Oil Manipulations Exposed 61 comments
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As it was just Memorial Day, let’s try to remember what our troops are fighting and dying for - Oil. But not oil itself; they are fighting and dying for oil profits and that is not the same thing at all!
The first Gulf War was clearly about oil, Saddam invaded Kuwait because he wanted their oil and we went to war and pushed him back. Even though Saddam’s troops lit Kuwait’s oil fields on fire, and even though there was a tremendous disruption in global supply, oil prices only briefly went from $20 to $30 (inflation-adjusted dollars) before falling all the way back to $12 between 1990 and 1998. There has been no major supply disruption during the Bush II War. What is the difference? Manipulation!
This chart (click to enlarge)only runs through August of last year, when a barrel of oil could still be had for $75, not far from HALF of last week’s peak at $135.09. Did demand double since last August? No, it actually declined over 2%. Did global stockpiles decrease? No they are flat. In that case, the real question is - What kind of idiots do the MSM and our very own government (yes, you, Sam Bodman!) take us for when they say there is no speculation in the energy markets???
The consumer group Public Citizen put out reports warning us in 2001, and 2004, and then testified before Congress in May 2004 that the mergers of US oil companies were, in and of themselves, driving up prices by forming a de facto US cartel. These findings were backed up the findings in a 240-page report to a still-Republican Congress. The Q1 profits of the 5 companies that now control close to 70% of all US gasoline - BP, COP, CVX, MRO and XOM - has gone up from $8.7Bn in Q1 2000 to $26.4Bn in Q1 2008, a 203% increase, outpacing the S&P 500 by 140%.
You will hear a lie repeated over and over and over again in the media and parroted by oil apologists all the way up to Energy Secretary Sam Bodman and Vice President Dick Cheney (and I’ll have more to say about him later this week!) that there is no manipulation in the energy markets. It is an absolute lie!
Santana Energy and others out of Texas were fined in 2001. Some utility companies were forced to refund consumers hundreds of million of dollars due to manipulation of pricing and billing – many of those shenanigans stem from the Enron debacle, some precede it and continue on to date.
A class action lawsuit has been filed against EnCana Corp. (ECA), its marketing company, and sixteen other companies and corporations on behalf of Fairhaven Power Co. and all other business entities in the state of California that purchased natural gas between Jan. 1, 2000, and Dec. 31, 2001. The suit alleges a massive scheme to control the flow and prices of natural gas that was sold within California, which is a violation of U.S. antitrust laws. The suit further charges the companies with false reporting of natural gas prices, of conducting "wash trades" designed to boost trading volumes, and conspiring to avoid competing with each other in the pricing and sale of natural gas in California.
A class action lawsuit has been filed against Centerpoint Energy Inc. (CNP) and other natural gas suppliers on behalf of millions of residential customers in Arkansas, Texas, Louisiana, Oklahoma, Mississippi and Minnesota. The suit alleges fraud, unjust enrichment and claims that a conspiracy between the companies has led to the artificially inflated natural gas prices.
In a judge’s ruling, a company that provides gas and energy supplies was found to have aided in raising the price of gas and electricity in California during the previous energy crisis. The El Paso Corporation (EP) allegedly withheld natural gas, and in doing so, raised both gas and electricity prices.
Members of the Federal Energy Regulatory Commission issued a report on the 2000-01 energy crisis in the West. It said it found evidence indicating Reliant Resources and BP Energy, both based in Houston, appeared to have engaged in coordinated efforts to manipulate power prices at a trading hub in Arizona. In 2003, BP and Reliant Energy admitted to price-fixing in California and paid a $3M fine.
New York’s wholesale energy market is currently being investigated for possible antitrust violations, according to a recent news report. A Newsday story indicates that a subject of the investigation may be possible withholding of capacity from the market, to drive prices up.
