ISDA wades into price speculation debate linked to Obama
The International Swaps and Derivatives Association has issued a comment on price speculation in the US petroleum product market, following comments made by US president Barack Obama.
Amidst the clamor over high gas prices in the US, the editorial pages of The Wall Street Journal and The New York Times both weighed in today on the issue of those prices and whether they are being influenced by speculation.
The Journal’s editorial commented on a briefing held by the Administration in Washington on Tuesday and stated:
“Nowhere in his remarks did the President claim that speculation is doing any harm. He did not cite any negative impact on the oil market. He did not say that speculators are manipulating oil prices, nor did he describe in even the vaguest terms the individuals or institutions that might be involved. He didn’t cite any research. Mr. Obama didn’t even, well, speculate about whether oil prices would be higher or lower if not for unnamed actors who may or may not be affecting the markets.”
The Times, not surprisingly, had a different take. It stated that: “Research…indicate[s] that …excessive speculation, mainly by Wall Street index-fund traders, is needlessly driving up prices…”
What is “excessive” speculation? And what exactly does the Times have a problem with: your garden-variety speculation or excessive speculation?
No matter. The Times editorial goes on to say:
“…it is important that the administration’s working group on oil and gas price fraud – formed a year ago by Attorney General Eric Holder Jr. – finally weighs in on the question of how, and how much, manipulators and speculators are pushing up prices. The group’s silence raises questions about how serious the White House really is about addressing this issue.”
We all agree that illegal market manipulation is wrong and needs to be policed and prevented. But could it be that the reason for the delay is that there is insufficient evidence to support the idea that speculation is distorting commodity markets?