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U.S. Considers Curbs on Speculative Trading of Oil
Edmund L. Andrews, The New York Times
Reacting to the violent swings in oil prices in recent months, federal regulators announced on Tuesday that they were considering new restrictions on “speculative” traders in markets for oil, natural gas and other energy products.
The move is a big departure from the hands-off approach to market regulation of the last two decades. It also highlights a broader shift toward tougher government oversight under President Obama.
Since Mr. Obama took office, the Justice Department has stepped up antitrust enforcement activities, abandoning many legal doctrines adopted by the Bush administration.
The Obama administration is also proposing an overhaul of financial regulation that would include tougher capital requirements for big banks, tighter regulation of hedge funds and a new consumer protection agency with broad power to regulate credit cards, mortgages and other consumer lending.
…“My firm belief is that we must aggressively use all existing authorities to ensure market integrity,” said Gary Gensler, chairman of the commission, in a statement. He said regulators would also examine whether to impose federal “speculative limits” on futures contracts for energy products.
Much of Mr. Gensler’s announcement was focused on precise issues well within his agency’s authority, suggesting that he was serious about seeking changes. But his proposals could encounter fierce opposition from big banks and Wall Street firms, which are each big traders in the commodity markets and manage big investment funds focused on commodities. Oil prices hit a record high of $145 a barrel last summer, then plunged to $33 a barrel last December and have since bounced back to more than $60.
But a growing number of critics have blamed those who are betting on the direction of energy prices for some of the extreme volatility.
(7 July 2009)
From mobile phones to oil
Kjell Aleklett, Aleklett’s Energy Mix
BP has a new chairman of the board. The chosen is the chief executive officer (CEO) of Eriksson, Carl-Henric Svanberg. There was great surprise in London when it was announced that the head of the mobile phone company Ericsson in Sweden had crossed over into the oil industry but such moves are not unique. It was not long ago that Nokia’s head moved over to Shell. It is known that Svanberg is a great admirer of Jorma Ollila and working again in the same industry as Ollila could be one reason for his surprising move.
According to the information available in the press, Carl-Henric Svanberg was not BP’s first choice as chairperson. Rather, that was Volvo’s CEO Leif Johansson. Through his work in the oil commission in Sweden, Lars Johansson knows that oil production is not an industry with a bright future. As the CEO of Volvo he has, instead, introduced Peak Oil as one of the driving lines for the company’s future. Volvo Trucks is the first vehicle company in the world that has, officially, realized what Peak Oil means for the company’s future. Leif Johansson knows full well that BP has already passed its “use by” date. I hope that Leif Johansson will be successful in piloting Volvo into the future.
For the past year there has officially existed a bet between BP’s CEO Tony Hayward and yours truly. One year ago we met at a conference in Malaysia and to my surprise he said, “I bet that, in ten years, the world will be producing more oil than today”. When I asked how large the bet was the answer was the price of a barrel of oil in 2018. Of course, I accepted the bet and if Carl-Henric Svanberg is then still chairman of the board of BP I hope that he is there when I receive my payment. He is also welcome to participate in the bet but then, of course, BP will risk making an even greater loss.
(8 July 2009)
Video: Why the oil price will rise (video interview)
Robert Miller, telegraph.co.uk
Sunday Telegraph Economics columnist Liam Halligan tells Robert Miller that sustained demand from the BRIC (Brazil, Russia, India, China) countries will underpin the recent oil price hikes.
(8 July 2009)