Comment Text:
David Stawick, Secretary
U.S. Commodity Futures Trading Commission
Three Lafayette Centre
1155 21
St
Street, NW
Washington, D.C. 20581
i0-002
COMMENT
CL-02704
Subjeet:
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
bonafide
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 ha~ 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.
Thank you for your consideration.
Sincerely,
Kinson Craft-
Owner / Partner
99 N. Main Street, West Lebanon, NH 03784
603-298-7200
www.SimpleEnergyonline.com