At the same time as all the flagrant manipulation was going on by members of the US oil cartel, our own President Bush, in November of 2001, directed the DOE to fill the SPR "without regard to crude oil prices" and a report issued to the Permanent Subcommittee on Investigations in March of 2003 found
"In a 1-month period in mid-2002, crude oil price increases caused by SPR deposits spiked the U.S. spot price of home heating oil by 13 percent, jet fuel by 10 percent, and diesel fuel by 8 percent, imposing on U.S. consumers additional crude oil costs of between $500 million and $1 billion. Since then, high crude oil prices have boosted the cost of gasoline, heating oil, jet fuel, and diesel fuel, generating the types of adverse economic impacts on U.S. consumers the SPR program was designed to prevent."
That same study made the following observations (all easy-to-read details in the first 11 pages):
1. IN 2002, DOE BEGAN TO FILL THE SPR WITHOUT REGARD TO THE PRICE OF OIL.
2. FILLING THE SPR IN A TIGHT MARKET INCREASED U.S. OIL PRICES AND HURT U.S. CONSUMERS.
3. FILLING THE SPR REGARDLESS OF OIL PRICES INCREASED TAXPAYER COSTS.
4. DESPITE ITS HIGH COST, FILLING THE SPR DID NOT INCREASE OVERALL U.S. OIL SUPPLIES.
5. 2003 SPR DELIVERIES WILL DRIVE OIL PRICES HIGHER.
6. U.S. CRUDE OIL FUTURES MARKET NEEDS TO BE IMPROVED.
7. THE UNAVAILABILITY OF KEY INFORMATION ON OVER-THE-COUNTER TRADING ACTIVITY MAKES DETECTION AND PREVENTION OF PRICE MANIPULATION DIFFICULT, IF NOT IMPOSSIBLE.
Not to seem paranoild, but if you Google this main report you will find most copies of it erased (you are redirected to THIS page). I checked the above link and it worked as of Monday at 9 a.m. but I’ve never seen so many dead links associated with a government document before, so let me know if this one disappears too, as the report is completely contrary to everything the government is currently telling us. The SPR IS causing high prices and they knew it way back in 2003, and the "Enron loophole" was already causing problems and price manipulation was suspected then, but UNPROVABLE due to the loophole.
Unprovable doesn’t mean there isn’t any proof, folks… And remember, it was Enron and then-Texas Senator Phill Gramm who provided the biggest push to pass the energy trading deregulation bill in the first place –- The Commodity Futures Modernization Act of 2000 (S. 2697, 106th Congress), passed during the lame duck session after the 2000 election. The Democrats tried to have it removed in vote on 4/10/02, which was lost by one vote, but the Republicans rallied to table on Feinstein’s bill on June 11th, 2003, effectively killing the opposition.
Many traders have moved to the unregulated over-the-counter exchanges that do not require companies like ExxonMobil (XOM) or Goldman Sachs & Co. (GS) to disclose information about trades. "The lack of information on prices and large positions in OTC markets makes it difficult in many instances, if not impossible in practice, to determine whether traders have manipulated crude oil price," said Tyson Slocum, research director at Public Citizen.
There is currently an "open interest" on the NYMEX for 378,974 contracts, representing 1,000 barrels each, that is the "demand" for July.
At the peak of June trading there were close to 450,000 open contracts but the NYMEX allows traders to "roll" open contracts to longer months WITHOUT PENALTY and by the close of the June contracts, less than 30,000 contracts (30M barrels) were actually finalized for delivery. The other 420M barrels that were, at some point, contracted to be delivered in June, were "rolled" into July, August, Sept. contracts. You can track this nonsense here on a daily basis.
Notice how there are 378,974 barrels "ordered" for July and 91,509 for Aug and 94,177 for Sept and 49,177 for Oct. I will tell you for a fact, right now, that on June 24th (close of July trading) there will be LESS than 40,000 contracts accepted for delivery. All but 40M of the now 378M barrels that could be delivered to the U.S. PER THE EXISTING CONTRACTS will be cancelled by these evil, manipulative bastards in oder to create an artificial shortage of oil each month while driving up the apparent demand for the next month by rolling the contracts forward. That’s how the scam works.
Also, note that the "front month" contracts, the ones they print on CNBC etc., rose $1.38 today, but longer contracts were negative. The Dec 2015 contracts that they couldn’t stop talking about and pointing to just 2 days ago when they crossed $140, have quickly and quietly dropped to $132.77 just 48 hours later.
