Comment Text:
10-002
COMMENT
CL-04020
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Sent:
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Subject:
[email protected]
Tuesday, April 13, 2010 10:59 AM
secretary
Comments on Proposed Speculative Position Limits for Energy (File # 10-002)
Terry Moran
Keyser Energy - Hugh Duffy Coal & Oil Co. Inc.
190 West St.
Rutland, VT 05701-2849
April 13, 2010
David Stawick
Secretary, U.S. CFTC
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
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.
Up until August of 2009 1 owned and operated a 117 year old, fourth
generation fuel supply business. The speculation that has driven prices up
and down, in essence, manipulation of the market, has in effect allowed
individuals and their companies to reap large profits by controlling which
direction the market is going to go and operating with that inside
information. I found that it was no longer worth it to continue to operate
when the predictability of the market was no longer dependent on true
market forces but left to the whimsical desires of a few very greedy and
unscrupulous parties operating outside the rules without oversight or
concern for those of us operating honestly. I have sold my business,
suffered a stoke, lost a good deal of money and equity in my company and
watched many of my customers suffer large losses and remain incapable of
paying their heating bills from the last two years. Washington (House and
Senate, as well as regulators) in my eyes are out of touch with how the
rest of us have to live in these times and don't appear to care. It's
taken far too long for any action to take place and most of us at the Main
Street level have lost faith in our "leadership". If you're really
interested in fixing the problem it's time for action.
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 energy10-002
COMMENT
CL-04020
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 ~vill begin
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, ~vho do so to protect themselves
from volatility and risk. Speculators take on the risk that hedgers seek
to shed, ho~vever speculation should not dominate the markets. Moreover,
one speculator or class of speculator should not be allo~ved 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
~vritten 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 ~ve 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,
Terry Moran
(802)773 -2567
