John McCain's Connection to Big Oil & The Enron Loophole

[Nbadan]

Must see T.V.: Doesn't really fit right into any of the other high-gas price threads going on in the forum, but Keith Olbermann explores the Enron Loopshole that speculators have been able to drive monster-truck sized gas price through...at huge cost of all of us..legislation that McCain initially opposed but has completely ignored thanks largely to his loyalty to oil lobbyist, his own team of economic advisers in the pockets of big-oil and former Texas senator Phil Graham and his wife, a former-Enron corporate whore who helped Enron corner the California energy market and put lots of old folks on the streets...


AdRbuUQNcxw

Outrageous....they should all be strung up

:hang

[Nbadan]

So much for letting unregulated markets police themselves....Wall Street doesn't give a damn about Main Street, just about lining their own greedy pockets, some industry insides estimate that closing the Enron loophole and new legislation that bypasses U.S. regulations would mean a overnight decrease in gas prices anywhere from 25-50%....

Wall Street Lobbies to Protect Speculative Oil Trades


...The move did not go far enough to satisfy some Democrats who criticized the CFTC for abdicating the job of policing overseas oil traders to the Intercontinental Exchange.

Until recently, Congress had been reluctant to intervene in the energy futures markets, and the lobbying by financial entities has been a major reason. "We have known since 2001 that there were problems here, but we've run up against people on Wall Street who don't want to be helpful in policing the market," said Sen. Maria Cantwell (D-Wash.), one of several lawmakers frustrated by the effectiveness of the financial lobby.

A growing number of members of Congress have reacted to public outrage over skyrocketing gasoline prices by introducing at least eight bills that restrict the ability of financial companies to buy futures contracts, disclose more about those investments or stiffen federal oversight of energy trades. Other legislation is in the works, congressional aides said.

Democratic lawmakers have been particularly outspoken. "There is a bubble of speculation on the oil commodity exchange that is also driving up the price of gas, and that has to stop," said Sen. Byron L. Dorgan (N.D.), a leader on the issue.

But some Republican lawmakers are also pressing for change. "At a time when American people cannot escape the direct impact that rising gas and oil prices have on their day-to-day lives, it is incumbent that we ensure that our energy futures markets are transparent and demonstrate supply and demand -- not manipulation by large institutional investors," said Sen. Olympia J. Snowe (Maine).

What's more, the ramped-up lobbying by financial services firms has provoked a counterattack by lobbyists eager for additional regulation of energy trading. Led by the Air Transport Association, the lobby for the airline industry, a newly formed coalition of energy users -- which includes truckers, farmers and consumer groups -- has been urging lawmakers to approve several bills that would limit speculative investments in energy.

But advocates for the financial industry insist these concerns are misplaced.

"Increasing regulation on what we do will not lower energy prices," said Greg Zerzan, head of global public policy for ISDA. The association, which represents all aspects of the multibillion-dollar practice of trading exotic financial contracts outside of formal exchanges, hosts a conference call every Friday in Washington to coordinate the activities of like-minded groups.

Its latest addition: the Financial Services Roundtable, the lobby for 100 of the nation's largest financial services companies. And now the Roundtable and ISDA are courting the nation's largest business federation, the U.S. Chamber of Commerce, to join their crusade. Chamber executives said they were seriously considering the alliance

Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR2008061802732.html)

Amazing...this is truly, Enron on steroids....call your congressman, call your senator, call who ever the hell you need to call and tell them that you want this loop-hole and other legislation that lets speculators avoid FED regulation closed...


NOW!

[ChumpDumper]

Why should I believe the corporate media?

[Nbadan]

Why should I believe the corporate media?

Weak. Is that the best u got?

[ChumpDumper]

Weak. Is that the best u got?It's a very valid question in light of your little tantrum yesterday:


Our country is involved in many wars today. We have a war in Afghanistan, we have a war in Iraq, and we have a “War on Terror”. But perhaps the major underlying cause of all these wars is the class war, which is going on simultaneously. And by a class war I mean a war waged by an elite group of ultra-wealthy individuals against the middle class, the working class and the poor.

A major tool in that class war is our corporate news media. By acquiring monopoly control over the news that most Americans receive, their main strategy is to keep most Americans uninformed enough that the ultra-wealthy can continue to widen the wealth gap in our country to astronomical proportions without protest.

[JohnnyMarzetti]

Same old McSame.

[Nbadan]

How oil speculators with the help of big oil is hiding oil shipments headed to Western Markets...the big oil ripoff....

