by help, i'm surrounded by liberals

Created on: June 07, 2008

Can a boycott by the American public affect gas prices?

The question of a boycott in itself is perhaps a moot point. On a scale of one to ten, there are societies in which individuals act more collectively, and individuals that act well, more individually. The United States rates among the highest, as having "individualized" thinking and behavior. It is on this basis, I can't imagine ordinary American's ever organizing together enough to come up with any semblance of a widespread boycott in the first place.

While the US Congress, CTFC and commodities exchanges have gone a long way towards ensuring there are more regulations for commodities market speculators, they are now wondering if the legislation they passed recently, is strict enough, or if the regulations concerning index speculators is clearly defined enough.

This is a great concern right now in Washington D.C., as well as governments all over the world, who are examining this weeks rise in oil prices to see whether the new regulations which have gone into effect are working or not. So far, it looks like more regulation is needed to close the "swaps loophole". Many large investment banks also own physical oil storage companies, giving them the ability to trade with "commercial" status. The "swaps loophole" allows funds such as pension funds and hedge funds who are non commercial entities who are allowed to only hold a certain number of contracts, to enter into agreements with investment banks with this so called "commercial status", who are not bound by position limits as non commercial entities are. Because of the dual status of investment bankers, it is predicted that there are more what they call "index" hedgers or non commercial entities trading as commercial entities trading, than there are oil suppliers or oil refineries who purchase oil. Because of this, the ordinary laws governing supply and demand have been corrupted, as non physical oil hedgers and real oil hedgers intersect on the same electronic market.

I believe this problem is first and foremost on the mind of Congress, and the CFTC, as increased oversight, higher margins, more oversight and authority, and penalties and fee's have gone into effect this week, and still don't seem to be slowing down the unstoppable force of pension and hedge funds all over the world which are trading in this manner.
The only boycott that I can think of that would really make a difference is if some of the labor unions and farmers who rely on transportation protest. I can only imagine there is already quite a bit of heated discussion going on behind the scenes from labor unions to politicians in Congress on this issue. Although people are getting upset, and protesting in many parts of the globe, including the United States, I trust the skyrocketing oil prices will spur Congress to action regardless of any sort of boycott taking place.

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