It’s very easy for the oil apologists to point to all sorts of abberant statistics to try to confuse you. China demand is a classic example - it’s up 40% in the past 5 years. What they don’t tell you is that that 40% was a rise from 5Mbd to 7Mbd but Chinese production went from 1.6Mbd to 4.1Mbd during the same amount of time causing them to import 500Kbd LESS than they did in 2003. No, it’s much better to scare you by saying 40% even though that 40% is about how much fuel we would save in America if we simply inflated our tires properly (10% x 20Mbd).
Mark Twain said, "There are three types of lies: Lies, damn lies and statistics." Always be wary of people who throw them around without letting you take a look at the sources for yourself. I try very hard to have links to all my stats. When CNBC shows you the Dec 2015 contract one day to "prove a point" and then doesn’t show it again, you need to be suspicious. Just ponder that those 378,974 contracts were traded on the NYMEX today 425,099 times. That’s a churn rate of 115%! The net change in price was 1% and the net change in open interest was less than 1%. What would you think of a stock or option contract where the entire float turned over in one day? This is what goes on EVERY SINGLE DAY at the NYMEX. 425,099,000 barrels of oil were traded yesterday, readily available to any trader who wants them delivered in July, with another 136,725,000 August barrels traded and another 73,297,000 September delivery contracts written, yet in not one of those months will more than 42M barrels ever be delivered because that is the transfer capacity at Cushing, OK.
So the ENTIRE thing is a joke. People are ordering barrels they don’t want with contracts written for a place that will never accept delivery AND, if anything actually happens to disrupt supply, there is a loophole called "Force Majeure" which allows the contracts to be cancelled by the shipper due to "supply disruptions" so they are not even buying insurance. The only thing they are insuring is that they will bleed you dry by forcing you to pay $130 a barrel for something that has a global average production cost of $42 a barrel.
This is nothing less than the single largest con in human history and your "reliable sources" are a government that was elected thanks to hundreds of millions of Petrodollars of campaign contributions and a media that is owned by companies that either are energy companies or accept millions of dollars from energy companies. The 30M barrels of oil that were actually accepted for delivery in July set someone back $4Bn, that sounds like a lot until you realize that that $4Bn locked in a price increase of $25 a barrel during the month of May x 85Mb a day worldwide or $65Bn bonus dollars paid to the same people who are churning oil contracts in the pits.
What if you had 15 shares of IBM at $100 and the price of the last trade on June 24th will set the price you can sell IBM for in July. What if you could buy that last contract for $150 and that would let you sell the ones you are already holding for $150. You would spend $50 extra for a single contract but would collect $50 more on the 15 you have for a net profit of $7,450! Would you do it? Do you know anyone who would? Do you think no one would? That’s how the NYMEX works. Those 30M barrels that are "accepted" at the contract close determine the price of the 85M barrels PER day that are delivered for the 31 days of May. That’s 2,635 barrels over 30 or 1/87th.
This is how you are being ripped off, this is how the manipulation operates, this is the only reason that oil is over $70. There is no shortage, there is no great demand, there is just a greedy cadre of immoral people who manipulate a system that costs the American people $500Bn a year (the premium we’re paying over $70) just so they can skim a few million for themselves.
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This article has 61 comments:
1) where the oil is produced
2) where the oil is consumed
3) depletion rates of existing elephant fields
4) discovery rates of new elephant fields
5) oil demand growth
perhaps, if you consider these 5 points and do some due diligence, you will understand the true dynamics of the oil market today.
In fact time has now come for us to start a movement to stop this non sense of trading in futures and options to "discover" prices. The world was perfectly fine before the early 80s when we did not have to discover oil prices through the futures market. The actual trading sent perfect signals and the market knew what the prices were. They did go up an down to reflect supply and demand. But it was the actual supply and demand for wet barrels unlike the manipulative paper barrels. Today's is a con game played by those outside the oil sector.
