In a couple of different venues, I’ve seen a desire expressed that “something” be done to rein in oil speculation, which is believed by some to be playing a non trivial role (in addition to demand/supply issues, and the weak dollar) in the high price of oil.
I’ll admit, there is something appealing to the notion of restricting participation in the oil futures markets to those who can actually take delivery of the product.
Unfortunately, there are two big problems with that desire.
First, we have a little matter of the market being international. Getting all the global commodities exchanges to cooperate is likely to be almost as challenging as herding cats.
Second…well, I’ll just point to an article in Friday’s Wall Street Journal (subscriber link):
While Nymex operates as a U.S.-regulated market, ICE Europe operates as a foreign exchange with trading terminals in the U.S. and is exempt from U.S. rules on reporting and speculation limits.
One person close to the matter was unsure if an actual agreement on setting levels had been set. Another said that even if the FSA and ICE Europe had agreed to the setting of limits on the front-month contracts, the FSA still isn’t sure who is doing the trading.
It’s kind of hard to regulate the speculators if you don’t know who they are, don’tcha think?
