What we are left with is the possibility that out of the $70 price for a barrel of oil about $20 can be accounted for by speculation. This brings us to the most important part of the report: We need to know more.
Until quite recently trading on futures markets was regulated by the CFTC. Trades on regulated markets are subject to reporting requirements. Traders are required to report large trades to the CFTC, which has the responsibility of limiting excessive speculation. However, concurrent with the dramatic increase in speculative trading of energy futures, there has been a shift of this trading to unregulated commodity exchanges.
Essentially this shift is the result of an exemption written into the Commodity Futures Modernization Act of 2000 at the behest of Enron. Perhaps more important is the announcement by the Intercontinental Exchange that it would permit traders to use its terminals in the United States to trade futures contracts for crude oil, gasoline, and heating oil produced and delivered in the U.S. on its ICE Futures exchange in London.
In effect, American traders can completely circumvent all U.S. regulation, including reporting requirements, by simply routing their transactions through London. It is important to understand that the CFTC’s large trader reporting requirement is the Commission’s primary tool for preventing market manipulation. The recent charges against BP for manipulation of the propane market appears to involve activity on the over-the-counter-market. Apparently it was part of BP’s strategy to use the unregulated market, where it could avoid making reports and could expect no surveillance.
Not sure how accurate it is to say that speculation is to blame. It looks like a trailing indicator, if the price before speculation went from $20 to $50. Good old-fashioned gouging is still a possibility, of course.
This chart shows the nominal and adjusted prices of a barrel of crude from 1865 onward. A history of OPEC and their control of the market since the early 70s might shed some light on why the prices get so wild after 1975.
5 Comments
openoffice :)
http://www.openoffice.org/
I used Mellel for the last big document I did, and was very pleased with it. I have to admit that until I found the tutorial I didn’t like it at all. It turns out I was missing the point. I was expecting something like word and Mellel was providing something way better. Happy surprise.
I’ve also been playing around with Publicon from Mathematica. This is a very powerful tool. It generates TeK, so the results are very high quality.
open office is an X-windows application and a bit too heavyweight for my iBook.
I think Mellel gets the nod, so far.
I use NeoOffice/J, which is openoffice.org reimplemented with a Java UI so that X11 is not required. Because of the porting involved, it lags behind the OOO releases by a few months (there’s no 2.0 yet and one is not expected until next summer), but it’s quite good.
I do also have Mellel, bought and paid for, but I haven’t been too impressed with it as a general word-processing tool; I keep running across little features that I find I miss, in what might seem a disproportionate fashion. So mostly I use it for its superior Semitic language support when I need such – usually when creating printed Hebrew or provisional Muslim calendars.
Abiword has a native mac version
http://www.abisource.com/download/
It’s a great free/libre lightweight general pupose word processing tool
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