Globe & Mail -- Energy Regulators Put ETF's on Natural Gas in Limbo

(c) 2009 F. Bruce Abel

Good and interesting article. This was floating around on CNBC but it puts the situation into a coherent light.

http://www.theglobeandmail.com/report-on-business/energy-market-probe-puts-etfs-in-limbo/article1266288/


The commodities market cannot withstand the pressure of speculators and so must be regulated. This in turn causes the EFTs to stop buying futures, which turns them into closed end funds, which drives the quoed price of the ETF to go up with the shortage.

If you doubt whether regulators should step in, witness oil going to $147 last summer.

This has an impact on municipal residential aggregation also, my topic of the month. When you go off your dedicated supplier of natural gas you are more or less submitting yourself to the vagaries of the marketplace, and ultimately the spot market. Natural gas might be under $3 now but it might be $150 in a year. Same with electricity. Look at what happened to electricity prices in California in 2001.