Almost all the economists studying today's high oil prices think that financial speculators are helping drive up those prices, but hard data is lacking as to whether they're a factor, and if so, how big.
Michael Greenberger said speculation is a major factor, and he knows a lot about the complex global oil market. He directed trading and markets for the Commodity Futures Trading Commission from 1997 to 1999. That body regulates the trading of contracts for future deliveries of commodities, including crude oil. The contracts, called futures, drive oil prices. Greenberger, a law professor at the University of Maryland, told McClatchy why he thinks financial speculation is driving up prices.
How do speculators drive up oil prices?
What is a "wash sale" and how does it work?
Who are these speculators? Do they have names and addresses?
How much of today's record oil price is attributable to speculation?
What about supply-and-demand fundamentals? Aren't they behind oil's rising price to some degree?
Can the futures trading commission do something, and if so why hasn't it?
The Commodity Futures Trading Commission has the power to terminate its deference to British regulation of that Atlanta-based institution trading in the U.S. and controlling 30 percent of the major U.S. crude-oil contracts. They have authority to do so immediately and to bring ICE under full U.S. regulatory oversight.
(The CFTC announced Tuesday that it will condition ICE's access to U.S. contracts on its adoption of the same contract size limitations and accountability measures that apply within the U.S. This is only a partial step toward the regulation that Greenberger calls for; it leaves overall regulation of the ICE under British oversight, which is less rigorous than U.S. rules.)