Economist Verleger: Commodities Regulation Will Cost Consumers $20 Billion
Philip Verleger thinks the CFTC’s proposed position limits will be costly for consumers of heating oil and other exchange-traded commodities. (image: media.canada.com)
Economist and oil analyst Philip Verleger has a dire forecast regarding the CFTC’s proposed limits on energy trading: “Great harm to the American economy will result from these unenlightened actions.”
That’s just one of the highlights from the text of a speech Verleger will give today at the Futures Industry Association, BusinessWeek reported. According to Verleger, the oil markets have been functioning perfectly. He argues that record-high inventories in oil and gas kept energy prices stable this winter even as temperatures dropped and energy demand rose, demonstrating that the free-market incentives to store oil ended up benefiting consumers. “New regulations by the Commodity Futures Trading Commission guarantee that consumers will never again experience stable prices during a serious cold spell,” warns Verleger. If position limits curb the incentive to stockpile inventories, he proposes, there could be shortages during the next cold snap, sending prices spiking upwards and costing consumers as much as $20 billion.
The CFTC’s regulations aim to prevent such a disruptive price spike; it was 2008’s soaring oil prices, when a barrel of crude topped $147, that prompted renewed efforts to curb the speculative activity that many blame for record-high prices. While Verleger worries that the CFTC will cripple energy markets, others have criticized the CFTC’s position limits for being too soft—the limits would only affect the ten biggest position holders in the oil and gas markets.
Afternoon Price Check, March 11: Oil Prices Close at Even After Early Losses
Inflation in China pushed oil prices lower this morning, as traders speculated that China would move to tighten its monetary policy, which would have the effect of slowing the growth of its economy and curbing oil demand. Many analysts expect growing Chinese energy demand to be sufficient to push oil prices higher through the rest [...]
Read More »
Flynn’s Oil Officially Defunct, Repayment of Bilked Heating Oil Customers to be Decided March 31
We last reported on beleaguered heating oil dealer Flynn’s Oil status a few weeks ago, when word came out that a state liquidation hearing would be the next step in handling the company’s debt to the hundreds of cheated customers.
According to an article published today on Seacoastonline.com, the Exeter, New Hampshire-based company made $685,000 when [...]
Senate Passes Extension of Biodiesel Tax Credit in Second Jobs Bill
The Senate passed their second bill this year aimed at creating jobs and improving the US economy on Wednesday that included a renewal of the $1-per-gallon tax credit for producers of biodiesel. H.R. 4213, known as the Tax Extenders Act of 2009, “extends unemployment insurance for jobless Americans through the end of the year, [...]
Read More »
Study: Cap on Carbon Emissions Would Boost Domestic Oil Production
The oil industry has opposed legislative efforts to impose a cap on carbon emissions, but a new study says that such a cap could actually lead to increased oil production in the US and reduce imports of crude oil by 40 percent, reports the Houston Chronicle’s NewsWatch: Energy blog.
Captured carbon dioxide is at the heart [...]
Heating Oil Price Trend for March 11: +2¢
Inventories of refined oil products fell much more than expected and signaled to oil traders that demand was beginning to cut into abundant oil supplies. Inventories of distillates, which include heating oil and diesel, fell by 2.2 million barrels, and gasoline supplies dropped by 2.9 million barrels. Lower refinery rates contributed to shrinking oil inventories; [...]
Read More »
Heating Degree Day Report: March 11, 2010
KEY: Cumulative Heating Degree Days since March 1, 2010 for specified location / departure from average cumulative HDDs for today’s date.
Read More »
Generous Incentives Make Purchase of Efficient Heating Equipment More Attractive Than Ever
Despite the recession’s effect on many people’s disposable income, it may still be a good idea to buy that more efficient refrigerator—or oil heater. The year 2010 is a golden age of energy efficiency incentives.
In addition to the American Recovery and Reinvestment Act (the known more generally as “the stimulus”), which in 2009 renewed a [...]
