How much of a difference can one academic make? Last September, a federal court knocked down a proposed regulation concerning \u201cposition limits,\u201d a provision of Dodd-Frank designed to limit the role of speculators in inflating the price of commodities like oil, wheat and aluminum. To understand how this came about, follow the path of the University of Houston\u2019s Craig Pirrong, who plays a Zelig<\/i>-like role in the story of how this rule\u2014hated by both the big speculators and the private exchanges in which commodities are traded\u2014came to face delays, legal setbacks and now an uncertain future.<\/p>\n
While numerous studies have demonstrated, and even Goldman Sachs has conceded, that excessive speculation on crude oil has boosted the price of gasoline at the pump by billions of dollars for consumers, the impetus for reform can be traced to the record spike in gas prices in June of 2008. The following month, a congressional hearing was called on the role of speculators. That\u2019s when Professor Pirrong\u2019s assault began on what would later become part of Dodd-Frank.<\/p>\n
In his testimony, Pirrong said that \u201cspeculation is not the cause of high prices for energy products\u201d and that there is \u201cno evidence\u201d to the contrary. In fact, there is an abundance of research, including a 2006 report from the Senate Homeland Security Committee, about the role of speculators in driving up the price of energy products like crude oil. Nevertheless, Pirrong pressed on, advocating against action on speculation in a report for the libertarian Cato Institute, in an opinion column for CNN Money, and in comments to major media outlets like the Financial Times<\/i>. \u00a0 The Nation Reports <\/strong><\/a> How much of a difference can one academic make? Last September, a federal court knocked down a proposed regulation concerning \u201cposition limits,\u201d a provision of Dodd-Frank designed to limit the role of speculators in inflating the price of commodities like … Continue reading
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