Limits on energy trading really possible?

July 29, 2009 | By Jim Kim

The recent volatility in energy commodities has drawn lots of attention in Washington--as well as in energy intensive industries, such as the airline industry and retail gas stations. In the current climate, it's not surprising that the head of the CFTC is talking about limiting the size of positions in the energy markets.

The goal is to limit the volatility that stems from excessive speculation, not to get rid of it entirely. This is a tricky challenge for the industry, and in my mind the CME Group has responded well by suggesting that it will act ahead of the CFTC and Congress. The worst response would have been to dig in its heels. You can either reform on your terms or the government's. That said, some think that there will be unintended consequences, like hoarding oil. Banks are making a case against such limits.

For more:
- here's an AP article