Commodity Silver Lining
By Chidem Kurdas
Saying nasty things about commodity markets is good for politicians; it looks like they’re doing something for households hit by high food and energy prices. In the past couple of months investigations, hearings and press conferences by various government players and regulators have been prominent in the news.
 Is there any non-political upside to these dog-and-pony shows? Certainly some industry people think so.
“We’re all for it if the investigations shine a light on a darker corner of the market,” says Christopher Keenan of Welton Investment Corp, a global macro and managed futures manager. “Free and fair markets benefit everyone. Uncertainty and lack of confidence isn’t good for either the buyer or the seller.”
Politicians have never been notable for enhancing market efficiency, but one can always hope. Perhaps some new transparency requirement from the CFTC, say, will bring greater certainty and in the long term smooth the working of futures markets.
 As for the real reasons for today’s prices, such as the drop in spare oil production capacity from about 5 million barrels per day in 2002 to 2.5 million in 2007, those are immune to political grandstanding. “We think there’s ample support for today’s oil prices given the underlying fundamentals, and we haven’t seen any hard evidence for market manipulation as put forth by some in Congress as the root cause for today’s oil prices,” Mr. Keenan says.