Afternoon Price Check, March 10: Heating Oil Prices Rise as Distillate Inventories Drop
Inventory data showed surprising drawdowns in supplies of distillates, which include heating oil and diesel, and gasoline, and those findings led oil prices to overcome some tumultuous price changes and close higher for the day. Distillate supplies fell by 2.2 million barrels, more than double the expected 1-million-barrel decline, and gasoline inventories dropped by 2.9 [...]
Read More »
At CERAWeek Conference, Oil and Gas Are the Future
Tuesday was “oil day” at the CERAWeek 2010 energy conference, sponsored by the energy research firm IHS CERA, and leading figures from the energy industry and from the Obama administration gathered to speak about the future of oil and gas. The dominant tone was one of confidence, as most speakers insisted that fossil fuels would [...]
Read More »
Kuwaiti Researchers Predict Peak Oil Production in 2014
A new study published in the journal Energy & Fuels predicts that world conventional oil production will hit its peak in the year 2014, GreenCarCongress.com reported on Wednesday. The study, undertaken by researchers at Kuwait University and Kuwait Oil Company, looked at oil production in the top 47 oil-producing nations and found that humanity [...]
Read More »
OPEC President Vows to Fight Volatile Oil Prices
Bloomberg reported on Wednesday that another high-profile international figure has pledged to fight excessive oil speculation, which many believe contributes to volatile prices. OPEC President Germanico Pinto of Ecuador laid out what he sees as the negative impact of volatile prices on OPEC and the oil industry: “volatility produces difficulties in the markets and [...]
Read More »
Heating Oil Price Trend for March 10: -2¢
The dollar’s gains against the euro paired with expectations that oil inventories would rise to push down oil prices on Tuesday. A strong dollar makes commodities priced in dollars, like crude oil and heating oil, more expensive for traders holding other currencies. The API’s inventory data came out after trading closed yesterday and showed that [...]
Read More »
Heating Degree Day Report: March 10, 2010
KEY: Cumulative Heating Degree Days since March 1, 2010 for specified location / departure from average cumulative HDDs for today’s date.
Read More »
ICPA Calls For Conservation Funding Over Heating Oil Assistance
Last week, the New Britain Herald published quotes from Gene Guilford, president of the Independent Connecticut Petroleum Association, proposing that the heating oil-focused nonprofit known as the Connecticut Fuel Oil Conservation Board is optimally positioned to implement the green job and home efficiency improvement initiatives awaiting Congress approval. The article is a rewritten version of [...]
Read More »
Oil Traders Split on How Gasoline Demand Will Affect Oil Prices
As the heating season prepares to give way to the driving season, oil traders shift their focus from the market for distillates (including heating oil) to the market for gasoline. More people drive than heat their homes with oil, so crude oil futures tend to rally when gasoline demand picks up, as it usually does [...]
Read More »
Afternoon Price Check, March 9: Supply Concerns, Strong Dollar Weigh Down Oil Prices
Crude and heating oil prices fell today, though each gained back some ground from earlier losses. A strong dollar drove down demand for oil futures, because those commodities became more expensive for traders holding other currencies. Traders expect this week’s inventory reports to show an increase in supplies of crude, and the price of crude [...]
Read More »
Analysts: OPEC Will Leave Oil Production Quotas Unchanged
OPEC members will meet in Vienna on March 17, and most observers believe that they will decide to hold oil production quotas at their current levels, Reuters reported on Monday. The news service surveyed 14 financial institutions and reported unanimous consent among them that OPEC will not raise quotas at the Vienna meeting. [...]
Read More »
Possible US Sanctions Persuade Oil Trading Firms to Stop Gasoline Sales to Iran
The US is still working on legislation to impose new sanctions on gasoline sales to Iran, but the threat of sanctions is already having an impact. On Monday, Reuters reported that oil trading firms Vitol, the world’s largest oil trader, and Trafigura are going to stop selling gasoline to Iran. The firms join BP, Glencore, [...]
Read More »
Survey of Analysts Shows No Consensus on Oil Prices
In January, we took a look at the two schools of thought on crude oil prices in 2010: the first stated that the price of crude will stay flat, hovering around $80 per barrel, and the second predicted that crude’s rise to the $80 mark was a fluke and that prices would decline significantly as [...]
Read More »
