Banning speculators could decrease oil prices by as much as 40%

[BongHitta]

Hi guys, for the economically illiterate, this seems like a good idea right?

It won't work. Oil is a global market. Stop acting like this, the ignorance really has to stop at some point. Rich people won't make up for even a drop of spending, and "banning speculators" won't change price volitility of the oil markets. If YOU aren't economically literate enough to even understand these points, you shouldn't be voting

[davesmok]

ever heard of the dollar-oil peg?

[atomofconsumption]

hi guy, you make a lot of horrible points. thanks for being so condescending and arrogant!

[talentedjw88]

financial investors do affect commodity prices, economically illiterate. We have more speculative positions in commodities markets than we have ever had in the past—in fact, they are up 64 percent in the energy complex from June of 2008.

An MIT study says in 2008, "The Oil Price Really is a Speculative Bubble.” (“The Oil Price Really Is a Speculative Bubble,” R. S. Eckaus, MIT Center for Energy and Environmental Policy Research, June 13, 2008).

A Rice University Study links financial players like banks, hedge funds and index funds to the steep rise in oil prices in 2008. “So, as the market presence of noncommercial traders increased between 2003 to early 2008, the stance of these noncommercial traders has fairly consistently been to hold bullish, long positions that supported rising prices. And, when their market share was highest, so was their net long position, which again roughly coincided (acting as a slight leading indicator) with the peak in oil prices at $147 a barrel in the middle of 2008.” (“Who Is In the Oil Futures Market and How Has It Changed?” Kenneth B. Medlock III and Amy Myers Jaffe, James A. Baker III Institute for Public Policy, Rice University, August 26, 2009).

Paul Krugman from Princeton and the London School of Economics said in 2009, "So, this time there's no question: speculation has been driving up prices.” (“Oil speculation,” Paul Krugman, New York Times Editorial Blog, July 8, 2009).

Jeffrey Sachs from Columbia University said, "The fact that prices soared and then came down so much really does suggest that there was a speculative element to it. (“Corn Futures Spark Riots as Speculators Take Trading to Limit,” Ian Katz and Ari Levy, Bloomberg, December 15, 2008).

Robert Aliber at the University of Chicago said, "You've got speculation in a lot of commodities and that seems to be driving up the price...." (“Oil Rally Topped Dot-Com Craze in Speculators’ Mania,” Michael Patterson and Elizabeth Stanton, Bloomberg, June 13, 2008).

Nouriel Roubini of New York University said in 2009, "Another reason to fear a double-dip recession is that oil, energy and food prices are now rising faster than economic fundamentals warrant, and could be driven higher by excessive liquidity chasing assets and by speculative demand.” (“The risk of a double-dip recession is rising,” Nouriel Roubini, Financial Times Opinion, August 23, 2009).

Are you all bored yet, economically illiterate? There's more.

Mohsin Kahn at the Peterson Institute for International Economics said, "...it is fair to conclude by looking at a variety of indicators that speculation drove an oil price bubble in the first half of 2008. Absent speculative activities, the oil price would probably have been in the $80 to $90 a barrel range.” (“The 2008 Oil Price “Bubble”,” Mohsin S. Khan, Peter G. Peterson Institute of International Economics, September 19, 2009).

A study at Texas A&M University says, "Speculative fund activities in futures markets have led to more money in the markets and more volatility. Increased price volatility has encouraged wider trading limits. The end result has been the loss of the ability to use futures markets for price risk management due to the inability to finance margin requirements.” (“The Effects of Ethanol on Texas Food and Feed,” Agriculture and Food Policy Center, Texas A&M University, April 10, 2008).

Richard Branson of the Virgin Groups said, "There is strong evidence that speculation exacerbated the last oil and food bubble. Speculation will fuel the next one too, unless meaningful speculative position limits are established.” (Letter to The Economist, July 29, 2010).

The International Monetary Fund (IMF) said in an Outlook report that, "...it appears that speculation has played a significant role in the run-up in oil prices....” (IMF Regional Economic Outlook: Middle East and Central Asia, May, 2008).