I have worked for an oil company and none of the mega companies will indulge in these shenanigans despite whatever one may say. Yes there are companies like Enron. But oil mega companies have higher standards and any of these shenanigans will come out sooner than one think. Enron was manipulated by some very high ups and its downfall also came when one of them came out. Similar thing would have happened in the case of mega oil companies.
American's continue to look at the oil market using only their own factors and considerations, while the energy market is a global market. They just don't see the whole picture.
Speculation is part of any market that is this hot. It was part of the housing market, it was part of the Nasdaq bubble in 2000, and it is part of this energy market today. Oil has one difference, however, as it has a limited and finite supply that is not renewable. We are not going to solve this problem by building another something, or coming up with a new software program.
I mean us the biggest consumer is having flattish to negative growth .China and india are growing but not at the pace of even six months ago.In jan 100 dollar price was raising eyebrows ,now even 150 dollars is seen as no big deal.What has changed in these six months for oil to increase 50 percent !!!
If oil rises to 150 dollars at the end of two years on the back of solid economic growth and no major supply disruptions then one can understand that as a factor that oil being non renewable source prices are increasing ,but the fact that has such a sudden spike inspite of
1) Low growth to neagtive growth in us .
2) Moderation of grwth activity comparitively as compared to even in january in china and india
3) No cutbacks by opec
This all indictes that oil is being manipulated massively and is hurting everybody.
Why does everyone complain about the price of something... Why not make money off of these 'bubbles'. If the idiots are going to bid up something to astronomical prices, figure out a relatively safe method for making money off the morons.
Heck, the price of oil can go up or down and I don't care. If it goes up, I make money. If it goes down, I make money elsewhere.
Quit fighting a rising tide.
A wise man stands on the side of the road, points in the direction of traffic and yells 'THAT WAY!'.
Peak oil is hitting, the demand and supply curves are separating, global demand has increased despite the author's statement otherwise, and supply is peaking and will go down. I am not an oil "apologist" to use the author's biased terms, I am a realist. I've read about the petroleum supply for years. I know Mexico's supply has peaked, the North Sea has peaked, Prudhoe Bay has peaked. Saudi Arabia's king has stated they won't increase production after next year, and give reasons for only minor increases now, indicating they are really peaking but not admitting it. We can definitely drill more here in the states, but it is a drop in the bucket, we peaked a long time ago. What we need is a presidential administration that will support real answers like conservation, cellulosic ethanol and electric vehicles. Efficiency = productivity, it's a good thing for business and the home.
money.cnn.com/video/#/...
All other alternatives are going to take several decades to ramp up to any significance meanwhile Peak Oil is now. You best come to terms with Peak Oil, or you will become road kill on the slope down.
Timsinoil - price of crude has risen more often than not lately, why single out 2000's election? You could look at the terror alerts in the 2004 election for easier political manipulations.
Mikey - if this is a bubble (and it could easily be froth on top of a fundamental increase) it will hurt us at the pump, then at the grocery store, then in the unemployment line, and that's bad for everybody. That's why this is important, even if you personally can make short-term profits in trading.
We can't drill our way out of this. It can help marginally, but it's not a major piece of the solution. It's things we can do - driving the speed limit, with tires at proper pressure, will reduce our gasoline consumption 10%. Efficient , reasonably sized vehicles will save another 25%-50%. Electric vehicles and living close to work will be a part of our future.
www.offshore-mag.com/d.../
www.wnd.com/news/artic...
www.rense.com/general6...
www.geotimes.org/june0...
Let's say computer chips doubled in price... would you cry that Intel is playing unfair or invest in Intel???? Would that affect the price of computer equipment? YES... would that then affect all businesses expenses? YES.... would that then affect EVERYONE? YES.
What is your point?
If you want to bet against Oil going higher, then fine. Do it. But don't come to my house bumming change for a meal in 5 years when you are broke.
Be smart. Bet on higher oil. Short stocks that higher oil will have a negative impact on. etc etc.
It's called investing in a capital market...
However, let's place the blame where it really needs to be. GREENSPAN. He is the one who robbed you of years of interest rates on your fixed income assets. From savings accounts to CDs, to... well you name it. He demolished your spending power by ensuring you couldn't keep up with inflation.
