As detailed in an earlier article, a conservative calculation is that at least 60% of today's $128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. US margin rules of the government's Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population.
Second, ''margin'', in the world of futures, is a performance bond put up by the trader as a guaranty of performance on the contract, and a guaranty that he will be responsible for any trading losses. These dolts (Sen. Bunghole Bingamen, to name one) who are calling for gigantic margin requirement increases on the order of tenfold, are off on some other planet. Name me an instance, ANY instance, of a 50-60-70% performance bond on ANY contract on this planet.
Third, in futures mkts there is NO borrowing by anybody from anybody, except sometimes in the case of physical delivery (the brokerage will lend the client the capital to pay for the goods, on the condition that he sell them back into the spot mkt immediately).
Other than those points, your cited source may have a clue as to what he's talking about.