If Colonel Sanders Was President...

Well then, if he was, chicken would cost a $100 a bucket (Bill Maher
joke). GWB and The Shooter, who was also once CEO of Halliburton,
have helped preside over a major bull market in the oil price. Even
the Commodity Futures Trading Commission, which has a Texas power
base thanks to ex-Sen. Phil Gramm and his lovely bride, has a Lone
Star hue. In short, ain't nobody at the highest echelon of US power who
wanted to maintain a low oil price.

But, consumers now see pig instead of bull, and a Democrat led Congress
is under increasing pressure to find mal-doers and scapegoats. Thus a
growing regulatory rush to find out why the oil price is in a full tilt
mania. Plus, and this is not trivial, GWB and the Shooter are out of
there next Jan. So, there is going to be more pushback as we go
forward. This week, NYMEX raised margin requirements by 10% to
show they're on board, and there will be a quiet dissection of the CFTC
to see whether they, er, inadvertently structured trading in a way to
allow some heavy duty speculation.

With the spotlight moving from Exxon-Mobil to the trading pits, all
the newer index players will need to get their attorneys to ratify
that their activities are legally up to snuff, and the chieftains of these
firms will be sitting down to make sure the boyz have everthing going
according to Hoyle.

The upshot will be an intended damper on activity which could be
very shorlived if the Congress / regulators drop the ball and do not
press on to determine if the oil pits are running the show instead of
being just part of it. Back lo in my banking days, we would call this
a "leaner", meaning the regulators were set to lean on you some.

There is also the issue of the general public getting into the
commodities market on top of pension funds who are already
crapshooting retirement money. Increasing securitization of these
markets means that a horde of less knowledgeable people can start
to spin the wheel with oil or gasoline or what have you. A good thing
it is in one respect, as securitization will give more people a chance
to hedge liabilities in a sensible way. But we all know that many
could come in simply to be fleeced.

So, yes, this new attention on the oil price is three years late, but
it could be welcome anyway.