ICE, ICE, Baby
One piece of legislation is why the price of everything is going through the roof
Special to the Star-Telegram


"There’s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self fulfilling prophecy." — National Gas Week, September 5, 2005 as reprinted in the US Senate Permanent Subcommittee on Investigations’ report, "The Role of Market Speculation in Rising Oil and Gas Prices," June 27, 2006

Fiddling While We Burn

There it is in plain sight for everyone to see, exactly what I’ve been reporting for the past few years: Many individuals who are investing in oil and natural gas futures are going out in the media and trying to convince the American public that either we are out of oil or there is a serious supply shortage of crude against worldwide demand. The question is: Does it surprise you to discover that the US Senate investigated the rigging of the oil market by speculators in the summer of 2006 – and concluded that there was no supply and demand problem with oil? Did you know that their conclusion was that speculators were responsible for a 70 percent overcharge in the price of oil in the months leading up to the summer of 2006?

This from page 1 of the Executive Summary of that Senate investigation, there is this one troubling line: "Today, U.S. oil inventories are at an eight-year high, and OECD (Organization for Economic Co-operation and Development) oil inventories are at a 20-year high."

That’s odd because, in 2006, just like today, the media reporting covered the serious international shortage of oil and justified oil’s high price. Even more troubling is that the House of Representatives held a hearing this past December, ominously titled "Energy Speculation and Price Manipulation." How did it pass under the radar that both the Senate and the House studied the issue of price manipulation in our energy markets and both concluded that it was unregulated, massive trading in one futures market that was really driving up the price of oil and natural gas? And given that conclusion, why has Congress done nothing about it?

Investors Make the News, Literally

A week ago Goldman Sachs issued a new investor note, suggesting that somewhere between six months to two years, the price of oil could go into a "super spike" and prices jump as high as $200 per barrel. It became the major story of the night. Ignored in the reporting frenzy was that many legitimate and well-respected oil analysts dismissed Goldman Sachs’ prediction as groundless.

Get ready for the next shock to your system. In the past month we have added 11.9 million barrels of oil into our stock reserves, giving us 32.3 million more barrels of oil than we had on hand January 1. On May 5, we found out that for the second time in as many years, Iran was storing its excess crude oil on tankers in the Persian Gulf, because it had run out of storage space in the desert and was awaiting buyers for its heavy crude. That same day Saudi Arabia cut the discount price for its Arabian Heavy crude to $7.45, hoping to entice more buyers for immediate delivery. We didn’t hear that news, either.

While researching my third article for BusinessWeek online about the world’s oil situation in 2008, I asked for the most current report from Oil Movements. Because the oil industry is not transparent, Oil Movements tracks every tanker at sea, from both OPEC and non-OPEC oil countries, along with their cargoes’ final destinations. Anne O’Shea responded immediately to my request with their report dated May 8, 2008. Just so you will know, oil shipments are up from a year ago in almost every class, including Middle East oil in transit and Non-OPEC in Transit. The only class of oil shipment that has declined is covered on page 3 of that report. That chart is labeled, "4-Week Changes in Westbound Oil at Sea."

That’s right, shipments of oil headed west have shown serious declines during the month of April, down 800,000 barrels per day in the week before the publication of the report. Now, let me give you the first line from under the Westbound Oil shipments chart: "In the west, a big share of any [oil] stock building done this year has happened offshore, out of sight."

Could this be true? Oil Movements, the unimpeachable source for finding the real world situation on oil transits, is saying that oil is being hidden offshore, not declared in inventories? Yes, that is exactly what they are saying.

That same week our refineries cut their production runs back to 85 percent, down from 89 percent a year ago, to trim more gasoline out of our stock reserves, to increase their profits per gallon.

National Short-Term Memory Loss

It’s amazing how quickly we forget our recent history. Congressional hearings in 2001, blasting certain Wall Street executives for using the media to sell the public on stocks in order to bid up the price – so their firm could divest of its shares without taking a beating. Meanwhile, other trusted advisors pushed stocks that were fundamentally worthless, because their affiliated banks had large loan agreements with those companies.

The year before Enron had been caught manipulating the California energy market, even forcing rolling blackouts across the northern part of their state apparently just for effect – to support their claim that there just wasn’t enough electricity to go around. Again, we now know that claim was untrue. It was Enron shutting down certain power generation plants, while placing bets on their unregulated energy futures market. The net cost to California consumers was almost $8 billion.

It didn’t end there. Amaranth Advisors, a hedge fund, literally was cornering the market on natural gas futures, to make it appear that there was a shortage of natural gas, when the Commodities Futures Trading Commission told Amaranth to liquidate its position on the NYMEX because its bidding had already moved natural gas prices far beyond the reasonable limits of supply and demand. Now, remember this name: ICE, short for Intercontinental Exchange – the "dark futures lookalike market."

Once the CFTC told it to back off its natural gas futures contracts, Amaranth simply shifted gears, got out of the NYMEX, placed its massive bets outside of government regulation in ICE and managed to drive natural gas futures to $8.50 per MBtu.

