Thanks for the support, GOTNOGAME I do really appreciate it.

A year ago I would have been right there with you on this one but I came to realize that its not about production and consumption any more. Its about maintaining sufficient open interest on the long side of the trade and keeping a tight grip on the market while effecting the Goldman Roll. Its all about the supply and demand for futures contracts and not about the supply or demand for the physical commodity-oil.

I agree that selling from the SPR would reduce the price of oil and would dampen speculation for a time but it really wont bring the price down substantially. The release from the SPR last summer of 30 mbbl
dropped the price only for a few months and the price was higher at the 1st of November than it was when the President announced the release in the end of June.

The real thing I have against a sale from the SPR is that it would just provide political cover to the administration when they know that the effect is transitory and they also know that the problem is with continuing to allow speculation in the commodities markets. This speculation extends to all commodities, not just oil. A sale from the SPR would probably drive the money from the oil market to the rest of the commodity complex if nothing is done to stop the speculation. More political kabuki.

While I find myself in agreement on other points you have made in this post and others, we are going to have to agree to disagree on this one.

Fracking is ONLY economically feasible if price per barrell is $75 or more. Price of $74.50 or so sounds good to me lol…

Sorry but I really must disagree here GOTNOGAME

from Bloomberg:

Falling costs to find and extract oil from the Bakken is luring producers such as Exxon and ConocoPhillips, according to Jason Wangler, a Houston-based analyst for SunTrust Robinson.

Costs at Enid, Oklahoma-based Continental Resources, the most leveraged explorer to the Bakken after Whiting, have plummeted about 60 percent to $9.63 a barrel of oil equivalent since 2008, data compiled by Bloomberg. That’s $4.58 less per barrel than Exxon’s expense.

here is the link:

http://www.bloomberg.com/news/2011-10-19/bakken-shale-oil-turns-oasis-into-target-as-fracking-costs-slide-real-m-a.html

If President Obama wants to put a stop to this, he is going to have to do it himself. I agree with GOTNOGAME that the President needs to act, but I have to disagree with the method. The very problem with excessive speculation in the commodities markets is that prices no longer reflect the balance between production and consumption of commodities, they only reflect the supply and demand of the futures contracts. Increasing the supply by selling from the SPR would have a minimal effect and it would be short lived.
The speculation must be stopped and the president is the ultimate head of the CFTC and has the power to enforce the DODD-FRANK provisions concerning excessive speculation that was enacted by congress in 2010. As I posted before he should act by executive authority and issue an executive order to this effect.
Its all at RBOBGAMBIT.ORG

The President is no stranger to executive orders, he has used them many times, the real question is: Does he have the political will to take on the wall street establishment?.

Lack of regulation? That blame rests with Congress.

I would have to disagree with this. Congress passed the Dodd–Frank Act which empowered the CFTC to reign in speculation in the commodities markets. Congress has done its part. The CFTC has failed in its job and this is evident by the drop in price of NYMEX oil contract price from over $110/bbl in the spring of 2011 to $76/bbl in Oct of 2011 as the market awaited the publication of the new CFTC rules. The markets reaction to the new rules has been evident by the price action since. The new rules were a sham and havent done anything to curtail speculation, but it is not the fault of congress. They did their part – they passed the legislation. The fault lies with the CFTC and the executive branch. The president has the power and responsibility to enforce the laws of congress and should do so by executive action if need be. Lack of regulation is the only reason that this speculation continues today. I have posted on this very problem before.

http://my.firedoglake.com/members/realreform/activity/683612

I still contend that the president should execute the RBOB GAMBIT and end this speculation now.

http://www.rbobgambit.org/Home_Page.php

The laws to curtail this activity are on the books, they just need to be enforced.
David has it right:

ultimately it’s an executive agency that can crack down on oil speculators

I agree, Katfka, that you can’t continue to grow an economy on declining wages, but you can mitigate the effects by reducing the commodities speculation that is currently taking place in our commodities markets. The President could do this through the use of an executive order by Executing the RBOB GAMBIT. In forcing the CFTC to enact rules eliminating speculation from our commodities markets as stipulated by the DODD-FRANK Act the president would return to the American public Hundreds of BILLIONS of dollars currently being siphoned from the US economy by Wall Street. This amount would be larger than several payroll tax holidays.
Details at http://www.rbobgambit.org

The CFTC in and of itself as currently constituted will not reign in the speculation in the commodities markets or the derivatives markets on its own. This is evidenced by the new rules issued in October. The CFTC’s thrust is to limit speculation of a singe traders position while completely disregarding the much larger effect that indexed speculation in aggregate has on the markets.

More funding will not fix that attitude that is pervasive in the CFTC that index speculation is ok if it is transparent, and it can be dampened down if it gets out of hand.

Look to the price action in WTI contracts in the past 2 months, it is up 25% from $76 to $99 when it became evident that the economy would not slide into a double dip recession ( also an approval by the markets of the new rules the CFTC announced on Oct 18th). This is purely speculation since there have been no changes to the supply or demand during this time. This front running of economic news is caused by speculators positioning themselves to take advantage of future demands. By allowing this speculation the CFTC is ensuring that the economy will be stymied once again by high oils prices and this will only dampen economic activity.

The President needs to curtail this speculation now and if the CFTC cannot or will not do it then he needs to do it by executive action.The RBOB Gambit can fix this in a week if he has the political will to execute it. The details are at RBOBGambit.org. When the benefits to society of proper market regulation are realized then the problem of underfunding the CFTC will disappear, the public will demand full funding regardless of the wishes of Wall Street.