Trading Drives Up Oil Prices
CBS
Transcript
[Music] as gas prices Skyrocket attention has turned to public pits we Brokers trade oil Futures the right to buy or sell crude oil at a specific price on a future date but far away from the human and cry hundreds of millions of barrels of oil Futures contracts are traded electronically every day more than 30% experts say exchanged in so-called dark markets the exact size and scope unknown to us Regulators if you can trade out of the sight of us Regulators you can manipulate those markets Michael greenberger is a former top staffer at the Commodities Futures Trading commission or cftc which regulates the trading of Commodities like oil in this country at least 70% of the US crude oil Market is driven by speculators he recently told Congress that speculation is placing a huge premium on the price of oil how much per barrel well there have been various estimates uh anywhere from 25% to 50% people can actually Corner the market and drive up the price when there's no policeman on the beat you know that crime can go up more and more people are wondering about the role of one of the least known but most powerful foreign exchanges the Intercontinental Exchange or ice by the end of 2007 the all electronic exchange accounted for nearly a 50% Market share of all Global oil Futures contracts a total of 138.5 million up 49% from 2006 today it boasts more than 2100 individual Traders representing all of the major players in oil Banks hedge funds energy companies investment Giants and according to this Securities filing two of those giants Goldman Sachs and Morgan Stanley were founding partners of ice the fact that they started this shows the intent of where they wanted to go which was what which was to trade crude oil and Energy Products without any police in the United States supervising it 4 fre bu that's because it's considered a foreign exchange taking advantage of a loophole created by the cftc the company says since all of its Energy Futures business is conducted here in London it is not subject to us laws over strong criticism the cftc agreed all this despite the fact ice headquarters are on the fifth floor of this building in Atlanta its primary data center in Chicago and nearly all of its trade settled in US Dollars it is a charade and it is defies explanation in a statement ice CEO Jeffrey sper told CBS News ice is committed to providing the same visibility in our oil markets that exists for us exchanges and that ice Futures Europe is fully regulated by the British government but British Financial authorities are notoriously LAX why is the price of oil Futures Rising so quickly now Congress and others are asking just how much of the crude oil Futures Market is being manipulated by either excessive buying designed to drive up the price or phony transactions that imply a supply problem that does not exist today Under Pressure ice finally agreed to impose stricter limits and greater transparency on trading shedding some much needed light On the Dark Side of oil Arman Kay and CBS News Washington