Who
let the oil market be manipulated?

Salon.com
For anyone who believes that speculation by energy traders explains at least
a portion of the run-up in oil prices, the announcement that the Commodity
Futures Trading Commission is investigating oil market "manipulation" is welcome
news. Maybe, at long last, we'll get some clarity on this mystery.
Speculation likely does not explain
the entirety of $130-a-barrel oil, but it's reasonable to assume that some
sort of shenanigans are going on behind the scenes.
But for How the World Works, the most interesting tidbit in the Wall Street
Journal's coverage was the news that the CFTC had "reached an
agreement" with Intercontinental Exchange Inc., the operator of ICE
Futures electronic exchange.
As I've harped
upon in this space on numerous occasions, trading on ICE is not, as the
Journal delicately puts it, "subject to the same CFTC reporting
requirements as Nymex [New York Mercantile Exchange] trading." Which means
energy traders can do what they want under cover of darkness, and regulators
are none the wiser. But "ICE will now provide daily information on large
trader positions in its oil-futures markets, divulge more details on market
participants and notify the CFTC when traders exceed position limits."
To which, all I can say is finally! It's not like nobody knew this
was a problem. For background information, interested readers are referred to
two lengthy government reports, "The Role of Market Speculation in Rising Oil and Gas
Prices: A Need to Put the Cop Back on the Beat," and "Excessive
Speculation in the Natural Gas Market," published in 2006 and 2007,
respectively. To allow some commodity trading exchanges to operate without oversight
while others must report what's going on is an open invitation to traders:
"Manipulate me, pretty please."
Of course, this didn't happen by accident. I wrote
about this yesterday, and I wrote about it the
day before yesterday, and I'm seriously considering writing about it every
single day until the next election for the presidency of the United States
is decided. The freedom of energy traders to operate on exchanges such as ICE
without having to report their activities to the U.S. government is directly
attributable to the husband-and-wife politicking of Phil and Wendy Gramm.
That's right, Phil "top-economic-advisor-to-John McCain" Gramm. If
speculation has pushed up oil prices, Phil Gramm is at least partially
responsible.

― Andrew Leonard