As the Senate investigation into the manipulation of the energy markets showed, "Amaranth – the day before they failed, natural gas was about $8.50; the day after it failed, it went to $4.46 MBtu." That’s right, one major hedge fund managed to double the price of natural gas simply by loading up on futures contracts; when the government told them their bets were unwarranted, they simply moved their monies to a futures exchange that was unregulated. Only when Amaranth failed did natural gas prices fall back to what was considered normal for supply and demand.

Sadly, like oil today, when this was happening we were being told that natural gas supplies were tight worldwide. That statement simply wasn’t true.

Dark Future

Likewise, British Petroleum was busted for manipulating the propane market in the winter of 2004 and fined $373 million. Of course, in Texas, under deregulation of our public utilities, our electric rates can be set using the futures market for natural gas, so the manipulation of the natural gas market spelled trouble for us. Consider this, by 2006, according to www.powertochoose.org, electricity rates for us had climbed to 15 cents a kilowatt-hour due to the high cost of natural gas. But, that was the exact same time period that Amaranth was proven to be manipulating the market and sending natural gas futures through the roof. Two months later the hedge fund collapsed and natural gas prices fell. Therefore, most Texans paid higher electric bills for Amaranth’s manipulation of the natural gas market.

Professor Michael Greenberger of the University of Maryland, a former board member of the Commodities Futures Trading Commission, testified in front of the House Committee on Energy and Commerce on December 14 of last year. Under discussion that day was the manipulation of the energy markets and prices, but Professor Greenberger added these comments: "Three, four months from now, you’re going to have a hearing on the subprime meltdown, and you’re going to find that the very same legislation [deregulating energy] deregulated something called collateralized debt obligations, CDOs." That legislation, friends, directly ties the mortgage meltdown to the high price of energy today.

It was called H.R. 5660, the Commodities Futures Modernization Act of 2000. At first this bill went nowhere in the House, not even up for debate. Then, a few months later, late one night a 242-page bill written by Wall Street lawyers, with the exact same name as the former House bill, was quietly added to an 11,000-page appropriations bill, and the Enron loophole was created. The power behind that bill was one Texas Senator, one Texas Congressman and their wives.

Next week: How the unregulated futures market pushes the price of oil, natural gas and gasoline far beyond those commodities’ market value, thanks to the creation of the Intercontinental Exchange. Worse, Congress knows this, but does nothing.

© 2008 Ed Wallace

[ElNono]

To add to that an excerpt from an article on today's NY Times (LINK (http://www.nytimes.com/2008/06/24/business/worldbusiness/24oil.html))

But King Abdullah and Prime Minister Gordon Brown of Britain, who walked into the high-ceilinged hall together as a military band played, soon offered totally different perspectives on the problem.

The king spoke of the “selfish interests“ of speculators as a primary reason and urged the gathered ministers to “rule out biased rumors“ and to “reach the real causes for the increase in price.“

But Mr. Brown pointed to fundamental economics and “oil demand rising faster than supply.“ The American energy secretary, Samuel W. Bodman, put it more bluntly in a meeting with reporters, saying, “There is no evidence we can find that speculators are driving futures prices.“

[Nbadan]

A little research on Bodman...


Secretary Bodman went to Fidelity Venture Associates, a division of the Fidelity Investments. In 1983 he was named President and Chief Operating Officer of Fidelity Investments and a Director of the Fidelity Group of Mutual Funds. In 1987, he joined Cabot Corporation, a Boston-based Fortune 300 company with global business activities in specialty chemicals and materials, where he served as Chairman, Chief Executive Officer, and a Director.


Bodman served as Deputy Secretary of the Treasury in the George W. Bush Administration beginning in February 2004. He also served the Bush Administration as the Deputy Secretary of Commerce beginning in 2001.

Wikipedia (http://en.wikipedia.org/wiki/Samuel_Bodman)

A Bush crony with ties to the financial services industry that is driving market speculation...no conflict on interest there...

:rolleyes

[Nbadan]

http://www1.pictures.gi.zimbio.com/President+Bush+Announces+Support+Offshore+EDM6576G nq_l.jpg


U.S. President George W. Bush (L) blamed Democrats in Congress for high gas prices while delivering a statement about energy flanked by Interior Secretary Dirk Kempthorne (C) and Energy Secretary Samuel W. Bodman in the Rose Garden at the White House June 18, 2008 in Washington, DC. In the face of record prices for oil, Bush asked Congress to lift the U.S. ban on offshore oil drilling.
(Photo by Chip Somodevilla/Getty Images North America)

[Nbadan]

Sam Bodman was recommended for the position by outgoing Commerce Secretary Donald Evans. Evans, of course, is a Texas oil man and one of George Bush's closest friends. Sen. Pete Domenici, a Republican from New Mexico and chairman of the Energy and Natural Resources Committee that will consider Bodman's nomination, has predicted an easy confirmation.