Simple question. When was the last prolonged time you saw a 6.5% CD being advertised?
Well? You could have briefly gotten a 5% about a year ago but before that... I can't even remember. It seems like about mid 90s or so.
I rather suspect that it is a little more complex than that though. It is hard to hide a fraud of this magnitude from the entire world. Was it Mark Twain that said "you can fool some of the people some of the time, and some of the people all the time, but you cannot fool all of the people all of the time"
I'm sure there is some churning and manipulation. However the fundamental truth is that if supply exceeded demand, prices could not be manipulated. A supply/demand issue is the root cause. Our dependance on foreign oil will be the ruin of us. I'm not an oil apologist, I'm a realist. We need to reduce our presence in the global energy market competition. We need to pump our own oil, use our own coal, use our own natural gas, put up wind farms, put up nuclear power plants, and transition our mobile fleet over to the most energy efficient possible.
Folks come back to Earth. You've been doped up on oil for way too long. If you really want to understand what is happening, I highly recommend you research the following term "EXPONENTIAL FUNCTION."
Meanwhile I think Chris Skrebowski, editor Petroleum Review sums it up our current situation quite well.
“The first peak that we’ve achieved. … [is] in light, low-sulphur crude. The next peak will be when the producer countries’ exports start falling because their [internal consumption] growth rates are much higher than those in the West….Finally we will get the peak where we simply cannot produce any more of any grade, any quality, anywhere. And that will give the final kick-up [in prices]…probably around 2011.”
Congress has been controlled by bungling idiotic Democrats since the election of 2006 and gasoline was $2/gallon. I'll let the ignorance of your media-owned conspiracy theory speak for itself.
Could it really be that the little guy who has a chance to buy ETF's of oil and NG be creating the speculation as price rises more interest is generated which causes more investment which causes more rise in price which causes more interest which...
The greedy NY crowd is always in one sector or the other with their crony touts from the Big NY Houses on the financial shows pumping and pumping that particular sector.
This they carry out until the public is fully invested, which is now very close in the energy sector, then they dump.
Pump and dump, pump and dump. They've been doing it for years.
Jim Cramer has admitted to being a part of it when he ran a hedge fund.
The Congress doesn't understand it, so no one is even close to stopping it.
Thus, after they deplete the public's funds in the energy sector, they'll move to another one and start all over.
Watch for yourself. It's coming soon.
Rebeldog
THE WEAKER US DOLLAR
Thank you very much for your work and for putting up with people who can't debate or argue against your excellent points, but have to call you names.
Overlook them and keep it up!
Rebeldog
T Stephens - good post, even with the typos. If the hedge funds/futures market were suddenly the cause for the run-up in prices like the author is saying, why not the other commodity markets, and why not ten years ago also? I'm not going to say there is no manipulation or deceit at all in the market place, but that's not the cause of our current high prices. We're hitting peak oil production, and the sooner we accept that, the sooner we can create real solutions.
Your claim that the articles don't indicate abiotic production indicates to me that you need to read them. Deep down can't be biogenic origin since sedementary rocks don't exist deep down. Those are igneous rocks deep down.
Yes, OPEC producers publish either no or wrong export stats for exactly the reason nerfer stated. This is one of the more well known "secrets" in oil and if that's news to you then you might want to reserve your views on oil until better knowledge of the market is established.
These monthly Middle Eastern export stats available with only a short time lag are usually derived from tanker movements. But shipping is no less secretive than oil and the data is probably even worse. The movements data is not of good quality, and I have first hand experience with it (it may work well for certain individual vessels but on the grand scale it is poor). Annual exports stats may have been reworked from import stats of the receiver countries, but trade stats are also problematic, and are revised for years to come.
And that Russian abiotic oil theory is actually not completely wrong - some oil is abiotic, but that's only a very small amount, what we use on a daily basis is organic.
I highly doubt that we can grow exponential and have the RATE of oil production meet our demand......abiotic, if true, could only cover a very small portion of demand.
