Comment Text:
10-002
COMMENT
CL-07745
From:
Sent:
To:
Subject:
Kevin
Friday, April 16, 2010 4:49 PM
secretary
(File #10-002
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.
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,10-002
COMMENT
CL-07745
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
[email protected]
