Margin requirement for the front month NYMEX crude oil futures contract is just under $9,000 for 1,000 barrels of crude. Thus, a speculator can control 1,000 barrels of crude for 10 cents on the dollar while taxpayers pay the full price to add to the Strategic Petroleum Reserve (SPR ). Doesn't anyone in government remember that margin requirements were the first things to come out of the 1929 crash; that their purpose is to cool down run away markets fueled by lenient credit? Greenspan sat on his hands while the Dot Com bubble expanded and burst without ever changing margin requirements. Aren't we paying the price right now for a credit mess facilitated by sleeping regulators ?
What do you suppose would happen to crude prices if the margin requirement for the NYMEX crude oil contract were raised to 100%. And what if our government did all three of the following (which could be acomplished in less than24 hours) ?
1. Raise the margin for NYMEX crude oil futures.
2. Permit delivery on the NYMEX contract of any imported crude at any port of entry.
3. Suspend the purchase of oil for the SRP.
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