Comment Text:
10-002
COMMENT
CL-07744
From:
Sent:
To:
Cc:
Subject:
Kevin
Friday, April 16, 2010 4:59 PM
Kevin
secretary
Re: (File #10-002
[email protected]
On Apr 16, 2010, at 4:48 PM, Kevin
wrote:
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155
21
st
Street, NW
Washington, D.C. 20581
Email: [email protected]
Fax: (202) 418-5521
Subject: Comments on Proposed Speculative Position Limits for Energy
(File # 10-002)
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
bona fide
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 passing this proposed rulemaking, the Commission has an
opportunity 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 funds, speculate in the energy
commodities markets for profit, rather than commodity-related businesses and
users, who do so to protect themselves from volatility and risk. Speculators take
on the risk that hedgers seek to shed, however speculation should not dominate
the markets. Moreover, one speculator or class of speculator should not be
allowed to take a large, controlling position in any a single commodity.10-002
COMMENT
CL-07744
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 2007-2008energy bubble and another
major shock to a country still recovering from recession.
Thank you for your consideration.
Sincerely,
Kevin Dorgan
Direct Fuel
POBox2115
Peabody Mass 01960
Kdorgan@ directfueh net
