Stocks and Shares: Oil

Treasury written question – answered on 7th October 2008.

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Photo of John Spellar John Spellar Comptroller (HM Household) (Deputy Chief Whip, House of Commons)

To ask the Chancellor of the Exchequer if he will take steps to restrict those engaged in the operation of the oil industry from trading in oil futures.

Photo of Stephen Timms Stephen Timms Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

Commodity derivatives, such as the futures market, enable producers and consumers of energy to manage (or hedge) their exposure to adverse price movements in the future, thereby enabling them to plan for the future with certainty regarding the price they will receive or pay for the commodity in question.

Any measure to restrict those engaged in the operation of the oil industry, i.e. producers and consumers, from trading in oil futures would limit the ability of producers and consumers to hedge effectively against adverse price movements in the future, hindering efficient business planning and risk management.

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