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Senator Nelson Seeks To Lower Oil Prices With Higher Margin Requirement

Senator Bill Nelson (D-FL) seeks to lower oil and corresponding U.S. gas prices by asking the Commodity Futures Trading Commission to raise the margin requirement necessary to trade in oil futures. Currently, the margin requirement is only 6%. The Senator blames oil speculators for the increase in the commodity price of oil during unrest in the middle east.

However, Senator Nelson did not address other factors that led to the rise in oil prices such as The Federal Reserve’s quantitative easing program where new U.S. dollars were created from thin air which in turn led to the dilution of the U.S. dollar against all other foreign currencies and a rise in all commodity prices, including oil. Moreover, since oil is traded globally on other foreign markets, Senator Nelson did not explain how effective the increase in U.S. margin requirement would lower the global price of crude oil.

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