Responding to a report by Goldman Sachs about oil speculation, Bart Chilton, the commissioner of the US Commodity Futures Trading Commission, accused speculators of increasing the price of gasoline and demanded an answer from them.
Goldman Sachs's commissioned report detailed how large speculation in the oil futures market can affect the price of oil.
In response, the company sent Chilton a statement from the independent authors of the report, telling him "this is how a market works."
Below is the full response:
"We do find that buying and selling in the oil futures markets exerts an influence on oil prices. Buying and selling is how information about current and expected future oil supply and demand conditions is transmitted through the market, allowing the oil market to adjust the oil price in order to balance supply and demand. This is how a market works. Commissioner Chilton characterizes this as "speculation", with the suggestion it is unrelated to supply and demand conditions in the oil market. We disagree. In our view, this is the mechanism by which the oil market becomes better informed and reaches a consensus on issues such as the likely impact of the improving world economic outlook on oil demand and the increasing tensions with Iran on crude oil supplies. To say that "speculation" is contributing to higher oil prices is no different than to say that oil prices are rising on the expectation that the improving world economic outlook will lead to more oil demand and that tensions with Iran could lead to a disruption in crude oil supplies."
Chilton has served as commissioner since 2007. He was nominated by President Bush and re-nominated by President Obama in 2009.