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    • Thu Jul 3rd 09:11 AM
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      Oil and the Futures Market
      Speculators, especially Wall Street, set the price of crude (& Nat gas for that matter). NYMEX rules favor speculators via greatly discounted margin requirements for spread trades, (i.e. a buy of a nearby contract and a sell of a distant forward contract) over producers who typically only sell futures to guarantee stable "future" price of their oi. If spread trading rules were changed to make them even to hedging rules, the price of oil would drop $25/bbl. Why won't we do this? CFTC (NYMEX watchdog) is not an elected body; appointees are there thanks to our oil-man president. Don't look for this to change under either of our candidates for next term--both will owe too much to big oil to impose new rules. Another rule that needs changing: natural gas pipelines should be required to disclose line pack inventories to keep spikes from occuring during summer ac and winter heating seasons. Will this happen? Not unless we change out FERC appointees.
      This is not a message in support of any candidate, but a request that we look a bit deeper into what we do to cause our own financial mess.
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