James Lucier, a Washington analyst with the Prudential Equity Group, has said, "The choice of Bodman is a signal that they want to continue using the Energy Department as more of a long-term transformation change agent than a high-profile position."2 If confirmed, Bodman has said that he will carry out… "sound energy policy to ensure a steady supply of affordable energy for America's homes and businesses, and to work toward the day when America achieves energy independence."3

It is expected that Bodman will promote Vice-President Dick Cheney's energy initiative. He is expected to deregulate the energy industry and promote new nuclear power plant construction, clean coal-burning plants, and to press for drilling in ANWR and elsewhere within the US. Given his educational background in chemical engineering, his appointment will likely boost confidence in the Energy Department's proposed transition to a hydrogen economy.

Cheney Still in Control of Energy Policy

The Bodman nomination signals that the Bush administration wants an experienced administrator to run the department, leaving energy policymaking to the White House. Although the White House has long denied it, industry insiders and energy experts long ago concluded that Dick Cheney is in direct control of energy policy. "There is no doubt whatsoever that (Cheney) sets the broad direction and is keeping an eye on these agencies to make sure they follow their checklists," James Lucier has said.4

Environmental groups agree that Bodman will have little effect upon energy policy. "This nomination is indicative of a continuation of Cheney wanting to keep the lead," said Karen Wayland, legislative director of the Natural Resources Defense Council. "I think it's been pretty clear over the last four years that the energy plan the administration is pushing is taking its direction from the vice president's office."5

Bodman's nomination was awash in rhetoric about how he will help guide the US to energy independence. However, it is unlikely given his background, that Sam Bodman really believes the US can achieve this impossible goal. His appointment is intended merely to reassure the market. Sam Bodman will likely remain a low profile figure, proclaiming the glories of a hydrogen economy while secretly pushing nuclear, coal, and drilling of protected areas within the US. And, meanwhile, Dick Cheney will remain firmly in control of energy policy.

From the Wilderness (http://www.fromthewilderness.com/free/ww3/121704_sam_bodman.shtml)

[boutons_]

Making a case for renaming the Enron Loophole to the (Citibank) Phibro Loophole:

How a Shady Citigroup Subsidiary Secretly Makes Billions in the Oil Market

http://www.alternet.org/workplace/88995/

[Don Quixote]

Attention Forum:

BasketballDan has posted some Youtubes and articles about the Republican nominee. I trust they will be fair and objective, looking at all the quotes and events in their proper context. Once again, we should applaud BasketballDan for his tireless research and pursuit of truth.

[Nbadan]

Hey look everyone it's the Duke of Moderation.... :lol (Don't you have someone to stalk in the Club!)



WASHINGTON (MarketWatch) -- The price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress on Monday.

Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.

Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets.

Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets. "Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel."

Futures trading in London has not been a major factor in rising oil prices, testified Sir Bob Reid, chairman of the Chairman of London-based ICE Futures Europe. Rising prices are largely a function of fundamental supply and demand, not manipulation or speculation, he said.

"Energy speculation has become a growth industry and it is time for the government to intervene," said Rep. John Dingell, D-Mich., chairman of the full committee. "We need to consider a full range of options to counter this rapacious speculation." It was Dingell's strongest statement yet on the role of speculators.

There has been much discussion recently about how big a role speculators have been playing in the sharp rise in energy prices, though no consensus has emerged on this point.

Dingell introduced a bill on June 11 that would ask the Energy Department to gather the facts on energy prices, including the role played by speculators. See full story.

There are two kinds of speculators in the futures markets, Masters said. Traditional speculators are those who need to hedge because they actually take physical possession of the commodities. Index speculators, on the other hand, are merely allocating a portion of their portfolio to commodity futures.Index speculation damages price-discovery mechanisms provided by futures markets, Masters added

The committee will likely consider legislation that would rein in index speculation by imposing higher-margin requirements; setting position limits for speculators; requiring more disclosure of positions; and preventing pension funds and investment banks from owning commodities.

Both major presidential candidates have supported closing loopholes that encourage speculation in the energy markets. Read more on Election Blog. However, other witnesses said that pure speculators have had little impact on energy prices, which have doubled in the past year to about $135 per barrel. Both Treasury Secretary Henry Paulson and Energy Secretary Samuel Bodman have dismissed the impact of speculators on prices paid by consumers.

Speculators now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 2000, said Rep. Bart Stupak, D-Mich., chairman of the investigations subcommittee. Stupak introduced a bill on Friday that would limit index speculation.

There has been much discussion recently about how big a role speculators have been playing in the sharp rise in energy prices, though no consensus has emerged on this point.

Congress, however, has grown increasingly concerned over speculative investors' role in the energy market in comparison with those buying futures contracts to hedge against risk from price changes. Lawmakers are expected to consider legislation to set strict limits -- or in some cases, an outright ban -- on speculative trading in energy futures in some markets.

