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The top six financial institutions in this country own assets equal to more than 60 percent of our gross domestic product and possess enormous economic and political power. One of the great questions of our time is whether the American people, through Congress, will control the greed, recklessness and illegal behavior on Wall Street, or whether Wall Street will continue to wreak havoc on our economy and the lives of working families.

I represent Vermont, where many workers drive long distances to jobs that pay $12 an hour or less. Many seniors living on fixed incomes heat their homes with oil during our cold winters. These people have asked me to do all that I can to lower outrageously high gasoline and heating-oil prices. I intend to do just that.

Why have oil prices spiked wildly? Some argue that the volatility is a result of supply-and-demand fundamentals. More and more observers, however, believe that excessive speculation in the oil futures market by investors is driving oil prices sky high.

A June 2 article in the Wall Street Journal said it all: "Wall Street is tapping a real gusher in 2011, as heightened volatility and higher prices of oil and other raw materials boost banks' profits." ExxonMobil Chairman Rex Tillerson, testifying before a Senate panel this year, said that excessive speculation may have increased oil prices by as much as 40 percent. Delta Air Lines general counsel Richard Hirst wrote to federal regulators in December that "the speculative bubble in oil prices has concrete detrimental consequences for the real economy." An American Trucking Association vice president, Richard Moskowitz, said, "Excessive speculation has caused dramatic increases in the price of crude oil, which harms end-users like America's trucking industry."

I released records last month that documented the role of speculators and put the information on my Web site for three reasons.

First, the American people have a right to know why oil prices are artificially high. The CFTC report proved that when oil prices climbed in 2008 to more than $140 a barrel, Wall Street speculators dominated the oil futures market. Goldman Sachs alone bought and sold more than 860 million barrels of oil in the summer of 2008 with no intention of using a drop for any purpose other than to make a quick buck.

Wall Street, of course, wants to hide this information. They don't want the American people to know the extent to which speculators keep oil prices artificially high and the great damage that does to our economy. After the information became public, it was suggested that some on Wall Street may stop trading in the oil futures market. Good!

Second, Congress recognized last year that excessive oil speculation must end. The Dodd-Frank financial reform legislation required the CFTC to eliminate, prevent or diminish excessive oil speculation by Jan. 17, 2011. Months after that deadline, the commission still has failed to enforce the law, and speculators still are making out like bandits.

Third, the commodity regulators' claim that they cannot end excessive oil speculation because they lack sufficient data is nonsense. As the information I released makes clear, the commission has been collecting this information for more than three years. The time for studying is over. It is time for action.

I agree with those who say trust in government is at an all-time low. That's not because Washington is too heavy-handed with Wall Street. Quite the contrary! The American people are angry and disillusioned because they see our government act boldly to protect Wall Street CEOs but not ordinary Americans. When Wall Street needed a $700 billion bailout, the government was there for them. When working families need an end to excessive oil speculation and real relief at the gas pump, the government has failed to act.

The same Dodd-Frank bill that required commodity regulators to limit speculators included my amendment calling for an audit of the Federal Reserve from Dec. 1, 2007, to July 21, 2010, the period of the financial crisis. What we learned was that the Fed provided $16 trillion in secret, low-interest loans to every major American financial institution and to other central banks, large corporations and wealthy individuals. The audit provision was vigorously opposed by the Federal Reserve chairman.

It was right, however, that the veil of secrecy at the Fed was lifted and the American people learned about its actions.

Now it is appropriate to lift the veil of secrecy in the oil futures market. The American people have a right to know how much excessive speculation has driven up oil prices and which Wall Street firms are doing it.

Originally posted to Senator Bernie Sanders on Fri Sep 16, 2011 at 09:09 AM PDT.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement and Income Inequality Kos.

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  •  Tip Jar (352+ / 0-)
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    Bernie Sanders was elected to the U.S. Senate in 2006 after serving 16 years in the House of Representatives. He is the longest serving independent member of Congress in American history.

    by Senator Bernie Sanders on Fri Sep 16, 2011 at 09:09:35 AM PDT

    •  Personally I have always thought the price spikes (17+ / 0-)

      were driven by market manipulation.

      But that's just me.

      The hungry judges soon the sentence sign, And wretches hang, that jurymen may dine.

      by magnetics on Fri Sep 16, 2011 at 10:22:35 AM PDT

      [ Parent ]

      •  Yes, there has always been market manipulation. (33+ / 0-)

        But those manipulations are now on steroids. There doesn't even need to be an excuse anymore for spikes involving supply and demand, just investment "plays" with the big players taking huge profits on the spikes.
           It's even worse when it comes to food prices where high prices are literally taking food out of the mouths of the poorest people in the world.

