I was browsing through the change.gov website, to pick up useful tips and hints on how the Obama administration will kick-start the economy and secure our energy independence.
One of the promised agenda items is to ‘Crack Down on Excessive Energy Speculation’. I also seem to recall Obama promising to sock the oil companies with a windfall profits tax and to rebate that money to hard-working Americans.
And during the primary season, they hauled up Rex Tillerson and his industry colleagues to Capital Hill so Congresspeople could wag their fingers at their pernicous price-gouging business practices. And threaten them with all sorts of sanctions if they didn’t clean up their act.
I haven’t heard a whole lot about this since then. What’s the deal? Aren’t we still going to do this? Everyone sounded real excited about it at the time. And it’s still on Obama’s website, after all. I assume it’s still on. Should I think otherwise?
You can not hold a politician responsible for things said during a campaign. Thats not fair. When the MBAs brought the world economy down ,everything changed. Neither politician changed their positions. They should have,but would have been called wafflers,(like thats a big sin) They had to stick with what got them so far into the campaign.
Now the Obama group is actually analyzing the problems and slowly drawing up strategies. They will have a lot to do in a short time. They are still getting their cabinet figured out.
And the ‘excess speculators’ are getting their asses handed to them right now. How would you like to be the guy holding six month oil futures at $150/bbl?
Speculators always get savaged by populists when the market moves in their direction and they make good profits. But no one seems to interested in talking about them when their bets are going wrong and they’re losing money hand over fist.
The nonsense about ‘excessive speculation’ was just campaign rhetoric to please the netroots. I’m guessing that Obama’s economic team doesn’t have a single member on it who believes that speculation is a bad thing to be discouraged.
Yeah, that’s pretty much my take on it. I was willing to give Obama a pass on this one during the campaign, thinking that it’ll be just one forgotten campaign promise once he got into office. They all have to throw out a few bones like this.
They aren’t just betting. They’re attempting to manipulate the price of basic commodities to the detriment of everyone else. Nobody talks about them when they’re losing money because THEY DESERVE IT.
You see Sam? Nobody cares about them when they are losing money because they deserve it! That will teach em! Dirty capitalists! Always trying to make money and all.
I think Obama will go ahead with his plans full speed and stick it to the damn oil companies and corporate big wigs! Why shouldn’t he crack down on them all? Just because they are all losing money and such? They ‘deserve’ it and should be kicked while they are down for the good of the people!
Thanks for all of the posts. So if I was to sum up the consensus so far, it seems to be
A populist campaign slogan meant to drum up passion in the electorate, who wanted to ‘blame somebody’ for high gas prices
A soundbite answer to a complex problem that normal market forces corrected anyway, usually a good signal that government intervention would have made things worse
Something that they probably never meant to follow through with in the first place
Hmmm. Interesting. But it’s still on the website.
I tried to click through to read more about ‘Excessive Speculation’ (as opposed to normal speculation) since I have no idea what it means. But it’s a dead link. There is no more information.
Are there any other Obama administration economic promises on the website that would fall into a similar camp? Defined as, populist sloganeering that doesn’t really mean anything, and might make matters worse if implemented?
Candidates (regardless of party) always have to campaign with an eye to their base, especially during the primaries. Even in the general election they have to toss bones to their base if they want to get elected…even while making soothing gestures toward the middle and perhaps covert indications to the other parties supposed base. However, once they are elected reality sets in and they do what they think is for the best, instead of what their base necessarily thinks is best.
Look at Bush and all the promises he supposedly made toward his own base prior to his election in 2000. How many of those did he keep? How many did he even TRY to keep? Same with Clinton. Think about how disillusioned a lot of HIS base was after he stopped even going through the motions of his plans early in his first term…and especially when he hijacked the Republican’s economic plans and made them his own.
Obama is going to be a VERY smart president I’m thinking and I have every faith that he is going to do what is best for the country…which may or may not be what his base (or his faithful) THINK is best. Gods save him though from his own supposed people though, who will (IMHO) turn on him like rabid chipmunks if he doesn’t do all the things they think he should do. Going to be interesting times.
As for him not keeping his (supposed or real) campaign promises…hell, I think that shows he is a really smart guy. I’m militantly unsurprised.
I was wondering if “energy speculation” referred to the futures market(s), but figured I’d hold off posting until getting some sort of confirmation.
So, knowing very little about “futures”, I have to ask: aren’t there (valid) criticisms of that market? For instance, I recall something about how futures speculation lead to higher market volatility (which may or may not be a bad thing, I guess, at least to a certain extent). Again, knowing little about them, I’m unable to enunciate why (or even if) that’s the case. Also, while the talking point may be “energy speculation”, is there a fundamental difference between energy futures and other types?
But there is no “guy” holding six month oil futures at $150/bbl.
AFAIK, most of these traders work for big firms. When things are going their way, they make billions for their companies and thus get millions in bonuses every year. When the market is going against them (as it appears to now), they simply don’t make bonuses, or in the worst case get fired. But they get to keep the many millions they made in the boom years. And when the market becomes favorable again, they’ll start getting their millions in bonuses again.
There is no need to feel sorry for these people. They’re doing fine.
It’s the companies these traders work for that are bearing the brunt of the market downturn, and when these companies are “too big to fail” the taxpayers come in for the rescue.
The above is my understanding as an observer. If any of you have first-hand knowledge of how things work, and if they are significantly different from what I describe above, I’d be interested to find out.
I used this in an earlier thread…it’s a Wiki article on the futures market. It doesn’t actually answer your questions, but it’s a good read on how the futures markets (including energy futures) works.
As with all things, there are pros and cons to any system. I don’t think that commodity markets and speculation are a valid criticism of how capital markets work, no…but then I’m biased. There are valid concerns, certainly, but remember the commodities market (including energy) ARE regulated.
I don’t think they lead to higher market volatility, no. There were many other factors that lead us to the recent roller coaster ride in energy prices, including the US dollar and various problems and issues in oil producing nations…as well as very high demand in several emerging nations (like China and India, both of which subsidized their refined fuels pricing…I think China still does in fact though I think India has halted or at least cut back on that).
My guess is that you feel this way because a lot of the focus has been on speculators, and that this is easier to focus on that the complex workings of how energy futures and oil production work. That means news agencies are going to illustrate this aspect more than any others.
I don’t think there is any real fundamental difference between energy futures and other types of natural resource commodities, now. There are differences between OTHER types of commodities (like, say, grain), but even there the differences aren’t very big and have to do with other things impacting futures speculation (say, the difference between how war in the ME effects the futures market vs how a hurricane would effect the price of grain).
Thanks, xtisme. I’d like to note that I don’t/didn’t have any preconceptions (that is, no “feelings”) one way or the other about futures, but was going totally on memory recall. I’m neutral except that, not being a gambling man (read: “speculator”, in this case), I generally think they’re a bad idea.
After reading the wiki page, the only thing that might bug me is the bit about the margin/equity ratio. And, I think, that’s only for a confluence of traits – e.g., the case of speculators (as opposed to hedgers) if the ratio is too low and the total amount is very large. In my view, the lower the m/e ratio, the closer it is to pure gambling with money one doesn’t have.
But, overall, it’s not clear to me that there’s really an issue to be “cracked down on”.
I was going for, ‘An answer that might still be employed, if gas spikes again in the summer, but not likely to be employed now, because they ain’t making the windfall profits anymore’.
If you ignore the, um, contribution by gonzo at the last, here is a GQ thread on oil speculation that may be interesting. Several good answers in there and perhaps one of the real expert 'dopers will wander in later to put in a more complete answer.
