From Fuel Fix:
Big Bank meets Big Oil: Goldman's coming to Houston
Goldman Sachs will open an energy sales and trading desk in Houston this year, putting nearly a dozen people to work trading physical products such as oil.
The Houston office will be headed by Trey Griggs, a managing director in U.S. energy sales in New York, who will relocate to Houston, according to persons familiar with the plans.
Ben Freeman, a vice president in crude oil trading in London, will also move to Houston as head of trading.
The new office will cover sales and trading of crude oil, refined oil products, natural gas liquids and coal, according to the source. The traders will be in Goldman Sachs' existing Houston offices at 1000 Louisiana Ave. downtown.
Say hello to rampant speculation:
Most of Goldman's New York traders deal in financial transactions that don't include the physical delivery of commodities.
and
Earlier this month, Commodity Futures Trading Commission head Gary Gensler said speculators are a huge part of the market, with some 80 percent of trades being conducted by companies that never take actual delivery of the physical commodity.
Emphasis mine. 80%. Wow. One more:
Goldman's move comes as the CFTC draws closer to finalizing rules related to the Dodd-Frank Act, which is expected to limit the size of commodity futures contracts that companies can hold at any given time. The rules are aimed at preventing companies that don't physically use oil, natural gas or other commodities from being able to influence prices.
Dodd and Frank are the last two people who I want determining how a bank or an investment institution should operate. We had a perfectly good regulation in the Glass--Steagall Act which was put into place after the Great Depression to prevent recurrences. Needless to say, it was 'repealed' under the Clinton administration by the Gramm-Leach-Bliley Act. Six or seven years for these financial leviathans to run up in size and then four years for them to start crashing the economy. We do not need Dodd-Frank -- this is a band-aid on a mortal wound. We need some serious teeth or we are in for a world of financial hurt...
