Comment Text:
I am concerned about the impact that commodities speculators/traders are having in the commodity markets, especially oil. It seems to me that there are not nearly enough controls placed on these speculators/traders who's primary objective is to turn a profit through trading commodities that they never have to physically own or take possession. In my opinion, that is the root of the problem with seemingly irrational commodity price fluctuations. Anybody trading in commodity futures should be required to actually take posession of these commodities either in whole or in a significant proportion. Without taking physical ownership of the commodity, the traders/speculators are purely middle-men who serve no purpose other than to drive up prices as a means to achieve profits, regardless of market fundamentals.
The only exception to the possession rule that I can think of would be "manufacturers" who actually use the respective commodities and are hedging as a strategy for leveling their material costs to avoid price increases for their goods while maintaining their profit margins. These manufacturers already "own" some volume of these goods as part of their normal production and generally have an anticipated demand schedule for future purchases based on their forecasted production needs. Most speculators and traders never take possession of any goods and don't have the capacity to do so (that should be everyone's first clue regarding the true motive) but they certainly have a significant impact on everyone who consumes goods using these commodities.
Just because someone figures out a way to get involved in a market because regulations don't preclude that activity doesn't translate into general economic value for the system and everyone else in the system! If you trade commodities futures then you should actually have skin in the game yourself which means physically owning and possessing that commodity at least in some proportion realtive to your trading volume. Get rid of these non value-added middle men, who increase the costs for everyone in the system, by regulating them into the role of value-added trader with a real vested interest in the market by actually having skin in the game like everyone else.
