Wednesday, July 23, 2008
Congress really can't tell a speculative trade designed to move the market from a legitimate futures trade. It is true that one of these things is not like the others, but does Congress know?
The concept of disclosing what trades are being made isn't bad, or at least disclosing aggregated trades by entity would help, and some more regulation of the ICE trades would be worthwhile. But limiting the number of trades by entity? Dingbat to say the least.
If that is true then the curbs that Congress wants to put in place won't matter.
What Congress needs to do is try to understand the concept of Peak Oil. There are a lot of huxters out there right now who are selling the concept to investors and speculators. Their pitch: "Peak oil is here. No way is supply ever going to catch up with demand. Step right up and buy your futures contracts and shares of small oil explorers. It's a no brainer, can't lose bet."
A lot of both sophisticated and unsophisticated money is buying into that concept.
I don't think anyone knows when Peak Oil will be reached and it will only be recognized in the rear view mirror. One thing is certain, if we act to unlock billions of barrels presently locked up in ANWR, other Alsakan reserves, the continental shelves, the eastern Gulf of Mexico, and our oil shale deposits, the date of Peak Oil can be postponed long enough for new, sustainable sources of energy to be developed.
That is where Congress should be directing their efforts. Increase supplies now, but work toward the future, simultaneously.
It would also help the economy greatly over a period of time, because there is an immense difference between producing oil domestically and importing it.
So yes, you are right, which is why I'm calling this a LOLCongress.
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