How do you stop Oil Speculation?

[Junkdrawer]

That's a serious question. Not a "you can't so you HAVE to let the market alone" question.

Do we make oil future trading illegal?

Can we limit trading to special circumstances?

How can this be fixed? :shrug:

[Clovis Sangrail]

1. step 1

break the dependency on oil
once that's gone it won't matter ;)

[zonmoy]

3. problem is that dependency on oil for a technological society

is the same as the dependency on food and water that a living organism has.

[Clovis Sangrail]

4. alternative energy sources exist

we just haven't put the money into research or infrastructure required to make them viable

Had we been pushing alternative forms of energy for the last 30 years... where would we be now?

[zonmoy]

9. Maybe a bit better off although oil isn't just about energy since

nearly all of the chemicals that our society use for medication are created either using the oil as a base material or as an energy source. also how many industrial processes can be powered using alternative fuels. not all since smelting metals and things like welding that require acetylene will still need oil or natural gas products.

[Clovis Sangrail]

11. What's the break down of our oil use?

I think transportation accounts for over 50% and energy around 25% but I don't know exactly.
(do you know?)
Cutting out (or way back on) those 2 things would have a significant affect on consumption and price.

Take care of those 2 things and use oil for the other 25% (pertrochemicals, plastics, etc) until something better comes along.
Heck.. if oil consumption drops that low we can probably keep using that other 25% without much ill affect.

[zonmoy]

14. Best I found so far on the matter.

[Junkdrawer]

2. MSNBC is pooh-poohing the idea....

With the latest spike in oil prices, consumers and Congress have started taking names. For awhile there, Big Oil — raking in more profits than it invested in finding more oil — was the main culprits. Strong demand from the developing world took part of the blame. Then the weak dollar was in the hot seat. Lately, speculators in the oil futures markets are the bad guys. (Our e-mail inbox contains a number of more creative theories about why oil prices are rising, but this list includes the usual suspects.)

All of these factors are playing a part: the growth in demand is coming faster than new supplies are being found and developed. If that keeps up, we may face an actual shortage — one side of the equation has to give. But as the value of the dollar has fallen and inflation has perked up, there’s no question that investors have been flooding the oil trading oil pits with orders. Buying oil is a great hedge against both.

So if all this speculation is pushing oil prices higher, why don’t we just clamp down on the speculators? Congress is considering doing just that. One quick solution: make speculators put up more money when they buy futures contracts. Under current rules, you can buy large volumes of oil with relatively small amounts of money. By raising the “down payment” on oil futures contracts, the theory goes, you’d eliminate some of the buyers who are just there to place bets.

The problem, as with everything to do with oil prices, is that the oil market is global. So if you shut the door on the U.S. commodity market, speculators could turn to other oil markets — like the International Commodity Exchange in London — to place their trades. If you got all the governments around the world to agree to clamp down (a neat trick if you can pull it off), traders would still figure out how to find each other. They could go on eBay.



...

http://www.msnbc.msn.com/id/24794852/

Yeah...They'd go to eBay...That's the ticket...

[phantom power]

5. I recommend posting your question to the Peak Oil forum.

Somebody there is likely to know about how the trading system works.

I doubt that curtailing speculation will bring down the price of oil, if that is what you are thinking.

[sicksicksick_N_tired]

18. PEAK OIL ISSSSS THE SPECULATORS BULLSHIT TRADE! PUT 'EM BEHIND BARS!!!!

THEY ARE ALLOWED THE POWER TO MANIPULATE NOT ONLY THIS NATION BUT THE GLOBE!!!

PUT THE FUCKERS BEHIND BARS FOR FRAUD AND VIOLATIONS OF RICO AMONG NUMEROUS OTHER US POLICIES AGAINST MOB TACTICS!!!!