        "We the People of the United States...." -U.S. Constitution

        by elwior on Fri Sep 16, 2011 at 11:07:36 AM PDT

        [ Parent ]

        •  Oil price from the get-go are manipulated (14+ / 0-)

          by the obvious fact that oil prices are artificially set by the OPEC cartel / big oil. Add speculation by hedge funds , the big banks, Wall Street, in general, and oil prices can continue to be artificially high, even during a period of falling demand, economic stagnation

          •  "speculation" is a relatively nice (18+ / 0-)

            word.  It suggests that one is thinking ahead, a good thing.  What the traders on Wall Street are doing is gambling.  Moreover, they're gambling with other people's money.

            Now, I do have some sympathy for the fact that accumulating wealth is no longer as easy as it used to be.  When 30 year Treasury bonds (the safest investment of all) were earning 8% in 1990, that was the floor and any risk at all returned much higher. If a good investment, brings in 10%, then, in just seven years, the investor is twice as rich without doing a lick of work. Percentages are nifty that way.  They sort of disguise greed.

            Anyway, those days of easy money are gone, regardless of the crash, probably because, hard as they try, Wall Street can no longer restrict the money supply.  Though a $2.5 trillion stash of cash is a pretty good try. But, if they don't spend it, it's worthless.

            I also have some sympathy for oil shippers.

            http://www.marketwatch.com/...

            This news is rather startling:

            "Tanker rates have eased further since last week," Nokta said. "VLCC rates remain pressured and have fallen to $2,000 a day for cargoes moving from the Arabian Gulf to Asia."

            In 2008 VLCC supertankers were rented by shipping companies for around $170,000 a day.

            But, if shipping rates have fallen so much, how come that's not represented in the cost of foreign oil in the States?

            What I don't have sympathy for are credit card companies which are charging first time card holders 24.95%.  Ditto for recent immigrants and people with bad credit ratings.  That's unconscionable.  And that's not even including what they are collecting in various fees for late payments and in-house delays.

            Warren Stephens, the Lord of Little Rock is complaining about the federal government allocating credit.  I say "go for it."  The banks have done a lousy job.

            http://youtu.be/zjmxyaXVdDA

            by hannah on Fri Sep 16, 2011 at 01:17:16 PM PDT

            [ Parent ]

          •  This is really very silly (2+ / 0-)
            Recommended by:
            Sparhawk, orange dog

            Oil prices in the end are determined by supply and demand.  Even OPEC can't change that - they can artificially restrict supply, but the price still gets determined by the supply and demand.

            The only way that speculators could manipulate final prices would be to manipulate supply and demand.

            For example, if they could buy oil futures and then bribe oil producers to produce less oil, put huge amounts of oil into storage, or persuade states to fine people who car pool (increasing gasoline consumption and therefore demand).

            There is no evidence of any of these things.

            Oil production doesn't seem to be manipulated by anyone except OPEC and, as they are sovereign countries, we can't do anything about that.

            Storing enough oil to manipulate prices is pretty much impossible - it is a bulky commodity and there is no evidence of some Dr. Evil filling up dry lakes with stockpiled ore.

            I'm not aware of any way that you can manipulate oil demand in the short term.

            Wall Street makes lots of money off of oil and oil volatility - for example, letting people lock in heating oil prices for the winter using futures contracts - but that has no impact on the market price.

            If you do want to claim that Wall Street speculators are somehow increasing the price of oil you need to explain how.

            Also, voodoo is not an acceptable answer.

             

            •  Adam Smith is dead (5+ / 0-)

