Speculation by hedge funds accounts for nearly 30% of the price of oil. What can govts. do about it?

Question

Speculation by hedge funds accounts for nearly 30% of the price of oil. What can govts. do about it?

Answer 1

Speculation does not account for the rise in the price of oil.  Speculators buy the right to oil at some point in the future.  However, they must sell it to someone who uses it before the contract date comes up.  If there was no one to buy the oil, the price of oil would drop.  But the price has not dropped, so there apparently are people who are willing to buy the oil.

Answer 2

Do you know where that 30% figure comes from? I run a hedge fund blog and would like to write an article on this. Thanks for the help!

- Richard

Hedge Fund Group (HFG)

Answer 3

They can't do squat as things stand and I don't think they should interfer with the free market system.  As soon as the government starts to regulate investing or any other market force they either make it worse as they did with the airline industry and medical industry, or it curtails yet another freedom we supposedly have.  What people need to realize is the have's will always have and the have nots will continue to not have.  I'm for everyone holding hands and singing songs but its not the reality of existance.

Answer 4

raise the margin requirements to make speculation more expensive and less lucrative.