As you know from our earlier posts, the market has been impossible to predict this spring due to speculation overriding the fundamentals of supply and demand. Goldman Sachs with 1.1 trillion in assets has led the charge in overpricing oil through speculation. Thus, I for one am not unhappy to see them get caught with their hand in the cookie jar, i.e. selling marginal equities to unknowing GS investors while betting that the value of the equities would fall. Meanwhile, Europe is thinking of suing GS for its prominent part in Greece's financial downfall (clients of GS seem to be at major risk). I'd be happier when their manipulation of the oil market has been proven. Part of the reason we have been waiting for prices to drop is the expected imposition of financial controls on energy speculation by Gary Gensler, head of the CFTC. Depending upon what he does, heating oil prices for next winter could drop dramatically. If the controls are ineffective or don't pass, prices will continue to climb.
Seventy five per cent of the major players in the oil industry feel that speculation has added $10 to $30 per barrel to the cost of crude oil See "Financial Speculation Seen Boosting Oil Price, Reuters News". The CFTC "has proposed limiting the number of futures contracts financial players can hold at any one time". Though the proposed restrictions do not go far enough to really prevent them from continuing to game the market, the major banks and hedge funds are united in their opposition. See "Big Banks, Shell Blast CFTC Position Limit Plan".
The American Gas Group, an association of 195 energy companies and utilities, fuel distributors, the American Feed industry, Americans for Financial Reform and millions of voters in New England and the Mid West support the introduction of these limits which would curb if not end speculation. See article "...CFTC Energy Speculation Limits", Bloomberg Business Week.
Now that we are finally close to seeing the CFTC put in rules to clean up the casino, I urge you again to call your Congresspersons and Senator and express support for strong limits on energy speculation. It would not hurt to contact the CFTC also at 202-418-5000, 202-418-5521 fax, 202-418-5514 TTY, or questions@cftc.gov. A $15.00 per barrel drop in the price of a barrel of oil would reduce heating oil prices by almost 40¢ per gallon, a $30 drop would result in double savings.
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- Our Town Energy Alliance was founded in November, 1999 by the Barraford's as a community service for senior citizens. Those 74 members told all their friends and neighbors and we had almost 1000 members by the end of 1999. In 2000, we made the organization independent. From the 74 original members it’s grown to its present 2010 membership of 17000 plus households, schools, towns and businesses through “word of mouth” OTCC members pay an annual membership fee (starting at only $25 per year) and can then take advantage of significant discounts on services and fuel purchases. Our Town Energy Alliance gathers this information from all of our members and uses that volume buying power to secure discounted fuel rates from leading area fuel providers including Irving Oil, Eastern Oil and Propane, as well as other fuel providers. Once the fuel prices are secured, we notify members of the prices. They can take advantage of purchasing their fuel at the discount rate directly from the fuel provider. But they are not obligated to accept the bid price. To take advantage of the program, you must sign a contract with the dealer.