Skepticism About Commodity Futures Markets: An Answer
24 Pages Posted: 5 Aug 2015
Date Written: March 28, 2013
In the United States, there is a rich historical experience with controversies over futures trading that date back to the nineteenth century. After a brief recounting of history, this paper notes that a review of U.S. history provides valuable lessons in figuring out what is necessary for commodity futures trading (including oil trading) to continue and prosper during times of political pressure. Essentially, one finds that the following actions have been indispensable in responding to past controversies over futures trading: (1) an increase in transparency in showing how these markets actually work; and (2) an improvement in public education on the economic usefulness of commodity markets. This paper endeavors to help in providing precisely that education.
Keywords: Commodity futures markets, oil market, hedging, speculation, CFTC
JEL Classification: G1, G18, Q41
Suggested Citation: Suggested Citation