Dingell is looking into any legal loopholes that may have contributed to speculation in energy markets. In 1991, according to documents provided by the Commodity Futures Trading Commission to the committee's investigators, the agency authorized the first exemption from position limits for swap dealers with no physical commodity exposure. This began what Dingell said was "a process that has enabled investment banks to accumulate enormous positions in commodity markets."

MarketWatch (http://www.marketwatch.com/news/story/gas-could-fall-2-if/story.aspx?guid=%7B2673C102%2D68E0%2D41D9%2D9C9A%2 D10EE2E723948%7D)

Forget nuclear power, drilling in ANWAR or increasing drilling off the U.S. coasts, or even begging the Saudis to increase production, none of these will work because speculators will quickly corner those energy markets too...all we need is an act of Congress to lower the price of gas for consumers by an Average of $2 per gallon.

[Nbadan]

Looks like a majority of America get it...

Should the government crack down on oil market speculators? * 4827 responses


Yes. They are driving up prices 74%

No. Don't interfere with free markets 23%

Not sure 3.3%

CNBC (http://www.cnbc.com/id/25329659)

[johnsmith]

Prior to this post, 9 out of the 15 posts in this thread are from the thread starter.

All I have to say about that is...............:rolleyes

[Nbadan]

So what? stick to the issues.....

Obama unveils clampdown on oil speculators


WASHINGTON (AFP) — White House hopeful Barack Obama attacked energy speculators Sunday, outlining new regulatory proposals that his campaign said would slash record-high oil prices and help hard-pressed consumers.

The Democrat attacked the so-called Enron loophole, a 2000 deregulation of oversight by the Commodity Futures Trading Commission that critics say opened the way to a speculative free-for-all in the oil markets.

"For the past years, our energy policy in this country has been simply to let the special interests have their way -- opening up loopholes for the oil companies and speculators so that they could reap record profits while the rest of us pay four dollars a gallon," Obama said in a statement.

"My plan fully closes the Enron loophole and restores common-sense regulation as part of my broader plan to ease the burden for struggling families today while investing in a better future," the Illinois senator said.

After a week of furious controversy over Republican John McCain's call for the lifting of a federal ban on offshore oil drilling, Democrats said they would introduce new anti-speculation bills in Congress this week.

But McCain's campaign said the Republican had already backed legislative action against speculative trading, which had failed to get through the Senate, and pointed to a speech he gave in Houston last Tuesday.

McCain had said the "reckless wagering" of traders and hedge funds could "distort the market, drive prices beyond rational limits, and put the investments and pensions of millions of Americans at risk."

"Where we find such abuses, they need to be swiftly punished," the Arizona senator told oil-industry executives, calling for legal reform to make the oil futures market as "clear and effective" as other financial exchanges.

But Obama's campaign noted that the Enron measure was shepherded through Congress by former senator Phil Gramm, who is now the campaign co-chair for McCain -- proof, it said, that the Republican was out of touch with US voters.

The loophole, enacted under strong lobbying by the Enron trading company before its spectacular collapse, exempted energy traders who deal electronically from US regulation against price manipulation.

Traders were allowed to deal in oil without taking physical possession of the commodity, so US speculators have since been able to rapidly buy and sell futures contracts on electronic markets run out of London and Dubai.

According to New Jersey Governor Jon Corzine, a former boss of Wall Street titan Goldman Sachs, the real price of oil based on the laws of supply and demand should be 60-80 dollars a barrel -- rather than nearly 140 dollars.

The Enron loophole was dealt with partially in a recently passed Farm Bill, but Obama said he would go further by requiring all US oil contracts to be traded on regulated exchanges where suspected manipulation can be monitored.

The position staked out by Democrats put them in alliance with Saudi Arabia and other producers of the OPEC cartel, who argue that unregulated speculators are the driving force behind rocketing oil prices.

After announcing a Saudi output boost at an emergency energy summit in Jeddah, King Abdullah Sunday railed against speculators, but US Energy Secretary Samuel Bodman said the real problem was lack of supply.

Texas Senator Kay Bailey Hutchison, a McCain backer, said the Republican's call for offshore drilling was one way for the United States to help itself and stop speculators, along with new nuclear reactors and renewable energy.

"This is a supply-and-demand issue," she told ABC. "And yet, anything that says production is killed by the Democrats."

Obama, however, has derided the offshore drilling option as a political "gimmick" that would not yield any oil for at least a decade.

New Mexico Governor Bill Richardson, a former energy secretary, told CBS that "what we have here is Senator McCain is basically following the policies of (President) George Bush -- drill, drill, drill."

Oil companies already have "millions of acres of leases in America" that they are failing to tap, he said. One Democratic bill pending in Congress would force the companies to exploit those federal leases or lose them.

Googles (http://afp.google.com/article/ALeqM5jNJjgKkHGZkk3FAyRTqcgpJx_kdw)

[johnsmith]

You're not even sticking to the same issue as your original post. The thread is about McCain and then you post some article about Obama's plan to close a loophole. Which is funny by the way because the article never explained how he's going to close said loophole.


