So oil speculators want to be bailed out after buying contracts for oil near the summer highs, apparently with money available through the Emergency Economic Stabilization Act. Courtesy of Greg Newton at Naked Shorts.
Amateur! Speculators! on bailout line
That ‘nation of whiners’ thing is really catching on.
The Independent Connecticut Petroleum Association joined a host of oil heat dealing associations in the region to ask for loans to help the dealers buy out expensive [heating] oil contracts purchased this summer and help consumers into lower-cost contracts…
…Eugene Guilford Jr., ICPA executive director and chief executive officer, said in a letter to Treasury Secretary Henry Paulson:
“We now have millions of consumers who locked-in their prices at over $4.50 a gallon this summer who now see a retail price substantially lower than that. The only way our retail companies can swap out their higher-priced wholesale futures contracts for newer, lower-cost supply agreements is to literally buy their way out of them and pay their wholesalers.”
Patience, little grasshoppers. We’re just a decent cold snap, a geopolitical thingamajig, China back in the game and Evil! Speculators! getting back their mojo, away from the old highs. And anyway, losing money on your hedges is a good thing. Or so I’m assured.
Source: Everybody wants out of oil contracts
Locked-in contracts force request for help from U.S. Treasury Dept.
Attorney General Richard Blumenthal said it has become a worry in Connecticut, with more than 100 people seeking help to get out of these high-priced contracts.
"I am supportive of efforts by dealers to seek help," Blumenthal said.
"I fully understand they’ve made contracts to purchase product. I understand they can’t simply walk away," Bluementhal added.
Blumenthal said he knows of some dealers who have worked with people in financial trouble regarding this very problem. But he said people should be aware that they entered into a binding legal contract in many cases that has penalties if they break that contract.
Like a cell phone contract, a fixed-price contract can contain a clause that allows a customer to walk away after paying a penalty fee. That fee can range from a few hundred dollars to more than $1,000.
Blumenthal said it is important to help the oil dealers remain in business.
The U.S. Treasury Department’s press office took a message, but did not comment on questions about using the money from the Emergency Economic Stabilization Act to help oil heat dealers.
