Don't Blame the Speculators
According to Neal Wolkoff, chairman and CEO of the American Stock Exchange, writing in the Financial Times:
I am extremely sceptical that speculators are behind high energy prices. My reason for writing is driven by my concern that in hunting the monster in the closet, we will end up adopting legislation and new regulations that will harm our public markets, which are essentially the work of my life. Government has a poor track record in market design.
You might ask, what would be the harm in this case of regulating speculative energy market participants? This is not just an energy issue. Markets are intended to reflect full-throated opinions, and they depend on the liquidity provided by different points of view, and varied risk profiles participating all at once to reflect the best, most accurate available price. When markets lose liquidity because some participants are not allowed to remain due to irrational mistrust the markets become more volatile, more difficult to enter and exit, and less reliable tools for price discovery.
Without a clear reason to impose new rules, other than hating high prices – and I count the months of lease payments remaining on my V8 – we need to keep from lashing out in ways that will hurt us later. We have policy alternatives available to us without harming the greatest system of organized markets the world has known.