Seriously Dan, let others post in the thread you started.

[Wild Cobra]

Forget nuclear power, drilling in ANWAR or increasing drilling off the U.S. coasts, or even begging the Saudis to increase production, none of these will work because speculators will quickly corner those energy markets too...all we need is an act of Congress to lower the price of gas for consumers by an Average of $2 per gallon.
This is not what's going on. Spectators make or lose money by trading in futures. Their actions do not apply to what the future price is. They are just good at predicting the future price, otherwise they would be out of the futures market and doing something else like working for Propaganda Dan.

[Nbadan]

You can take a postion in oil futures by putting up (putting at risk) LESS THAN 10% of the contract price. Speculators buy futures contracts to trade them before delivery of the commodity. They do not want the commodity. They only buy the contract to sell it later BEFORE delivery to make a profit. IT is in their interest for the prices to be moving (either up or down) so they can buy and sell and make a profit (preferably quickly).



How do speculators drive up oil prices?

Speculators are able to drive up crude oil prices today because they're allowed to trade in the U.S. in futures markets not overseen by U.S. regulators. Therefore, they are free to dominate these markets by taking huge positions within them. And there is an additional fear that, because of a lack of oversight, they may be engaging in manipulative practices — i.e., wash sales and false reporting that would be barred in a regulated environment.

Who are these speculators? Do they have names and addresses?

I really cannot answer that with certainty because these unregulated markets are so opaque. Many say that Goldman Sachs & Co. and Morgan Stanley are primary traders on the principal market outside of direct U.S. supervision, the Intercontinental Exchange, otherwise known as ICE. The whole point here is that we need transparency through a thorough investigation to determine precisely what is happening on the Intercontinental Exchange, including who key traders are and the positions they are taking in these markets. That transparency is provided regularly for those exchanges regulated directly by the (futures trading commission).

How much of today's record oil price is attributable to speculation?

There are many estimates being made by observers of these markets, economists and industrial energy consumers suggesting that the price of a barrel of crude oil could be anywhere from 25 percent to 100 percent in excess of what market fundamentals would dictate. For example, (the Organization of Petroleum Exporting Countries) has recently said that a barrel of crude should not be in excess of $70, and it has opened its own investigation into excessive speculation in these markets to find out what interests are causing the price to be almost double that.

How does the absence of effective regulation of commodity trading compare to the stock-market excesses of the 1920s?

To the extent that the Intercontinental Exchange operates outside of U.S. limits and controls on speculation, there is very substantial evidence suggesting that United States futures trading on that exchange is akin to the unregulated trading in U.S. stocks in the 1920s. That comparison is aided by the fact that huge positions in these markets can be obtained by speculators with less than 10 percent margin.

(more)


Star Telegram (http://www.star-telegram.com/business/story/706612.html)

NOte that there is an economic reason to have futures contracts. Buyers of a commodity can put up a percentage of the total contract price to lock in a price today if they fear the price will be going up before delivery date. Suppliers of a commodity may want to sell a futures contract to lock in today's prices if they fear the price may go DOWN before delivery date. In each case the interested party puts up (or risks) a percentage of the contract price to protect themselves from economic losses due to a change in price between the day of the futures purchase and the day delivery is made. NOte However, the interested parties in this example are actually going to trade in the actual commodity. The buyer of the futures contract does want to take delivery of the commodity and the supplier of the commodity really does intend to sell the actual commodity to a buyer. SPECULATORS DO NOT WANT TO TAKE DELIVERY OF ANYTHING. THEY JUST WANT TO BUY AND SELL FUTURES CONTRACTS AND DO IT WITH A VERY SMALL PERCENTAGE OF THE TOTAL CONTRACT PRICE BEING PUT AT RISK.

The quickest way to kill off this kind of gambling is to put the margin requirements to buy and sell futures contracts up to a higher percentage. Probably 25% would kill off most reckless speculation. THis could be done quite quickly IF WE REGULATED THE EXCHANGE THESE TRANSACTIONS ARE TAKING PLACE ON (THe ICE - the Intercontinental Exchange). BUT WE DO NOT! that's a prescription for disaster - remember what happened in California when ENRON had it's way with the electricity market

[Wild Cobra]

Dan, the only way the buyers of contracts can raise the price of oil is if they can sit on enough of it to change the supply and demand equation. In the end, the market controls the price. If the buy for more than the market will bear, they will lose money. Are you telling us they have the resources to sit on that much oil?

[Nbadan]

Are you telling us they have the resources to sit on that much oil?

Why are Iran and other ME countries sitting on oil that they can't give away? I'd like to hear your explaination...

