Germany in call for ban on oil speculation

[The Straight Story]

Germany in call for ban on oil speculation

By Ambrose Evans-Pritchard
Last Updated: 10:49pm BST 26/05/2008

German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.

It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.

Uwe Beckmeyer, transport chief for Germany's Social Democrats, said his party would call for joint measures by the G8 powers to prohibit leveraged trading on energy contracts. "It's an extreme step but it has to be done," he told the Berlin media.

Mr Beckmeyer said the last 25pc rise in the price of oil to $135 a barrel had nothing to do with underlying supply and demand. “It’s pure speculation,” he said.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml

[Zynx]

1. They are absolutely correct in their assessment. We need to make war on oil speculators.

They are not conforming to any models of supply and demand at all. Nothing supports the price of oil where it currently is.

[Obama4ever]

14. Windfall Tax

How about a windfall tax on the oil companies that are plundering billions from us every day.

[Yael]

2. Good

And I hope those steeped in the heavy speculation lose their shirts when it comes down.

[elizfeelinggreat]

3. I hope this gets a lot of coverage here!

Then people in our country can see another side to what's going on and not just the investors' take on it. That would certainly change some opinions.

[Andy823]

5. So do I.

If Bush were any kind of a leader at all, and we all know he isn't, he would have come out supporting this idea instead of putting on a show going to his buddies in the middle east and "begging" them for more oil! He knows why the price is high, and it has nothing to do with supply and demand. Germany is on the right track, and if more world leaders agree, something can be done about it!

[liberal N proud]

4. Glad to see I am not the only one who sees the commodities cause

Less to do with supply and demand than speculation.

[Andy823]

8. Lots of people

Know the real cause, but the media in this country, owned and run by conservatives, are not doing their job of bringing this information to the public, and we sure as hell know our fearless leader and his sidekick dead eye Dick will never address it!

It's Enron all over again, but on a much larger scale.

[liberal N proud]

12. And no one will be missed in this scam

[Andy823]

17. Yep.

I live in Washington state, and we got hit with the Enron scam. Our local public utility district bought ten huge diesel generators because they feared a shortage of electricity. They had something like 500 gallon tanks, which they filled, and never were they used! They sit there for years for everyone to see, and complain a about since our rates were raised to pay for them. They ended up finally selling them for less than half of what they paid for them.

The oil scam is going to take a huge toll on this country, and we have Bush and company to thank for it!

[Zynx]

16. People like Chris Dodd in our own party are part of the problem.

They call the investment bankers and hedge fund managers tremendous "creators of wealth" when in fact they do nothing productive for our capital markets. We need to break this mindset. There should be nothing short of outrage at what they are doing and the amount of money they are making doing it.

[izquierdista]

6. How to stop speculation

What really makes these bubbles take off is the use of margin. That was the problem in the 1920's, when there was 10% margin; it is the problem now with the housing meltdown (with low and no-down mortgages) and it is the same on the NYMEX, where crude oil is traded. An immediate doubling of the exchange margins would do well to shake out a large number of the speculators and the foolishness can be taken out of the market.

Unfortunately, Republican regulators have nothing close to a clue when it comes to what to do with a market out of control.

[Andy823]

9. Republican regulators

Work for George W., need I say more!

They will never do anything to piss of the people with the money who keep on lining their pockets!

[izquierdista]

13. Actually, they work for the NYMEX

The exchange does not need anything from the government to raise the minimum margins. If the powers that be on the world commodity exchanges acted in the long-term and not the short-term interest, they could raise margins overnight, and keep raising them until the open interest dried up and the bubble was deflated. Not easy to do smoothly, but MUCH better than leaving things as they are.

[mac2]

7. I demanded Senator Durbin of the Energy Committee

do that. He was on CSPAN outraged about it previously. We need to control the greed of the corporations. DA!

[Andy823]

10. We all need to

Write to our reps in congress and tell them how we feel, and make it know we want something done about this problem. Congress can do it, and if the word gets out in the media about how the speculators are responsible for the high costs, people will get pissed, and congress will finally have to listen to us. Even those who get money from big oil can't vote against such a thing if the whole country knows what is going on!

First we have to get the media to start doing their job and bring these things to the attention of the public!

[FarCenter]

11. Transaction fees and/or interest surcharge should be implemented

Taxes should be levied on traders as:

- a purchase transaction fee that is a percentage of the contract bought, and

- a sales transaction fee that is a percentage of the contract times the lenght of time held.

If the trader either physically delivers or takes delivery of the goods, the taxes would be refunded.

[Zynx]

15. We could also engage in a licensing system whereby actual producers and distributors

have a fee free license, but every other participant would have to pay 10% at the point of sale and 25% if the contract was held for less than 6 months.

[aint_no_life_nowhere]

18. Do the two potential Democratic candidates have a position on this German proposal?

I would like to know if they support it as an indication of what international leadership they could provide, if elected. I won't even wonder about McCain's position, as I'm sure it has the scent of Chimp all over it.