Wall Street's crude ways Commentary: How traders and hedge funds fuel runaway energy costs

[EV_Ares]

NEW YORK (MarketWatch) - Two years ago, our president, a former Texas oil man, proclaimed that "America is addicted to oil."

These days, the problem is that even though the appetite of the addict hasn't changed, the price of a fix has doubled.
A boom in speculation and trading by investment banks and hedge funds has put our energy markets on steroids. Contract volume in the futures markets has risen by a third in just the last year. Oil closed at a record high of $125.96 a barrel (USO:united states oil fund lp units

Last: 106.95+1.32+1.25% -- That's double the price two years ago, a difference clearly caused by market manipulation.

This isn't complicated finance. The way traders push up prices is surprisingly simple. They buy in European futures markets, which don't have the limits that U.S. markets do. That drives up U.S. prices where they may already have positions. It's a move to think about next time one of these exchange chiefs talks about all of the benefits of "market globalization."
None of it would matter except that these markets are supposed to be driven by supply and demand. China and other rapidly growing countries may be using more, or will use more resources, but the reality is that demand and supply haven't changed enough to warrant the price of oil doubling in less than three years.

Here's what has changed: the proliferation of energy trading desks on Wall Street and at hedge funds. There are more than 9,000 hedge funds with $1.5 trillion under management, according to the Federal Reserve. Hedge funds, which almost exclusively use short-term strategies, do nearly 55% of derivatives trading, the kind used in energy futures, according to a study last year by Greenwich Associates.

entire article @ link: http://www.marketwatch.com/news/story/wall-street-blame-runaway-energy/story.aspx?guid=%7B789899AB%2DFD58%2D4110%2D9C54%2D7A42B8D50907%7D

[Double T]

1. The trading addicts belong in jail. The fact that this enronesque activity has been exposed.........

and NOTHING has been done to STOP IT is largely attributable to our DO NOTHING Congress; hearings AFTER hearings and NOTHING! Traders, hedgefunds and their investors are common criminals that require super heavy duty regulation. Unregulated free market capitalism DOES NOT WORK. Pure insatiable GREED has been renamed 'growth' by these traitors; the double digit out of control inflation rate was the precursor to the LAST GREAT DEPRESSION. The same CONServative criminals were/are engaged in perpetrating THIS criminal activity. We need NEW leaders that will NOT be bribed by the criminals of wall street and the corrupt corporations.

[aquart]

3. I get really exhausted by that much naivete.

And the inherent, snarling hysteria isn't a joy, either.

I'm assuming this is your first election and your first economic downswing?

Let me know how you plan to get your "super heavy duty regulation" without mass murder. I'll be charmed to hear it.

[tanyev]

2. Kick.