CFTC's Chilton for Position Limits

October 22, 2012, 4:40 p.m. ET

Regarding your Oct. 17 editorial "A Seinfeld Rerun" ( http://tinyurl.com/8zwh244 ): You say Congress did not mandate the imposition of speculative position limits. I vehemently disagree with you and the Circuit Court ruling. My reading of the law is that limits are explicitly part of the Dodd-Frank reform law and were even required to be promulgated in a specific, shorter time frame than other rules.

You repeat an assertion by a former commissioner that there is no "reliable economic analysis" linking excessive speculation to prices. But there is. Even a Goldman Sachs report (March 2011) notes: "We estimate that each million barrels of net speculative length tends to add 8-10 cents to the price of a barrel of oil." There are also numerous scholarly studies supporting a speculation-price nexus. See, for example, research papers from the Federal Reserve Bank of St. Louis (February 2012), the Massachusetts Institute of Technology (June 2008) and Rice University (August 2009). There are many others.

You call this a "nonexistent problem[s]." Yet, in 2008, the massive influx of long-side speculation coincided precisely with the highest-ever oil and gasoline prices in our country. Despite asking repeatedly, no one has ever provided me a fundamentals-only analysis to support this price movement. This is a significant problem that continues today for the millions of American households that can be paying a "speculative premium" at times for virtually everything they purchase. That's not "about nothing."

This is a critically important issue for consumers, and just because you and the largest speculators in the world dismiss the matter doesn't make it any less important for consumers or our economy.

Bart Chilton
Commissioner
Commodity Futures Trading Commission
Washington