White House Takes Aim At Oil Traders

The Wall Street Journal leads and the New York Times off-leads with a look at the trouble facing commodities traders as regulators in the United States and abroad seek to curb speculation in oil markets in an attempt to keep oil prices low. The price of oil has climbed back up to about $73 dollars a barrel from a low of $34 earlier this year, "despite a slump in demand, bulging supplies and a world economy in the doldrums," the WSJ writes. Responding to the rise, and fearing a repeat of last summer's $145 a barrel, the Commodity Futures Trading Commission in Washington has proposed rules that would limit how much money any single trader can bet on any one commodity at a time. The commission has already adopted "tougher information requirements" that seek to identify the role of hedge funds and traders who swap contracts outside of regulated exchanges like the New York Mercantile Exchange, adds the NYT, which zeros in on the political impact the proposals have, saying they "highlight a broader shift toward tougher government oversight under President Obama."

Deftly breaking down the issue into understandable terms, the WSJ writes: "Much trade in oil futures is carried out by commercial traders such as oil companies, utilities and airlines, seeking to protect their profits against swings in energy prices. In recent years, big noncommercial traders such as hedge funds and investment banks have poured money into oil and other commodities. Such investors typically put their money in indexes that track the value of futures contracts, in which investors promise to pay a certain amount in the future for oil and other commodities." Since the beginning of the year, investors have poured some $25 billion into commodities as a hedge against inflation and a weakened dollar. The proposals have been criticized by traders, and have raised brows among analysts, who say the current volatility in the commodities market is due to uncertain prospects for economic recovery. The long-term rise, analysts say, is due to increased demand from developing countries. The investment community maintains that speculators are crucial to the futures market as they provide liquidity to hedgers, including commercial traders.

Topping the news roll at Reuters is word that Google (GOOG) is taking aim at Microsoft Corp. (MSFT) by introducing an operating system for PCs that will be available in low-cost netbooks in the latter half of 2010. The company said it will aim at full-scale PCs later on. The Journal calls the announcement, made on Google's blog, "a direct assault" on Microsoft's turf." Adds Bloomberg: "Google's plan intensifies the company's competition with Microsoft, whose Windows system runs about 90 percent of the world's personal computers. In addition to Web browsers, the companies compete in Internet search and business applications such as word-processing and spreadsheet programs."

Dubbed the Google Chrome Operating System, or Chrome OS, the software will be based on Google's Chrome Web browser, launched in 2008, which ranks a distant fourth in the Web browser market, with a 1.2 percent share as of February. Microsoft's Internet Explorer has a lockdown on No. 1 with a 70 percent market share. The "key to success will be whether Google can lock in partnerships with PC makers, such as Hewlett-Packard Co and Dell Inc, which currently offer Windows on most of their product lines," Reuters says.

The Washington Post tops its business news with a look at General Motors' (GM) Chevy Malibu, the recently revamped midsize sedan that could be its ticket back into the hearts of wary consumers. The car was named 2008 "North American car of the year" by auto journalists and in Consumer Reports' rankings of "reliability, satisfaction and cost, it beat or tied its main Japanese rivals, the Toyota Camry and the Honda Accord," the paper says. In quality surveys by J.D. Power and Associates, "it bested those competitors." However, through June 2009, the Malibu has garnered only 9.8 percent of the market share.

The paper chalks this up to the way GM develops its cars. "GM is a sprawling global corporation that typically develops products through laborious, far-flung processes

—design, engineering, financial, advertising, and so on. According to people inside and outside the company, this diffuse approach often has smothered the will to dominate the competition." But "what the new Malibu represents to many inside GM is that the company, when it decides to, can produce a car to rival Toyota and Honda in one of the most important market segments: mid-size cars." If GM can just do what it did to the Malibu to all its new cars, "its prospects will be measurably brighter," the Post concludes.

In other oil news, and in another WP report, T. Boone Pickens, the Texas oil magnate and trumpeter of clean energy (in recent years), has "temporarily shelved" plans to construct the world's largest wind farm in the Texas Panhandle. The decision was made because of low natural gas prices and due to his inability to borrow $2 billion for transmission lines to link the wind farm to the Texas grid. Mesa Power, Pickens' company, is now on the lookout for other projects that could use 667 wind turbines, or $2 billion worth, that he's already ordered, set to be delivered in 2011. The farm was to produce 4,000 megawatts, enough to power 1.3 million homes, the WP notes. The projected cost was to be $10 billion. "Boone still remains committed and focused on developing wind energy in the United States," said Jay Rosser, a spokesman for Pickens' BP Capital Management.