Comment Text:
David Stawick, Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155
21
st
Street, NW
Washington, DoC. 20581
Subject:
Comments on Proposed Speculative Position Limits for Energy (File #10-002)
Dear Mr. Stawick:
i0-002
COMMENT
CL-02700
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 natm'al 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~de
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 [gears, such events have become commo
n
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, controllingpo.sition in any a single commodity.
...
The Commission has a st.atutory obligation, if not.a compelling moral obligatio~n;.to est.ab, lish 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 ~hat excessive ~pec..ulation has on businesses like mine, my consumers and the broader economy. It
should establish restrictive speculati;ce position limits, ~nd 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.
Thank you for your consideration.
Sincerely,
299 Spruce Street
Rumford, ME 04276