              Smithian "supply and demand" "invisible hand of the market" economics is so out of date, we may come to a point where we wonder if it ever was.
              However, let's try using some of the old language to put the current, investment-based global economics in some perspective, at least the facet that Sen. Sanders is trying to address:
              In investment-capital terms what might be called the "hardcopy" product - oil and its derivatives - and "hardcopy" consumers of that product those buying gas at the station -  are actually both raw materials to be "manufactured" in the production of profit.
              Investment speculators are consumers, and the product they consume are potential profits derived from stocks.  The oil corporations thus respond to the "demand" of the speculator-consumers by designing their hardcopy raw materials (oil and its consumers) into various reformulations of the commodity (stock-benefiting profit) to be supplied to the speculator-consumers to meet their demand, but in such ways as to ensure that the demand will not be wholly satisfied yet never disappointed, so that the demand remains at a fairly steady-state.  Hardcopy prices (e.g., at the gas-pump) thus rise and fall as indicators to speculator-consumers that profits will remain stable when not actually expanding.
              There are a couple signals in this narrative (or any such that would better articulate it) that the age of Smith is done and over.  Clearly, for instance, there is a feedback loop between the profit as commodity sold to speculators and the profit derived from the speculation purchase of stock.  That is, the oil corp. sells speculators profit, the speculators pay the oil corp. for this, which in turn increases the profit the oil corp. can then sell the speculators, etc., and it is this feed-back loop that really grounds the global investment markets; and there is a real danger that such loops spiral out of control until they become seemingly detached from their 'hardcopy' production-consumption markets.  That is not the only thing that went wrong with the housing market, but it is certainly a part of the story - speculation on housing loans sprialled so far away from the hardcopy property market it included bad debt as part of the feed-back loop - bad debt seemed to make profit, and in fact did so for a few years.
              So far, because oil has become as much a necessity as water or food, neither oil corporations nor their speculator-consumers have had to worry about making such a miserable gaffe.  Nonetheless, there are political issues, both national and global, as well as long term resource availability, that are bundled into the oil investment market place, and a number of these could get sucked into the loop and cause spiral-damage in the long run. A problem with investment capital is that even hardcopy necessity-commodities do not adequately ground investment-commodity feedback loops to provide long-term stability.  However, unlike with the old Smithian 'supply-side' producers and their hardcopy consumers, investment capital suppliers and consumers not only live easily with a high degree of risk and uncertainly, but frequently feed off these as leverage in the feed-back trading -
              - no matter how much damage and suffering this inflicts on hardcopy consumers, who, afterall, are mere fodder to be manipulated and sold off in speculation.  
                 

              •  P. E. A. K. O. I. L. (1+ / 0-)
                Recommended by:
                cacophonix

                Sorry, i think Sanders has it wrong, even though i generally respect the guy in a number of areas

                Why the hell is he singing the same song as Sarah "i'll bring back $2 gasoline" Palin ? That is bizarre.

                The simple fact is that it's supply and demand. focusing on the influence of speculation is a distraction. The fact of the matter is that when we are spending a resource that took millions of years to produce, and burning it up in a generation, it is going to run out as it is a finite resource. Insofar as we are depleting the resource, (less supply), and we have not sufficiently developed alternatives (increased demand) , of course the price goes up. Duuuuh  it ain't really about the speculation. You ain't seen nothing yet.

                Get a time machine if you want to go back to $2 gas, it is unlikely to happen ever again. Cheap fossil fuels are poison for the climate, so cheer on price parity for renewables, fie on cheap fossil fuels, i say.

              •  The line for tin foil hats starts over there (1+ / 0-)
                Recommended by:
                cacophonix
                In investment-capital terms what might be called the "hardcopy" product - oil and its derivatives - and "hardcopy" consumers of that product those buying gas at the station -  are actually both raw materials to be "manufactured" in the production of profit.

                So Joe Blow filling up his pick up truck with gasoline was manufactured by Wall Street?  Sorry... you've already lost me.

            •  Oil prices (4+ / 0-)
              Recommended by:
              TexDem, greengemini, elwior, orange dog

              Go back to the top. Read the diary. Oil prices are the result of supply/demand, PLUS excessive speculation.

              What ticks me off is the price at the pump. Last year gas was 2.79, oil was 70-80 a barrel. Now gas is 3.69 at the pump, same price per barrel. Its plain that the distributors are fixing the price, because no matter where you go its 3.69! I have never seen this before, and its a scam.

              Things are more the way they are today than they ever were before. -Jimmy Flynn

              by onionjim on Sat Sep 17, 2011 at 05:14:45 AM PDT

              [ Parent ]

              •  Evidence please? (1+ / 0-)
                Recommended by:
                cacophonix
                Go back to the top. Read the diary. Oil prices are the result of supply/demand, PLUS excessive speculation.

                The diary makes this claim.  Where is your evidence that it is true?  This is a claim that contradicts all normally accepted economics, so if you expect anyone to accept it you will need to provide actual evidence.

                What ticks me off is the price at the pump. Last year gas was 2.79, oil was 70-80 a barrel. Now gas is 3.69 at the pump, same price per barrel.

                Here's a chart of gas prices and oil prices together.  Seems to track pretty well.  There's also an explanation of why it sometimes does not.  http://www.theautoinsurance.com/...

                Its plain that the distributors are fixing the price, because no matter where you go its 3.69!

                I can't decide if this is snark or stupidity.

                Obviously, if someone was selling gas cheaper everyone would buy from him... so other gas stations cut their prices too or shut down.  So in a free market gas prices from different sellers for the same grade of gas will be the same.

