Regulators should focus on market integrity and not prices in the commodity markets.
Governments are rightly concerned over the economic and
societal impact of high prices and excessive volatility in
consumer-sensitive commodities, but the intensity of the debate
as to whether or not speculation is a cause has left little
room for rational analysis. For this reason, the FOA retained
FTI Consulting to review 20 reports, covering a range of the
more recent and historically significant studies that have
addressed this topic.
They found that the only area of real consensus on causation
was the undoubted and underlying impact of supply and demand
imbalances, exacerbated by a variety of geo-political factors,
problems in production and distribution and distortions
generated by government policies in the area of strategic
reserves, taxation and trade barriers.
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