PUT THEM IN JAIL WHERE THEY BELONG!!!!!!!!!!!!!!!!111

[no_hypocrisy]

6. Tax the profits and listen to the collective howls of indignation.

[izquierdista]

7. Raise the margins

Oil as it is traded on the commodity exchanges requires very little margin, under 10%. The original reason for having low margins in the commodity markets is because the physical stuff doesn't exist yet, i.e., still in the ground in the case of crops and petroleum. The margin is just supposed to be a performance bond that the seller will actually show up at delivery time with the physical goods and the buyer will show up with the rest of the cash to settle the futures contract.

When you have a market with such low margins, speculators have low barriers to entry, anyone with the margin can step in and take the place of the buyer or the seller. While this allows more liquidity in the market (which is good), it also makes for more volatility and for the possibility of a bubble forming if more and more speculators rush in (which is bad). One standard way to cool off a market is to raise the margins, and the Chicago Board of Trade does this a lot with grains during the summer months.

If you look at what the Germans are calling for, they essentially want to do the same thing, require buyers to post more money to buy oil contracts for future delivery. The NYMEX can do this without any prior government approval, but they have a vested interest to see a lot of trading, and raising the margins will put a damper on that. What an honest president would do, one who was not a vassal of the oil companies, is to call the board of governors of the NYMEX and ask them to triple the margins before he had to sign an Executive Order declaring a market holiday.

[Junkdrawer]

8. Apparently Congress is considering this...(see post #2 above)...

But at the glacial pace THIS congress moves, the bubble will have burst long before they act.

[DiverDave]

10. Fuck em all, nationalize it

along with the insurance and phamacuticals...just tell all the bloodsuckers they've raped enough trillions from 'we the people'.

A fella can dream, cant he.

[htuttle]

12. I say that if something is critical enough to go to war over to 'protect'...

...then it's critical enough to nationalize.

I sure don't want to put my life and the lives of my children on the line just to make sure that some fuck in a Brooks Brothers suit can take all of our money, too.

[Telly Savalas]

19. How do you propose to nationalize resources outside the border of the U.S.?

Use of military force?

[Captain Angry]

13. There are several ways.

But none will work as well as one thing.

As soon as investors find a place that they feel is safer and will provide greater returns, the money will go there.

Period.

If it's lucrative, loopholes will be found. Therefore, oil prices will fall precipitously as soon as the next "big thing" is found.

Tech bubble inflates... pops. Money runs to real estate.
Real estate bubble inflates... pops. Money runs to commodities.
Commodity bubble inflates???

I wonder what comes next.

[aint_no_life_nowhere]

15. Air? Water?

I'm sure if they could buy and sell sunlight or other basic necessities of life, they wouldn't hesitate to try to make an easy buck on life itself.

[Captain Angry]

16. Water isn't the next bubble (no pun intended).

Water is the only thing that I'm worried about, and so I am invested in companies that are in water cleaning, services, etc.

Over the next 20 years, I expect companies in that sector to grow immensely, and become very profitable as the remaining water becomes more polluted.

But the next bubble is probably going to be a run up in the dollar somehow. It's so low, I'm wondering if BIG money is going to speculate on it going up. A policy here and there could make it look stronger, the late money comes running in, bids up the dollar, the BIG money gets out. And then it crashes.

That's my guess at least. There are no fundamentals to support oil at this level, and there sure aren't any to make the dollar go up, but it's so low it has to be enticing.

[sicksicksick_N_tired]

17. PUT THE GREEDY MOTHER FUCKERS IN JAIL!!!!

NO ONE SHOULD HAVE THE POWER TO RUIN A NATION!!!!

THE FUCKERS SHOULD BE BEHIND BARS FOR RICO, AT LEAST!!!

[ColbertWatcher]

20. Make them accountable for breaking the law?

There are two groups that the oil whores are not following:

http://en.wikipedia.org/wiki/Commodity_Futures_Trading_Commission">CFCT and http://en.wikipedia.org/wiki/IntercontinentalExchange">ICE

The senate is doing investigations about it.