        •  saw a quote from a Wall ST. speculator (4+ / 0-)
          Recommended by:
          elwior, alizard, billlaurelMD, greengemini

          averring with apparent delight:  the time of cheap food is over!

          Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

          by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:36:00 PM PDT

          [ Parent ]

      •  Market manipulation or not, (2+ / 0-)
        Recommended by:
        Ginny in CO, Sparhawk

        don't we want high oil prices?  High oil prices are the only thing that will ever get us off of oil.

        •  Yes and No (7+ / 0-)

          High oil prices also hit the very poor the hardest, especially given our horrendous public transit.

          Also, the excess here is just being used to pad the pockets of the rich, instead of for the transition to green energy.

          "What could BPossibly go wrong??" -RLMiller "God is just pretend." - eru

          by nosleep4u on Fri Sep 16, 2011 at 03:29:49 PM PDT

          [ Parent ]

        •  The other problem with this (5+ / 0-)

          was the world wide effects when the price of gas went to $4/gal in '08.  It hit food production and distribution so hard there were famines.

          Doncha just feel the cockles of your heart warming over the idea that the Banksters (Goldman Sachs, JPM, Lehman Bros and lots of others) got even more filthy rich while people go hungry and some die.

          No, we don't want oil prices going high quickly. Doesn't help the truckers or the airlines either.

          "People, even more than things, have to be restored, renewed, revived, reclaimed and redeemed; never throw out anyone. " Audrey Hepburn "A Beautiful Woman"

          by Ginny in CO on Fri Sep 16, 2011 at 06:23:45 PM PDT

          [ Parent ]

          •  Truckers and airlines and farmers need to (0+ / 0-)

            reduce their oil consumption, too.  It's not just people driving to the grocery store who consume gas.

            •  They do, over time. A sudden change from (0+ / 0-)

              a steep increase in oil costs that creates a significant reduction in established services can have a very significant ripple effect.

              Which is a really big problem when it becomes famine.

              The shipping industry would have been more germane to this than the airlines.

              "People, even more than things, have to be restored, renewed, revived, reclaimed and redeemed; never throw out anyone. " Audrey Hepburn "A Beautiful Woman"

              by Ginny in CO on Sat Sep 17, 2011 at 04:11:04 PM PDT

              [ Parent ]

              •  "why"? (0+ / 0-)

                If one's worried about famine, redirect gas tax revenue into farm subsidies.  But that doesn't justify not raising the price on oil, because everyone needs to reduce their oil consumption.  Personal driving habits are just a small fraction of total carbon emissions.

                How do you conclude that the shipping industry can reduce fuel consumption so much easier than the airline industry -- an industry where, for example, I have to fly through Chicago to go from Cedar Rapids, IA to Des Moines, IA?  Why should the farming industry get a free pass on their (not insignificant, by any stretch) emissions?

        •  It hasn't worked yet. n/t (0+ / 0-)

          Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

          by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:37:10 PM PDT

          [ Parent ]

        •  Giving billionaires stacks of cash to buy (2+ / 0-)
          Recommended by:
          greengemini, elwior

          leer jets with won't stop global warming.

          "I'm tired of hearing that it's "pragmatic" to support positions that most people oppose." RFK Lives

          by JesseCW on Fri Sep 16, 2011 at 11:01:06 PM PDT

          [ Parent ]

      •  yes, sometimes they seem to (1+ / 0-)
        Recommended by:
        bunsk

        correlate interestingly with political events
        such as a given candidate's standing in the polls

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:35:19 PM PDT

        [ Parent ]

    •  Senator, (5+ / 0-)

      with all due respect, what about the role of the Federal Reserve printing money out of thin air to create artificial demands for stocks and commodities alike?  Seems to me that anyone who participates in the market - whether they are individuals or institutions - is a speculator by nature because they're all speculating that what they buy will eventually net them profits.  

      Obama is really pissing me off.

      by That Korean Guy on Fri Sep 16, 2011 at 10:22:41 AM PDT

      [ Parent ]

      •  QE2 whereby the Fed purchases a trillion dollars (3+ / 0-)
        Recommended by:
        cpresley, notdarkyet, alizard

        of bank Treasuries; and the Fed's policy of keeping low interest rates in general -- deliberate policies on the part of the Fed to encourage Wall Street to raise asset prices, including oil. The effects were higher asset prices (in oil, food, equities, in general, etc.), and thus higher profitability for Wall Street. Higher profits for speculators, for TBTF banks that still have a large amount of toxic debt on their balance sheets. The latter just another back-door bailout for the zombie, TBTF banks that were responsible for the financial and economic recession/depression that we still find ourselves in.