[idler]

Must see T.V.: Doesn't really fit right into any of the other high-gas price threads going on in the forum, but Keith Olbermann explores the Enron Loopshole that speculators have been able to drive monster-truck sized gas price through...at huge cost of all of us..legislation that McCain initially opposed but has completely ignored thanks largely to his loyalty to oil lobbyist, his own team of economic advisers in the pockets of big-oil and former Texas senator Phil Graham and his wife, a former-Enron corporate whore who helped Enron corner the California energy market and put lots of old folks on the streets...


AdRbuUQNcxw

Outrageous....they should all be strung up

:hang

Yes they all should be strung up. The more I learn the truth about why gas prices are up, the more I want to investigate our Government. Then, I read this:

http://hypocrisy.com/2008/06/23/running-out-of-oil-utter-nonsense/

This is all just insane! What can we do to stop this price gouging? :ihit

[Wild Cobra]

Why are Iran and other ME countries sitting on oil that they can't give away? I'd like to hear your explaination...

OPEC allots those counties the amounts to sell per period. Not the speculators.

[Marcus Bryant]

NOte that there is an economic reason to have futures contracts. Buyers of a commodity can put up a percentage of the total contract price to lock in a price today if they fear the price will be going up before delivery date. Suppliers of a commodity may want to sell a futures contract to lock in today's prices if they fear the price may go DOWN before delivery date. In each case the interested party puts up (or risks) a percentage of the contract price to protect themselves from economic losses due to a change in price between the day of the futures purchase and the day delivery is made. NOte However, the interested parties in this example are actually going to trade in the actual commodity. The buyer of the futures contract does want to take delivery of the commodity and the supplier of the commodity really does intend to sell the actual commodity to a buyer. SPECULATORS DO NOT WANT TO TAKE DELIVERY OF ANYTHING. THEY JUST WANT TO BUY AND SELL FUTURES CONTRACTS AND DO IT WITH A VERY SMALL PERCENTAGE OF THE TOTAL CONTRACT PRICE BEING PUT AT RISK.

And when the price moves against them they may face a margin call. At a minimum their margin balance will be adjusted downward. Man, all of this excitement about nothing.

[Nbadan]

Oil, Oil Everywhere And None Of It To Use

Exactly, it's such a prevailant urban legend that hardly anyone ever questions anymore whether there is any basis of fact....

[Nbadan]

OPEC allots those counties the amounts to sell per period. Not the speculators.

Right....blame OPEC....that's why the Saudi's can get around these OPEC caps so easily....

[Nbadan]

And when the price moves against them they may face a margin call. At a minimum their margin balance will be adjusted downward. Man, all of this excitement about nothing.

Unless they know that without bringing regulation back to these markets, there will be no margin calls....go back and study Enron and the California enegy 'crisis'...

[Marcus Bryant]

Unless they know that without bringing regulation back to these markets, there will be no margin calls....go back and study Enron and the California enegy 'crisis'...

That had nothing to do with margin requirements.

[Spur-Addict]

Watch the film in my sig.

[G-Nob]

McCain has taken less from big oil than obama, surprisingly...
http://www.factcheck.org/elections-2008/obamas_oil_spill.html

Here's the other comparison:
In case you need reference: McCain is the Senator from AZ, Senator Obama is from IL.
http://oilmoney.priceofoil.org/truemajority.php?zip=75228

[Wild Cobra]

McCain has taken less from big oil than obama, surprisingly...
http://www.factcheck.org/elections-2008/obamas_oil_spill.html

Here's the other comparison:
In case you need reference: McCain is the Senator from AZ, Senator Obama is from IL.
http://oilmoney.priceofoil.org/truemajority.php?zip=75228

Come on G-Nob. You know libtards don't know how to handle the truth.

Your second link brings us to Texas. Here are two for McCain and Obama:

Senator Barack Obama (D-IL)
Accepted $70,000 from the oil and gas industry since 2000. (http://oilmoney.priceofoil.org/truemajority.php?zip=62705)

Senator John McCain (R-AZ)
Accepted $22,350 from the oil and gas industry since 2000. (http://oilmoney.priceofoil.org/truemajority.php?zip=86301)

[Nbadan]

:rolleyes

McCain has the people most responsible for high gas prices as his campaign staff and advisers...

Oil Price Blame Game
By TED JACKOVICS

The Tampa Tribune
Published: June 26, 2008


TAMPA - The aviation industry - in a rare challenge to a fellow private-sector enterprise - has begun to focus on oil speculators as a chief cause of what it calls its worst-ever economic crisis.

A flurry of Capitol Hill sessions on fuel costs reflects an urgency that aviation interests say surpasses their economic concerns following the Sept. 11, 2001, terrorist attacks. Congress held its 40th hearing of the year Wednesday on the surge in oil prices, with the aviation industry chiming in on the most recent ones.

