Word: oils
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Dates: during 2000-2009
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...NATO military operations in Afghanistan. That decision was a victory for the Obama Administration: just four months ago, the Kyrgyz government had said that the U.S. military had to go. More broadly, Moscow's ability to project its power has been reduced by the fall in the price of oil since last summer; nearly 20 years after the end of communism and the introduction of market reforms, Russia's economy remains worryingly dependent on commodities...
...Technically, NYMEX has placed limits such that no one firm can control more than 20 million bbl. of oil. Then again, a previously unknown energy-trading company called Vitol controlled 11% of the open interest on NYMEX at one point last summer, which amounted to four times that. Around the same time, SemGroup, a large oil-distribution company, filed for bankruptcy after losing $2.4 billion on a short position that also dwarfed the supposed limit...
...Position limits at some threshold might be a good idea, but they must apply to all institutions - especially those dealing with physical oil. And they cannot be too small, or else loopholes will become viable means to corner the market, for instance, by using subsidiaries...
...government has to avoid regulating the wrong participants, thereby pushing the price-discovery mechanism for oil out of the hands of Americans and into those of foreign oil suppliers. Do we want the government punishing some financial investors while letting others - the ones who have the strongest motive to raise prices - continue to do business as usual? That's what could happen if the government regulates the oil market...
...Oil-trading does not need to be regulated so much as monitored. We can assume that corruption exists, but the government does not yet understand the business; officials only recently even admitted that the price does not reflect supply and demand. If we dig deeper, we might find the foreign oil suppliers themselves, posing as speculators, to be the true villains. And deeper still, we will certainly find that the very system is flawed: in a world where hedging against high prices fulfills its own prophecy, we can be sure that prices will never be stable...