Regulators Call to Curb Energy Speculation
COSTELLO: A lot of people have done that, right? They've taken the money and they ran really fast and we can't catch them.</s>CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That song is great. Well, that's a really nice way to start the morning. I'm talking about the government trying to set some limits this morning as "Minding Your Business," limits on energy trading, speculation and energy trading. We all saw last summer that incredible rise in energy prices. And, still, it's been very volatile. You've got energy prices, oil prices that doubled. And then they were cut in half and then they doubled again. I mean, it has been incredible from $145 last summer, down to $34, and then now back up to $67. What is the role of speculation? Speculation, look -- speculation is a good thing. It's the other side of a market for people who are using the commodity. But wild gambling, speculation based on computer trading, speculation that throws the market out of whack, excessive speculation, excessive limits, that's what the government is looking at again. So, you might recall that last summer the CFTC, the Commodity Futures Trading Commission which regulates exchange-traded commodities, they found that excessive speculation was not the reason for that big rally. It was supply and demand for that big, big move in oil prices. Well, now we know the CFTC is re-examining that report from last year. May have new findings. They won't tell us what they are, but there's been a lot of speculation they will find that there has been excessive speculation which I call gambling in the energy markets, and they're thinking about new kinds of limits. They'll be three hearings. The hearings yesterday, they're discussing what to do to try to set some limits so that the hot money, the purely financial firms running in there, running in fast with a whole lot of money trying to negotiate little price changes and make a big load of cash that that might have to be shut down. And let me be clear, that's different than just plain old speculation. I love speculation. Speculation is good. But they're trying to find out if there's excessive speculation that have been running through those markets. Remember last year we got --</s>ROBERTS: So plain speculation is good, excessive speculation bad.</s>ROMANS: It's like pornography, though. You don't know. You don't know what it is until what is excessive speculation. That's the trouble for the government. And that's why a lot of people don't want the government involved in deciding what is good speculation and bad speculation.</s>COSTELLO: I like that -- plain pornography.</s>ROBERTS: It just further reinforces. I know nothing about it.</s>COSTELLO: Whatever.</s>ROMANS: You don't. Yes, you do.</s>ROBERTS: No, I don't.</s>ROMANS: Oh, you don't? Do you think that that run-up to $145 last summer was just pure supply and demand in oil?</s>ROBERTS: No, of course not. I still don't know how it works.</s>COSTELLO: It was excessive speculation allegedly.</s>ROMANS: Or supply and demand. I don't know. A little bit of all that. But anyway...</s>COSTELLO: "Romans' Numeral"?</s>ROMANS: "Romans' Numeral" is 40, and it's 40 percent. And this is from this hearing yesterday with the CFTC. This is actually from Delta Airlines. Delta Airlines saying that its general counsel actually saying that this is the amount of Delta's revenue that was gobbled up, burned up by fuel expenses last year, 40 percent. That's not speculation. That's somebody who's trying to hedge themselves in the energy market against fuel costs. On the other side of that, are the speculators who if, indeed, they ran up the prices, it really hurts the legitimate consumers of energy.</s>ROBERTS: Yes, because all these airlines bought fuel at future prices, right? And then the price went down. So...</s>ROMANS: You understand.</s>ROBERTS: Wow.</s>ROMANS: John.</s>ROBERTS: I know a bad deal when I see one.</s>ROMANS: Yes.</s>ROBERTS: All right.</s>ROMANS: So when -- I mean, that would really suck to hedge your energy costs at $100 a barrel all the way down to $40.</s>ROBERTS: Yes. Christine Romans "Minding Your Business" this morning.</s>ROMANS: Ouch.</s>ROBERTS: Christine, thanks so much. So, we talked about prescription drug abuse, and see those ads on the air all the time. The kids sitting at the lounge counter saying this is for my hip replacement. This one is, you know, and all that. Well, just how widespread is prescription drug abuse and what can we do about it? We're going to talk with the director of the Office of National Drug Control Policy, Gil Kerlikowske, coming up. And we'll take to the Michael Jackson case, too, to see if there's anything could be done about what's going on. Twenty-two minutes after the hour.