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Bart Chilton: There Would Be No Market Without Speculators

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    CFTC Commissioner Bart Chilton on the impact of speculators on oil prices.

  • Duration 4:03
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Oil prices rallying today after a steep today's sell -- sparked by a sharp rise in US crude inventories actually yeah but despite price is easing back from recent highs Democrats are ramping up attacks.

Against speculators and -- harm their allegedly causing American consumers.

Who better defaulted joining is now as Bob Chilton commissioner of the Commodity Futures Trading Commission but once again thank you for joining us.

What role do speculators -- -- the demons that everyone likes to make them out to be when it comes to pushing prices higher.

No no that they're not demons a matter effect as you know actually there would be no markets without speculation.

But what I think some of the members are concerned about what I've been concerned about for years.

Is that there is excessive speculation.

And there's really a new class of speculators actually instead of speculators are getting in and out of the markets that.

Buying and selling.

There's a new class of speculators that I call massive passes and these guys are getting into the market and holding on to that.

These are managed money accounts pension funds they're not -- whether or not oil goes up or down in the next couple of days or even in the summer driving season.

They're betting whether or not oil's gonna be worth more in two or three years and that's just different and we need to address it okay how how would you address apart.

What congress told us -- to put in place these things called position limits and essentially what these position limits are.

Are caps on the amount of concentration.

That anyone trader can have and we have set that at 10%.

But we have not yet implemented it and here's the kicker.

Wall Street interest the banks and others are.

Taking just a federal court trying to stop us from actually implementing those limits to control excessive speculation.

And as a result I think consumers are paying a higher price than they should right now at the pumps every time they fill up.

Interesting one democratic senate does calling President Obama -- not reappoint CFTC.

Commissioner chairman Gary Gensler because of these commissions in action is that -- -- base money just told us.

Well again the problem right now is were being taken to it to it to court by -- Wall Street banks and others to try to get to stop this we've got some technical issues with implementation but nothing like -- federal court challenge to a stopping what I think is really not only good for consumers but mandated up on us by congress essentially limiting it to 10% of a market actually.

We've seen even based upon Goldman Sachs information.

Where every time consumers fill out.

If they have a civic there's spent about seven dollars more than they would otherwise.

Dozens of excessive speculation if they have an explorer about ten bucks more and if they have an F 150.

Fourteen dollars more every time they fill up because of the speculation while we just need a regular cap not nothing crazy just 10% of a market.

-- -- because people are worried that any kind of involvement or interference might affect the markets negatively can -- just switch gears though because look.

It's what everybody on those trading floors doesn't it is speculate.

But the CFTC earlier this week struck down a proposal to legalize election based trading and speculation.

In traditional financial markets is this just something that you do you guys felt was an appropriate you know making bets on.

Who might win an election.

Yeah I mean it might be fun Liz -- there might be a lot of people that would enjoy this but we.

-- on elections as an even legal in Vegas and they know something about gambling thing but that the Dodd-Frank law says that.

We should allowed contracts based upon.

Terrorism.

Or.

Assassinations.

Or -- so you couldn't do things like a celebrity death pool and having futures markets based upon.

The outcome of a political action it might be fun but it's not the stuff for serious financial markets.

Hey -- all right well thank you Bart Chilton CFTC commissioner talking about speculation look I'll bet on anything they will it.

You know they -- are allowed -- thank you so much on everything that.

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