There is nothing on this earth or solar system that can cover exponential growth.....the argument can be food, metals, energy, etc. Sure we can probably produce a lot more of food or energy...or possibly metals from other metals....but we aren't god...and we cannot make something from nothing when it comes to that point.
Rebeldog
The cartel called OPEC should be made illegal along with 100% of a contract put down at the NYMEX (instead of $7,000 or 8,000 dollars). Then require the ones that buy oil futures contracts to take delivery or lose the oil they bought. In other words, stop the speculation in oil futures completely.
We are being cheated by the oil monopoly called OPEC and the oil companies. Hopefully the lawsuits will expose how the manipulation was done and the firms involved will be fined and the executives responsible for price fixing will go to jail. Just as was done to Enron executives.
Unfortunately, those speculators who think they are investors will lose a lot of money when oil prices drop.
There will always be morons who think they are smart. I already sold all my O&G investments. If Encana is sued and a federal judge lets the suit go forward because the lawsuit has merit I hope Encana loses.
To those of you who proposed CONSERVATION or ALTERNATIVE ENERGY...good for you.
A lot of the oil information telling us that oil is the answer and that there is plenty more, looks very much like the campaign years ago that told us that cigarette's weren't bad for our health.
MSGTB
As to the SPR, did you ever think President Bush may be building it up in preparation for 1) a war he is planning to create or 2) a war he believes is soon inevitable?
As to CEOs who make millions upon millions of $/ year, why would they need or want billions$ in a world that they would find dangerous beyond belief; a world that they helped create?
Well, that's what mush does to your brain. Just ask the author of this little "conspiratal ditty".
Now the peak oil folks are saying, 'see, we told you so' (high gas prices, political turmoil), and the environmentalists are saying ,' see, we told you so ' (food shartage, storms, bad weather).
We need to keep cool heads at this point. First, there is evidence enough that the various political situations, including relative falling petroleum supply (i.e., we cannot just crank up oil supply to meet demand) coupled with a panicked rush to commodities due to the financial collapse and various derivative contracts, shorting, etc. are big factors in the energy issues.
Now, peak oil eventually may be real, and with half the world waking up and developing, we need to take the underlyiong theory seriously. I think $120+ barrel oil may end up saving us IF we act NOW to start developing alternatives. We need tax incentives, government sponsorship, as well as good old American ingenuity to kick in NOW.The $120/barrel oil creates the economic framework to make alternatives possible.
This is not the time to give up as some of the more liberal peak oil advocates imply we should. A wise Catholic Saint once said something like 'Know that God can do anything, but act as though He will do nothing'. Let's not forget there is a God, and He could be testing us, He could be punishing us. We do not know for sure. But do not give up. Turn back to some of our basic Christian values (and natural law in general), think about what we are doing and why, and let's roll up our sleeves to solve this issue- not just prepare for the end, and hide in the wilderness. It is not all criticism for the more liberal peak oilers- some of their ideas about reviving urban living are not all bad, and make sense certainly in the short to medium timeframe. Much of their criticisms of suburbia deserve some consideration.
Let's also not get all tied up with Gore gloom and doom over highly speculative theories about disasterous human induced CO2 warming of the planet. In fact we may be headed for a little ice age! Let's develop any energy source we can, and not let the environmentalists tell us (especially the U.S., China and India which have extensie coal reserves) that coal is out because of the CO2 problem. This is pure insanity at this juncture. If the peak oil problem is allowed to play out because of our inaction, you will see an environmental disaster of unimagineable proportions. Even the anti-Christian Malthusian Darwinists could not create a scenario so hororible (though God knows they keep trying).
Turn back to basic values, including. God, country and family, roll up your sleeves, do not give up, and let's work together (with the rest of the world) to solve the problems ahead of us.
siv0.com
TakeBackTheFed.com
1) Why wasn't the SPR full in 2002?
2) Wouldn't NYMEX traders be the wealthiest people in the world by now?
3) If so, how do I become one?
4) Is everything a Bush-led conspiracy?
I'm just about tired of every columnist's political rant. They claim the Bush administration is full of bumbling morons that somehow conceive and execute complex (and ingenious) conspiracies to fleece the American public.
