Comment Text:
10-002
COMMENT
CL-02677
¯ ;: ." -:' '~ ~ Rai~d01ph; NJ07869-1362
(973) 366-1400
April.20~.201.0 .: , .".,
David Stawick, Secretary
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U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21
st
Street, NW
Washington, D.C. 20581
(973) 366-5712 (FAX)
Subject: Cormnaents on Proposed
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olJecu/ative Poslt~on ~,Im~ts for Energy (File #I 0-002)
Dear Mr. Stawick:
I am writing today to endorse comments submitted by the Petroleum Marketers
Association of America and the New England Fuel Institute submitted on April 9, 2010 on the
proposed rule to implement speculative position limits for futures and options contracts for
natural gas, crude oil, heating oil and gasoline. I am also writing to add my own.thoughts on this
matter.to the :public record.
Futures markets were designed as a tool for
bonafide
commercial businesses and end-
users to manage risk and "discover" prices for energy based on supply and demand economics.
Businesses and consumers rely on these markets and are harmed when they become excessively
volatile or subject to extreme price shocks, as we saw with the 2007-2008 energy bubble. In the
past ten years, such events have become common and federal regulators failed to take assertive
action to address the causes and to restore confidence in the energy futures markets.
By strengthening and pa~sing this pr.oposed rulemaking, the Commission has an
oppommity to take an important step in this regard. It will be addressing the main cause of
recent market instability-
excessive speculation..
Financial investors, including banks, hedge
funds and index fm~ds, speculate i
n
the e~nergy con~
-n0dities markets for profit, ratl~er than
commodity-related businesses and us,ers,. Wl)o do so to protect themselves from ~olatility and
risk. Speculators take on the risk that hedgers seek to slued, however speculation should not
dominate the markets. Moreover, one speculator' Or clas
s
of speculator should not be allowed to
take a large, controlling position in any asingle commodity..
As a supplier to BP, Gulf, and-Shell service stations R. P. C., Inc. purchases petroleum
products from those respective suppliers and they change their prices daily in conjunction with
the changes in the petroleum, futures markets. Therefore, excessive speculation has produced
tremendous volatility, which has in turn had a very dramatic effect on our business and the
consumers of motor fuel our service stations supply.10-002
COMMENT
CL-02677
The Commission has a statutory obligation, if not a compelling moral obligation, to
establish hard limits on the size of positions that speculators can take in these markets, and to bar
them from any exemptions. The rule that has been proposed is not perfect, and again, I strongly
urge the technical improvements suggested by the comments I have written to endorse.
In considering the rule, Commissioners must look past opposition by the financial
community and remember the affect that excessive speculation has on businesses like mine, my
consumers and the broader economy. It should establish restrictive speculative position limits,
and implement them expeditiously, before we see a repeat of the 2007-2008 energy bubble and
another maj or shock to a country still recovering from recession.
Thank you for your consideration.
Sincerely,
R.P.C.., Inc.
Lawrence S. Ray,
President
