Talking Points
TALKING POINTS
•When speculators flooded the commodities futures markets with money in 2008
the resulting bubble sent food prices to record highs and pushed 130 million people into
starvation according to the United Nations.
•The Senate Permanent Subcommittee on Investigations published a report proving
that speculators (particularly institutional investors like pension funds and university
endowments) were responsible for the bubble in wheat prices and for the disruptions in
the wheat market that made it next to impossible for farmers to hedge.
•In 2004 the commodities futures markets were only $183 billion in size
•In the next 5 years approximately $173 billion flowed into these
markets.
•The average commodity nearly tripled in price!
•When huge money flows into a small market it has a big impact on price.
•The simultaneous bubble in oil prices had a further damaging effect on food prices,
driving them even higher, because fertilizer and diesel fuel costs skyrocketed
WTI CRUDE OIL BUBBLE TIMELINE
January 1, 2007 to January 1, 2008
•Index Speculators push between $25 and $30 billion into
commodities derivatives
•Index Speculators buy between 130 and 150 million barrels
of WTI Crude Oil derivatives
•WTI Crude Oil prices rise 60% from $60 to $95 per barrel
January 1, 2008 to July 1, 2008
•Index Speculators push between $50 and $60 billion into
commodities derivatives
•Index Speculators buy between 145 and 165 million barrels
of WTI Crude Oil derivatives
•WTI Crude Oil prices rise 50% from $95 to $140+ per barrel
July 1, 2008 to January 1, 2009*
•Index Speculators pull between $60 and $80 billion out of
commodities derivatives
•Index Speculators sell between 230 and 260 million barrels
of WTI Crude Oil derivatives
•WTI Crude Oil prices fall over 70% from $140 to $40 per
barrel
January 1, 2009 to July 1, 2009
•Index Speculators push between $40 and $50 billion into
commodities derivatives
•Index Speculators buy between 170 and 190 million barrels
of WTI Crude Oil derivatives
•WTI Crude Oil prices rise 75% from $40 to $70 per barrel
Source: Michael W. Masters testimony to the Commodities Futures Trading
Commission
Did you like this? If so, please bookmark it,