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POPSCommission Finds Oil Price Manipulation The article goes on to say "...overall, most experts say the incidents are so scattered, and the energy market so large, that it's unlikely a single trader or group of traders can have substantial sway over prices." Of course, if this turns out to be an even fairly common crime, then the cumulative effect could be much larger. After the big corporate crime wave of '04, I think it's foolish to give them the benefit of the doubt.
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POPSSpeculators Chase the Money not Make the Money
I have a couple concerns about this story. One, even though it's a very small incident that had a negligible impact on the markets, I have a feeling politicians are going to use it as an example to introduce laws prohibiting or reducing oil trading. This despite the fact that there's even more research out there that says trading has not artificially inflated prices. It's supply and demand people - demand is greatly increasing, while supply is staying flat - of course prices are going to skyrocket. Second, it uses the correlation between the increase in oil price and the amount of money going into oil futures. Yet another basic market principle people - investors are going to chase hot items. Oil starts to go up, people anticipate it continuing to go up due to supply/demand issues, investors invest in it to hopefully make a profit. Finally, don't forget the dollar - people use oil as a hedge against inflation, which his been going up due in part to the weakening dollar.
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POPS Dubai's Favorite Senators Senator Maria Cantwell (D., Wash.) has been threatening to hold up appointments to the Commodity Futures Trading Commission until the CFTC increases regulation of oil trading. According to the Almanac of American Politics, "successfully worked the phones" in 2005 to round up enough colleagues to block drilling in the Alaskan wilderness. Her counterpart in the House is Michigan's Bart Stupak, who claims special credit for a permanent ban on drilling in the Great Lakes and has also cast votes against exploration in Alaska and off the California coast. Then there's New York Senator Chuck Schumer, another staunch opponent of new domestic oil supplies. Mr. Schumer has egged on the Federal Reserve's rate-cutting binge that has contributed so much to the oil price spike.
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