If traders, speculator, republican, democrats, or martians are manipulating the tech, real estate, commodity, or stock markets, I don't really care. As long as I know a market is being manipulated, I can profit off it.
So what's the trade here? XOM, HAL, GS, USO, ATK, BA?
we are running out of cheap oil...
As all commodities move up,
capital costs move up...
All infrastructure costs move up,
i.e. tar sands capital costs have double,
(billions....)
Oil is still cheap. We are extremely wasteful, just like the 60's.
Everything is the same, but different.
pugwee.typepad.com/pop...
pugwee.typepad.com/pop...
I'm betting it will and I'm not alone.
Like we 've never been manipulated before ?
Wake up.
Drilling will not do anything. We, the tax paying people of America, paid for a pipeline from the North Slope in Alaska to bring oil to the lower 48. One rule about that was the oil had to remain in the U.S. When Reagan was in office, oil prices started dropping and the oil companies lobbied to have this rule removed. It was removed. Now over 90% of the oil that comes from Alaska is sold to Asia. There are very few refineries in the U.S. that can do anything with Alaskan oil and they produce the gas for the west coast states. Makes you wonder why the gas prices went up in California when Katrina hit. If we drill more, it will just be sold to someone who is willing to pay for it.
Since the 1980's most of the oil/gas storage tanks have been removed. Oil companies and refineries have no place to store the product. They have gone to the "just in time delivery" like the retail stores at the shopping mall. Tankers cannot unload as fast as before which causes a slowdown in the supply line. That also causes OPEC and Non-OPEC countries to cut production because they have no storage left while they wait for the ships to return.
Most of our oil comes from Canada and South America, not OPEC.
Up until recently the U.S. was filling the National Reserve. In 2005-2006 it was estimated that the U.S. took 3 days of total world production every year. Recently the U.S. suspended the 75,000 barrels a day purchase for the reserve. The reserve actually hit 100% back in 2005-2006 and there was an emergency bill passed to expand it. Some places are fighting it in court because there was little or no enviromental studies done.
The last point I want to make is how much it really costs to pull a barrel of oil from the ground.
Saudi oil = $2.00
Old Cheveron oil field using modern steam injection in California = $16.00
These numbers come from a New York Times article posted in March 2007. I also recently read about a company that is drilling for oil in South America and the CEO said it only cost $9.77 per barrel, also 2007 article posted on the company website.
Decide for yourself what needs to be done or what can be done, just get the facts first.
> jack
1. Beef up the dollar--Nothing inherently wrong with a weak dollar, but now it's costing us more than it's helping;
2. Most importantly, as noted by other commentators, open up ANWR and offshore drilling. This will have an immediate effect on the speculative bubble before one drop of oil comes out of these reservoirs. Reason? Future supplies are likely to be significantly affected and speculators will see the writing on the wall (unlike politicians).
I do object to this writer's political agenda, which is all too clear. When politics become more important than economics, the King Canutes of the world lead us all (willingly or unwillingly) into a drowning pool.
Anyway, why we pay for oil on the basis of a US $ is beyond me. But I do know this: Everytime the price of gas goes up... so does the taxes paid to our dear government coffers.
So here we are, using the assets of our country, paying profits to "businesses and governments" while we, as menial peasants are no more than slaves to a hiearchy that would do no less than manipulate and deceive.
By the comments on the site, I suspect many of you may sympathize because it seems you too are smitten by this mysterious disease.
May your souls rest in cheaper oil!
Don't get me wrong, I think it is great that people are concerned about this now (cute even) but many of us are just simply jaded and already driving a Prius because we gave up along time ago.
But seriously, is there anything out there that isn't manipulated? To quote everyone's favorite Adam Smith:
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
Reads more like a quote from Marx, eh. Ergo, there ain't NO invisible hand....I can clearly see the hand and it's flipping us all the bird and slapping us silly.
But it's so cute now to see more and more people enraged by the abuses of capitalism (like collussion and price manipulation). Didn't you ever really read your Adam Smith and Karl Marx? Or did you just read your Keynes and the Austrian school? That's why we should all pay heed to Kafka's advices and every now and then read something that we don't agree with....anyway...see you the next time I'm filling up my prius.
