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Oil & Gas Journal

Jakob said Stupak's charge "was purely a public relation exercise to sponsor his antispeculation bill, but the risk from all this agitation from lawmakers is still to push for a CFTC reclassification of 'speculators' as well as a change of policy on limit waivers. Perversely, this might push some pension funds to buy before they are potentially not allowed to do it anymore, and we continue to witness an increase in the California Public Employees' Retirement System's [one of the largest US institutional investors] allocation to inflation assets since the pressure on the CFTC started to develop. Meantime banks buying commodities will state that they are not speculating but simply hedging Trichet."

Earlier, George Soros, a financial speculator, testified before the US Senate Committee on Commerce, Science and Transportation, about the impact of financial "bubbles" on oil markets after first warning senators, "I am not an expert in oil markets." Soros is best known for "breaking the Bank of England" on "Black Wednesday" in 1992 when he sold short some $10 billion in English pounds after the bank failed to raise its interest rates to the level of other European Exchange Rate Mechanism countries or to float its currency. The bank was forced to devalue the pound sterling, and Soros made an estimated $1.1 billion on his transactions.

Paul Horsnell, Barclays Capital Inc., London, said, "Congress must now be close to running out of room to conduct commodity bubble hearings. At the current rate of growth, a quick calculation reveals that by the end of the year, 2 out of 3 Americans will have given congressional testimony about commodities bubbles."

(Online June 9, 2008; author's e-mail: samf@ogjonline.com)