Industry advocates said they soon will make formal inquiries to the presidential candidates, U.S. Sens. John McCain and Barack Obama, to consider the impact of oil prices on airlines, the national economy and consumers, who are caught between the airlines and oil sellers as flights are cut and air fares increase.

"The airlines did not immediately catch up with the severity of this crisis, let alone Congress and the presidential candidates, so we are going to address that in our awareness program," said Kevin Mitchell, chairman of the Business Travel Coalition, a Radnor, Pa.-based advocacy group for business travelers.

The central issue regarding speculation is whether oil has evolved from a financial asset priced for its energy value to an asset traded for speculative value.

The price of oil has doubled on the international market in the past year, and demand has increased just 2 percent. That raises questions of whether U.S. and other speculators enjoy trading through foreign exchanges with no regulatory oversight, resulting in harm to the economy.

U.S. airlines are expected to lose as much as $13 billion in 2008, Victoria Day, a spokeswoman for the Washington-based Air Transport Association, said in releasing a revised forecast Tuesday.

"We are engaging in discussions with members of Congress to understand the situation first and to close oil pricing loopholes," Day said.

Although there is no consensus on what effect oil speculation might have on the recent international run-up in oil prices, the apparent disconnect between the 2 percent increase in global oil demand and 100 percent increase in prices has shunted issues such as control by the Organization of Petroleum Exporting Countries and growth in China and India to the background.

Some elected officials have concluded that the dramatic rise in oil prices in the past year has resulted from speculators gaining control of the energy market.

Between Sept. 20, 2003, and May 6, 2008, oil futures trading increased from 714,000 contracts to more than 3 million contracts. That represents a 425 percent increase in oil futures trading, U.S. Rep. Bart Stupak, D-Mich, said last week.

Hedges that airlines such as Southwest and other businesses use to ensure a stable price for fuel in future months accounted for 63 percent of the futures market in 2000, compared with 37 percent by speculators, Stupak said at a news conference. By April 2008, speculators were in control of 71 percent of the oil futures market compared with 29 percent by the so-called "physical hedgers" by airlines and others, Stupak said.

The presidential candidates have commented on the oil price crisis in general, without getting into details on aviation issues.

In a speech in Houston on June 17, McCain said that when enough speculators bet on the rising price of oil, it can cause prices to keep rising.

"And while a few reckless speculators are counting their paper profits, most Americans are coming up on the short end," McCain said.

On Sunday, Obama said a vibrant oil futures market can help producers and buyers hedge against swings in the price of oil. But an absence of common-sense rules allows a few energy lobbyists and speculators to undermine the public confidence in the integrity of the market, Obama said.

He called for the closing of the so-called Enron loophole, a legal position the failed company requested in 2000 that exempts some energy commodities from government oversight.

On the other side of the speculator issue are officials with the U.S. Commodities and Futures Trading Commission, which Congress created in 1974 to regulate commodity futures and option markets. They contend the data from Stupak and others is incorrect, and they plan to submit a report to Congress in September.

In addition, members of the New York Mercantile Exchange and the London-based InterContinental Exchange oppose congressional action on the futures market, contending it could harm business while failing to lower prices.

Daniel Yergin, chairman of Cambridge Energy Research Associates, told Congress on Wednesday that speculative factors have played a role in driving up oil prices and creating fear about tightening supplies, but emphasized the credit crisis and weak dollar have played roles in fuel price trends.

Airline officials, however, remain steadfast in support of action, not simply discussion, on futures trading.

"Reform and transparency in the energy commodity futures market represents a necessary step toward bringing the price of oil in line with supply and demand," said Glenn Tilton, United Airlines chairman, president and chief executive, in support of a Senate bill that would increase transparency in Commodity Futures Trading Commission activities.

Nine aviation industry groups will convene July 9 and 10 at an Energy/Air Service Summit for discussions in Washington with lawmakers, the Federal Aviation Administration and financial analysts.

"I'm not sure just what they can accomplish," said Louis Miller, Tampa International airport's director, whose July aviation authority meeting conflicts with the gathering of aviation officials. "But I know that when 40 percent of a ticket goes to pay fuel costs, it is a big problem to aviation and the local community. Something needs to happen."

Link (http://www2.tbo.com/content/2008/jun/26/bz-oil-price-blame-game/?news-money)



Funny when silver went to 50 dollars an ounce the government stepped in and regulated the speculation and the price dropped to less than 10 in about a week. Now we have special interest, all which benefit from speculation, saying it has nothing to do with the price of oil. Who do you want to believe? The sad truth is that those making all the money are doing so by pushing the general population under water. The even sadder truth is that virtually nothing will be done about it. The reason for this is the speculators are the friends of congress; they are university pension funds, large investment institution that make up our banking system and so on. These are the same people that are responsible for the real estate collapse and Bear Sterns. The same people that the Fed just balled out and sent us into a recession. If only those who took delivery were allowed to trade in Oil we would have less than $3 gas in a week, but it will never happen.