Comment Text:
10-002
COMMENT
CL-08059
From:
Sent:
To:
Subject:
Deluxe Oil
Wednesday, April 21, 2010 11:01 AM
secretary
Endorsement of PMAA comments dated 4/9/10
David Stawick, Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21
st
Street, NW
Washington, D.C. 20581
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, 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 major shock to a
country still recovering from recession.10-002
COMMENT
CL-08059
Thank you for your consideration.
Sincerely,
Deluxe Oil Company of Osakis, Inc
216 Nokomis St W, P.O. Box Q
Osakis, MN 56360
