With gasoline prices reaching $4.50 in Hawaii, and $5 in California, some CFTC watchers believe the tide is turning in favor of a tougher stance from the CFTC. Jim Collura, vice president of government affairs for the New England Fuel Institute and spokesman for the Commodities Markets Oversight Coalition, wrote in an email to
, "I do think the tide of public opinion will have an effect on the proposed speculative position limits rulemaking the CFTC -- if it were to come to a final vote now. Unfortunately the commission has not yet indicated when a final rule may be ready for a vote. The commission currently has two votes in favor, one vote opposed and two undecided. The question is whether or not one of the two undecided voters will be persuaded by the public outrage, and I think that one or both will be."
University of Maryland law professor Michael Greenberger, who has testified on Capitol Hill about speculation in the commodities markets, took issue with critics who say the Obama administration is playing a game of strategic misdirection with its oil-prices manipulation task force. The Maryland law professor and commodities trading expert believes that if it's properly set up by the Justice Department, and bringing together Justice with the Securities and Exchange Commission, Department of Energy, Department of Agriculture and CFTC, the chances are strong that serious wrongdoing could be uncovered and indictments brought against traders.
Maryland Law's Greenberger is also of the opinion that position limits are only part of the solution. "Look at Enron. Look at Brian Hunter. These are very sophisticated surgical purchasing of long futures contracts and avoidance of position limits, and these markets are opaque and need to be investigated."
Greenberger said that with only two clear votes on the CFTC measure, the quickest way to deal with this issue is to is start a grand jury investigation, and that the argument that there is legal speculation in the free markets is a weak position to defend.
"The Saudis have said there is excessive speculation. Goldman Sachs has said there is excessive speculation. It's not a question of whether there is legal speculation or not. This is looking at criminal conduct," the law professor said, noting that it has been demonstrated that derivatives markets are dysfunctional if they have excessive speculation.
President Obama made sure to couch his task force within the thesis that there is no simple fix for high gasoline prices. And when it comes to speculation in the commodities markets, and in congressional testimony over the past few years, it hasn't been about energy, natural gas, or oil specifically, using either Enron or Amaranth, or any single actor, to reduce the issue to a convenient villain. In fact, reading Congressional testimony one is as likely to discover reams of statistics on wheat trading dynamics that rival commentary on energy trading specifically. Yet with splashy IPOs like the upcoming debut of London-based Glencore -- the "Goldman Sachs of commodities" -- and Glencore sitting on a nation's worth of physical commodities inherent in its $11 billion valuation, the tension between free market liquidity and excessive speculation profiting a handful remains a headline designed for the masses in a world of inflation.
"Yes, you need speculation for liquidity, but there are twice as many speculators as commercial entities needing to hedge their risk. This is not supposed to be a casino, and even Vegas has cap controls on casinos," Greenberger said.