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Actually - this politician has done his homework and he is 100% correct.
The oil futures market is now causing the problem it is supposed to resolve. Futures markets were created to provide price stability to buyers & sellers of a commodity. This is not what they currently do. Hedgers right now have stepped away from the oil market and speculators have stepped in.
This is not about freedom or allowing capitalism to do what it does naturally. This is about a broken system.
Now - futures markets for movie tickets and onions has not sprung up in Dubai and there is no reason that a futures markets for oil would either if the government implemented sane restrictions to prevent the damage done by pure speculation.
These markets actually exist for one group of people. That is the people that run the markets. They want more markets - cap and trade, weather, onions. movie receipts etc. The people that run the markets want this because they can charge a fee for every transaction.
Even when we go back in time, studies are very mixed on whether futures markets provide any price stability at all. In fact, there is evidence that these markets are the very thing that cause instability. They cause the problem they are attempting to resolve.
Of course, it's an emotive issue. I don't want to see futures markets disappear for personal reasons but I would very much support the curtailment of speculation on all energy and food related commodities.
At the end of the day commodity prices should be set by supply and demand. This IS capitalism. Setting commodity prices by the supply and demand of contracts is insanity and is nothing at all to do with capitalism.
Let me pose a few questions to those that are all for the futures markets in their current form:
What if there was a housing futures market for the prices of new homes ? Would we all be happy for the very trustworthy Goldman Sachs to run a futures market to which the price of future home supply would effectively be pegged ?
What do we think would happen if trillions of dollars were pumped into this market and the price of new homes became unpredictable (as oil) because of this new market ? Or would this market make house prices more stable ? If so - how ? Would we not see speculators all running for the doors at the same time when it appeared prices were weakening ? Would we not also see speculators bidding prices up in times of growth ?
