Post by HardTimeTrucker on Feb 7, 2010 21:13:38 GMT -5
Truckers Target Wall Street 'Speculators'
William B. Cassidy
Feb 3, 2010
The Journal of Commerce
ATA, partners want tougher regulation of oil, fuel derivatives market
Truckers are asking Washington for protection from Wall Street speculators who they say artificially drive up the cost of oil and fuels.
In particular, they want the federal government to keep a close eye on energy commodity derivatives markets and ensure that trading in those markets is transparent.
They also want Congress to place limits on the value of such trades.
"While we cannot quantify the extent to which excessive speculation is responsible for the recent dramatic increases in the price of crude oil, we believe that it is a significant part of the problem," Con-way executive C. Randal Mullett said yesterday at a press conference on Capitol Hill called by the Derivatives Reform Alliance.
Mullett, Con-way's vice president of government affairs, spoke on behalf of the American Trucking Associations at the DRA event.
The DRA, which includes groups such as the National Farmers Union and Industrial Energy Consumers of America, is lobbying Congress as both houses consider financial industry reform bills.
ATA and its DRA partners are concerned not just by a recent jolt at the pump -- the national average retail diesel price rose 15 cents in December before falling back 10 cents to $2.78 a gallon by Feb. 1 -- but long-term trends they say run counter to typical market behavior.
The price of oil rose over the past year despite crude oil inventories that were well above average and weak global demand for oil, gasoline and diesel during the worst recession in decades, said Mullett.
At about $73 a barrel, however, West Texas crude oil prices are more than 40 percent higher than they were at the same time a year ago.
"In the face of these market realities, excessive speculation is the only other variable left unaccounted for," he said.
Higher fuel prices are choking trucking companies weakened by the recession, Mullett said, threatening many smaller businesses.
The answer, he said, is a stronger Commodity Futures Trading Commission and broader limits on trading.
"Congress must act to broaden the CFTC's authority and eliminate trading loopholes," he said. "The failure to apply position limits across all trading platforms creates a loophole that permits excessive speculation beyond the control of government regulators."
It's not the first time a trucking group has crossed swords with derivative traders.
Late last year the Teamsters union targeted Wall Street investment banks it said were trading derivatives that would profit from the collapse of the largest union trucking company, YRC Worldwide.
Some of those banks rushed to help YRC complete a debt-for-equity swap after Teamsters General President James P. Hoffa publicized Wall Street trading in credit default swaps.
Contact William B. Cassidy at wcassidy@joc.com.
William B. Cassidy
Feb 3, 2010
The Journal of Commerce
ATA, partners want tougher regulation of oil, fuel derivatives market
Truckers are asking Washington for protection from Wall Street speculators who they say artificially drive up the cost of oil and fuels.
In particular, they want the federal government to keep a close eye on energy commodity derivatives markets and ensure that trading in those markets is transparent.
They also want Congress to place limits on the value of such trades.
"While we cannot quantify the extent to which excessive speculation is responsible for the recent dramatic increases in the price of crude oil, we believe that it is a significant part of the problem," Con-way executive C. Randal Mullett said yesterday at a press conference on Capitol Hill called by the Derivatives Reform Alliance.
Mullett, Con-way's vice president of government affairs, spoke on behalf of the American Trucking Associations at the DRA event.
The DRA, which includes groups such as the National Farmers Union and Industrial Energy Consumers of America, is lobbying Congress as both houses consider financial industry reform bills.
ATA and its DRA partners are concerned not just by a recent jolt at the pump -- the national average retail diesel price rose 15 cents in December before falling back 10 cents to $2.78 a gallon by Feb. 1 -- but long-term trends they say run counter to typical market behavior.
The price of oil rose over the past year despite crude oil inventories that were well above average and weak global demand for oil, gasoline and diesel during the worst recession in decades, said Mullett.
At about $73 a barrel, however, West Texas crude oil prices are more than 40 percent higher than they were at the same time a year ago.
"In the face of these market realities, excessive speculation is the only other variable left unaccounted for," he said.
Higher fuel prices are choking trucking companies weakened by the recession, Mullett said, threatening many smaller businesses.
The answer, he said, is a stronger Commodity Futures Trading Commission and broader limits on trading.
"Congress must act to broaden the CFTC's authority and eliminate trading loopholes," he said. "The failure to apply position limits across all trading platforms creates a loophole that permits excessive speculation beyond the control of government regulators."
It's not the first time a trucking group has crossed swords with derivative traders.
Late last year the Teamsters union targeted Wall Street investment banks it said were trading derivatives that would profit from the collapse of the largest union trucking company, YRC Worldwide.
Some of those banks rushed to help YRC complete a debt-for-equity swap after Teamsters General President James P. Hoffa publicized Wall Street trading in credit default swaps.
Contact William B. Cassidy at wcassidy@joc.com.