http://www.truebluenaturalgas.org/speculation-in-the-natural-gas-market/ Join the energy conversation Mon, 06 Feb 2012 22:00:03 +0000 hourly 1 http://wordpress.org/?v= http://www.truebluenaturalgas.org/speculation-in-the-natural-gas-market/comment-page-1/#comment-37 Andrew Soto Tue, 03 Feb 2009 15:11:49 +0000 http://www.truebluenaturalgas.org/?p=111#comment-37 One of the concerns that I expressed in my remarks is that the remedy should not itself have an adverse impact on the efficient operation of physical or financial markets. A sales tax on hedging transactions in the financial markets may substantially, and adversely, affect natural gas consumers. A tax could either raise the cost of hedging transactions and thus increase the cost to consumers or deter utilities from engaging in hedging transactions thus potentially exposing consumers to greater price volatility. I agree that a tax would have a greater impact on "speculators jumping in and out of the market a thousand times on sentiment," but I remain generally skeptical that taxes are the right answer. "The power to tax is the power to destroy." - John Marshall. One of the concerns that I expressed in my remarks is that the remedy should not itself have an adverse impact on the efficient operation of physical or financial markets. A sales tax on hedging transactions in the financial markets may substantially, and adversely, affect natural gas consumers. A tax could either raise the cost of hedging transactions and thus increase the cost to consumers or deter utilities from engaging in hedging transactions thus potentially exposing consumers to greater price volatility. I agree that a tax would have a greater impact on “speculators jumping in and out of the market a thousand times on sentiment,” but I remain generally skeptical that taxes are the right answer. “The power to tax is the power to destroy.” – John Marshall.

]]> http://www.truebluenaturalgas.org/speculation-in-the-natural-gas-market/comment-page-1/#comment-36 Rick Weiss Tue, 03 Feb 2009 14:47:22 +0000 http://www.truebluenaturalgas.org/?p=111#comment-36 There is a simple cure for excessive speculation in all commodity and derivative markets: federal sales tax on the contract value. Commodity markets are currently line energy systems made of all springs and no dampers. A sales tax is like a friction damper on market oscillations. Folks wanting to hedge physical delivery or receipt will not be substantially affected by paying a couple of percent sales tax. Speculators jumping in and out of the market a thousand times on sentiment will find sales tax may make their activity much less profitable. Bonus value: reduce the federal deficit. Don’t regulate the market: tax it! There is a simple cure for excessive speculation in all commodity and derivative markets: federal sales tax on the contract value. Commodity markets are currently line energy systems made of all springs and no dampers. A sales tax is like a friction damper on market oscillations. Folks wanting to hedge physical delivery or receipt will not be substantially affected by paying a couple of percent sales tax. Speculators jumping in and out of the market a thousand times on sentiment will find sales tax may make their activity much less profitable. Bonus value: reduce the federal deficit. Don’t regulate the market: tax it!

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