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01. A Sensible Solution to the High Price of Gas
Much of the sudden, rapid increase in the price of gasoline can be attributed to exuberant speculation in the energy futures markets. An effective, yet dramatic measure to offset these significant increases would be measures to limit such speculation in comparison to those buying futures contracts to hedge against risk from price changes. Analysts testifying before Congress have suggested that this include, for example, requirements to raise the margin requirements on futures trading. Currently, the margin requirements are just 6% compared to a 50% margin requirement for trading stocks or equities. A moderate increase in the margin requirement on energy futures trading could result in an immediate reduction in the price of oil and gas such that some analysts predict that this simple move would result in an immediate drop in the price we pay at the pump by as much as 25-40%.
