Comment Text:
Dave Edwards
111 Jenny Road
Grantville, GA 30220-2134
June 17, 2011
David Stawick
Secretary, Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
Dear Mr. Stawick:
Today, we read about an appeal from the Seattle Times for U.S. President
Barack Obama's administration to support stricter regulations on
speculation in the oil futures markets, trading that artificially
increases the price of crude oil and its derivatives, including gasoline
and jet fuel. Virgin Atlantic's President, Richard Branson, also blamed
oil traders for pushing up the price of oil and called for greater
regulation.
The editorial claimed that "almost 90% of the futures market is rank
speculation by noncommercial traders," and distinguished speculators from
traders who deal with legitimate supply-and-demand conditions.
"Futures markets that allow industries from agriculture to airlines to
hedge price swings - and actually take delivery of products - are
disconnected from speculators who manipulate prices for their own
benefit," according to the Times editorial.
In a Dow Jones MarketWatch story, Richard Branson reported that documents
from Wikileaks indicated that the Saudi Arabian and U.S governments had
admitted that the "price the world is paying for oil is 40% to 50% more
than it should be because of traders and day traders who are pushing
prices higher."
Excessive speculation hurt the economy in 2008 and, once again, is harming
the economy in 2011. According to data recently released by the
Commission, speculators have raised their positions in energy markets by
64 percent compared to June 2008, bringing speculation to the highest
level on record.
We need meaningful, effective speculative position limits to restore
balance to commodities markets and ensure that they are connected to
market fundamentals, so that they fulfill their price-discovery function
properly and without distortions caused by excessive speculation. In
particular, I:
• support the Commission's immediate adoption of spot-month speculative
position limits; • urge the Commission to adopt effective back-month
levels that will accomplish the legislative purpose of curbing excessive
speculation; • urge the Commission to adopt single-month limits that are
no higher than two-thirds of the all-months-combined levels; • urge the
Commission immediately to adopt a position-accountability regime for the
nonspot months in place of its proposed position-visibility rule; and •
urge the Commission to adopt lower speculative position limits for
passive, long-only traders.
Time is of the essence, and I urge you to act quickly. Our pocketbooks and
the broader economy depend on it.
Sincerely,
Dave Edwards
404-773-8890