Therefore we must use a less exclusive pejorative use of the term which allows for the possibility that intentional actors are capable of planning an event, because we know that there are of course many such planned events. Thus, if we allow for the possibility (and experience teaches that we must) we must also admit that the principle of parsimony or Ockham’s razor is not always correct.
In the case of the markets, there are of course a plethora of intentional actors with investing plans. Some of these may have critical impact others not. Sometimes the net effect of these plans are foreseeable and predictable, other times not (at best, explanations are retrospective).
We live in an anti-speculative, homogenous culture where the mere positing of an opposing theory in popular culture generates accusations of "Conspiracy Theory." In academia and research circles such speculation is more welcome. We do not posit, we speculate….hmmm, do you think markets can relate to such a thing as speculation?
But the other component in this exchange of goods for money is the falling value of our currency.
Recently I viewed a chart of oil prices over the past 5 years with an overlay of the US $ index (Inverted) and they were very closely correlated.
When our government, and specifically the Fed lowers interest rates, borrows $800Bil/year, and spends $300+Bil bailing out the financial firms they are pushing our currency toward worthless.
Consumer debt, and annual trade deficits weigh in too.
Soon, it will take more worth less dollars for us to buy anything-
It is our government that needs to be fixed, not our free markets.
Unfortunately its going to get worse, much worse, before enough of us realize the problem is us.
None of these people ask the question of actually what is the production rate and output of Iraq. Iraq use to be the 2nd largest producer of Oil right behind Saudi Arabia. Is the production output of Iraq today 2nd to Saudi Arabia? It has the richest oil fields in the world. Does anyone asks that question. They fooled all of us into getting into war; under false belief of WMDs and terrorist threat. How come the media reports on oil prices going up because of limited supply are not actually reporting as to the output out of Iraq today? And the need to end the war in order to bring stability to the region so that production can resume to possible expected levels under secure conditions.
Also the fact that in the past 10 years and mergers of Chevron/Texaco, Exxon/Mobile and BP/Arco the 3 Giants have resulted in a methodical closure of Oil refinaries that produce Gasoline and other oil based fuels and fertilizers.
The issue gasoline is not Oil capacity; the issue is also refinary capacity that has been methodically cut down. By our lovely 3 Oil cartels that exist in USA.
The issue is the false war initiated to creat Chaos in region that strategically supplies more than 2/3s of the world oil production. "Take out the #2 oil producer" or "Take out the #2 supplier in any commodity"; and watch the Stock prices bounce. Capacity issues be impacted.
This B.S. about limited resources or it is not renewable resource is a bunch of crap.
I am firm believer in Alternative Energy sources and support these activities; but it is very upsetting weare getting a whole bunch of Oil Loving greedy ponduits suddenly getting on the band wagon to use the Atlernative fuel and limited resource argument for their own greedy little hidden agendas.
This is a very trueful article and nothing about it needs further explanation. American Consumers and Consumers of the rest of the world are being had by the Top three Oil Cartels I mentioned before.
The true price of gallon of gasoline should actually be about $2.30 in USA as the average price not above $4.00. That is also taking into account the valuation of the US dollar today. For those of you who want to make that as stupid reason of argument.
Hope you have been educated.
Here is a saying; "Fool me once ( Iraq war) shame on You. Fool me twice ( Manipulated Gas Prices) Shame on us."
So let's not get fooled again. Let's ask the questions and let's start the probes and investigations. And we need to release the Strategic reserves immediately; because this will bring the oil prices down in US markets which will effectively impact the gasoline prices and will kill off all this futures speculation. It was done during Bill Clinton; it should be done again.
Oil price future causing the rise of gasoline prices and other commodities in the open market is infact an economic fraud which will burst like 2000 dotcom fraud bubble and the recent realestate sublending fraud bubble. This is next. All this because of continued deregulation and purposeful lack of enforcement of regulations by this administration the republican NeoCons. And, their Carpet Bagger big oil and futures speculators friends run a mock.