Comment Text:
10-002
COMMENT
CL-02694
Corporate Office
P.O. Box 8 ~ 867 Western Avenue
Manchester, Maine 04351
David Stawick, Secretal7
U.S. Commodity Futures Trading Connnission
Three Lafayette Centre
1155 21
st
Street, NW
Washington, D.C. 20581
COMMENT
Subject:
Comlnents 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 role 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
cormnercial 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 ofrece.n.t ~,n..arket in,~tability -
excessive speculation.
Financial investors, including banks, h,@.~,e.fi/~nds and :i~dex!;;&m~;..~e(ulat~":in the energy commodities markets for
profit, rather than commodity-related l:;hsiries;es and i~ser's, Who do so to :~ro~ect themselves from volatility and risk.
Speculators take on the risk that hedgers seek to shed, however speculatidn 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 role that has been
proposed is not perfect, and again, I strongly urge the technical ilnprovements suggested by the comments I have
written to endorse.
In considering the role, Coamnissioners must 10ok 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 implelnent them expeditiously, before we see a repeat 0fthe
2007-2008 energy bubble and another major shock to a country still recovering fi'om recession.
Thank you for your consideration.
/J0~ L. Babb
J&S Oil Co., Inc.
