The manipulation of energy markets has cost my mom a minimum of thirty bucks a month for the last three years and I'm pissed.
In the post "Levin ain't Playing Pattycake" I pointed you to the Senate Investigations Subcommittee's reports on manipulation in the gas markets and the oil markets.
Last year's oil report estimated that "speculators" were costing American consumers $20 per barrel. We used 20,588,000 barrels per day last year. Do the math. That's just oil. This is as big as it gets.
Here's Ray Learsy over at HuffPo:
...But then again there is the case of Sherlock Holmes's dog not barking. By that I mean the price behavior of crude oil. Yesterday's weekly oil stats came out and showed a decrease of crude oil inventory of 1.1 million barrels, a drop less than what had been anticipated. If you are not going to use up your oil inventory at the height of the driving season, when then? And more pointedly, oil inventories are up over five percent from last year, and that doesn't even count the more than 700 million barrels we have in the Strategic Petroleum Reserve (I know, its sacrosanct and we shouldn't use it until...? But it's there nonetheless). And so, what happens. The price of crude oil goes up by some $2.50 a barrel. No shortage here, in fact ample supply, and yet we see a price popping past $76/bbl. on the trading exchanges.
...It stands to reason if you are an oil producer or a hedge fund trading in oil, you have a major stake in how oil is priced. If you can push up its price by simply taking a position in exchange traded derivatives and thereby setting a market recognized price level favorable to your interests, without directly confronting or having to deal with your long term customers or spot buyers on this issue, well you have found nirvana. All the while your trades can be executed anonymously and without oversight (Amaranth did much of its trading on London's 'ICE" exchange to circumvent US constraints), and the public and your customer base is made to believe that the escalating prices of oil is the work of the 'invisible hand of the market". The temptation to play the market in this way would be enormous. This especially if your means, as with OPEC producers, are almost limitless and no matter how big or wide the market may be, it could not withstand the power of the resources at your disposal. This is all hypothetical. Of course!
In actuality the prospect is not at all that far fetched as shown with the CFTC's filings against Amaranth alleging manipulation in the trading of natural gas contracts. The time has come for the CFTC to redouble its attention to the oil markets as well. They must try and get behind the major trades; who is buying or selling. To bring as much transparency to this commodity's trading as we have for stocks and bonds. To cooperate and persuade the non American exchanges to share information, and to be wary of producers trying to fix prices through the clandestine world of futures trading. Amaranth has taught us how one trading house can lose billions in trading. The CFTC must be equally vigilante to the possibility of those making excessive and unearned billions by rigging the game of oil trading at enormous expense to the public at large. With the disappearance of the commercial traditions and discipline that once existed between buyer and seller, the CFTC is our only line of defense and it must be given the tools by Congress to police the energy markets in the United States, most especially the electronic trading platforms. It must be given the mandate to cooperate and persuade offshore exchanges to jointly achieve transparency and to establish rational position limits that can no longer distort the free functioning of the trading markets. The unconsciousable transfer of wealth to oil interests must stop.
Do I have to run a 96-point ad?