Another year of high oil prices, another endless conversation about the role of speculators. Call up anyone on Wall Street or in Washington to find out what’s really going on. Chances are, the answers you get will go a little something like an Abbott and Costello routine.
Abbott: Well, let’s see, we have almost $4 gas and $110 oil. Who’s trading it? What’s the reason it’s so high? I Don’t Know…
Costello: That’s what I want to find out.
Abbott: I say, Who’s trading it; What’s the reason it’s so high; I Don’t Know.
Costello: Are you the portfolio manager?
Abbott: Yes.
Costello: You gonna’ be the regulator too?
Abbott: Yes.
Costello: And you don’t know the fellows’ names?
Abbott: Well I should.
Costello: Well then who’s trading it?
Abbott: Yes.
Costello: I mean the fellow’s name.
Abbott: Who.
Costello: The guy trading it.
Abbott: Who.
Costello: The first one to trade it at $110.
Abbott: Who.
Costello: The guy trading…
Abbott: Who is the first!
Costello: I’m asking YOU who’s the first.
Abbott: That’s the man’s name.
Costello: That’s who’s name?
Abbott: Yes.
Costello: Well go ahead and tell me.
Abbott: That’s it.
Costello: That’s who?
Abbott: Yes.
PAUSE
Costello: Look, you gotta’ man trading?
Abbott: Certainly.
Costello: Who’s trading?
Abbott: That’s right.
Costello: When you pay him off every month, who gets the money?
Abbott: Every dollar of it.
Costello: All I’m trying to find out is the fellow’s name.
Abbott: Who.
Costello: The guy that gets…
Abbott: That’s it.
Costello: Who gets the money…
Abbott: He does, every dollar. Sometimes his wife comes down and collects it.
Costello: Whose wife?
Abbott: Yes.
PAUSE
Abbott: What’s wrong with that?
Costello: Look, all I wanna know is when you signed him up, how does he sign his name?
Abbott: Who.
Costello: The guy.
Abbott: Who.
Costello: How does he sign it?
Abbott: That’s how he signs it.
Costello: Who?
Abbott: Yes.
PAUSE
Costello: All I’m trying to find out is what’s the guy’s name.
Abbott: No. What is the reason it’s so high?
Costello: I’m not asking you that.
Abbott: Who’s first.
Costello: One man at a time!
Abbott: Well, don’t change the traders around.
Costello: I’m not changing nobody!
Abbott: Take it easy, buddy.
Costello: I’m only asking you, who’s the guy who traded it?
Abbott: That’s right.
…
You get the picture. This past week, no fewer than a few dozen traders emailed me to say they are afraid of the lack of checks and balances in place in the energy market — and what that will mean for the long-term viability of their careers. Some of these traders are from very large banks and hedge funds and have been in the business for decades. They are not what you would call the faint of heart. My feeling is, when the speculators themselves are scared, it might be time to sit up and take notice.