        Higher asset prices that both enrich/bailout Wall Street (a continuation of the multitrillion dollar bailouts referred to by Sen. Sanders)  -- higher profits/ bailouts while the American people suffer from high unemployment/underemployment, falling wages, record numbers of foreclosures, defaults, and houses underwater, and now artificially induced speculation that raises the price of energy on the American people.

        (QE2 also was a backdoor way for the Fed to finance record US deficits.)

      •  commodities (2+ / 0-)
        Recommended by:
        OHdog, elwior

        commodities are different however, they are a real tangible asset for the most part.

        Of course wall street is a casino, always has been.

        Bad is never good until worse happens

        by dark daze on Fri Sep 16, 2011 at 11:52:35 AM PDT

        [ Parent ]

        •  But the speculative "instruments" that make up the (0+ / 0-)

          futures-futures market are what I understand to be the drivers of upward general momentum and the wonderfully profitable volatility. The ideal play would be one that drives the price curve asymptotically upward, followed by a giant crash.

          "Is that all there is?" Peggy Lee.

          by jm214 on Fri Sep 16, 2011 at 01:04:00 PM PDT

          [ Parent ]

          •  no (1+ / 0-)
            Recommended by:
            elwior

            no the initial momentum is usually something in the world which will spook people.  Speculation then feeds into and off of this catalyst.  Then speculation and price dives when some other entity or event happens.

            Bad is never good until worse happens

            by dark daze on Fri Sep 16, 2011 at 03:54:32 PM PDT

            [ Parent ]

            •  yes (4+ / 0-)
              Recommended by:
              AnnCetera, elwior, orange dog, dark daze

              Guess what? You agree with me!

              I understand that apparent behavior of "markets." Too bad I didn't express it more clearly, that the speculation "drives" the initial momentum (in the stupid "market," that confluence of greed and fear that deals in intangible succubi that drain the life out of real wealth and real people), both up, and down.

              And it's a waste of time for me and all the rest of us who just live day to day and have only the to even talk or kvetch about the enormity of It All, since I obviously am not a "player" in "the game" where people claim to "earn" money and all that goes with it, not by doing anything useful for their fellow man (spare me the shit about "increasing liquidity" and "encouraging and funding innovation" and all that, the hugest "notional value" of "innovation" is currently in the "value" of securitization and derivitization off the made-up securities and "laying off risk" in the form of the various "insurance trades" that ultimately, since they are phony but by convention get treated as Real Money, have to be made good by people like me who actually labor for a paycheck, as opposed to playing Risk Roulette for a huge salary plus bonus and other perks.

              It's the difference between people who EARN their daily bread, and those who literally "make money," in a counterfeiting ring that with their made-up money, in a wonderful example of Fraud Writ Large and Perpetual Motion, they have been able to render "not illegal."

              And I guess that makes me, and people like me who just want plain-vanilla lives and some sense that among all the other frauds and scams that perforate and perfuse our little living-small meaningless existences, some bunch of Bankstas will not foreclose on their homes (some of which are fully paid off, but nonetheless corrupt judges evict the owners, do not tell me that, among many other abuses, has not happened) nothing but a bunch of FREIERS.

              Apologies for the likely invisible venting. May your God bless you and your loved ones and keep you safe, in what seems to me to be inevitably coming...

              "Is that all there is?" Peggy Lee.

              by jm214 on Sat Sep 17, 2011 at 06:11:50 AM PDT

              [ Parent ]

      •  The best money has no intrinsic value. (3+ / 0-)
        Recommended by:
        Creosote, AnnCetera, elwior

        Money is a symbol of value, or an icon, if you will, just as the letters of the alphabet are symbols of sounds that combine into words to express ideas.  It makes as much sense to restrict the availability of money as it does access to reading and writing.

        Oh, wait, there was a time when we did that in an effort to keep certain populations subordinate.

        Now, when money was made out of precious metals, there was an added incentive (in addition to greed and an obsession with accumulation) for sequestering it.  But, that was a sign that the currency was not perfect.  
        In a sense, when you think about it, the North American natives using sea shells to mediate their trade and exchange were on the right track.  They knew that what counted was trustworthy people.  And the Europeans arrived and cheated them out of their land and laughed at their sea shells.

        http://youtu.be/zjmxyaXVdDA

        by hannah on Fri Sep 16, 2011 at 01:23:48 PM PDT

        [ Parent ]

    •  I have other questions: (5+ / 0-)

      1) You say:

      Why have oil prices spiked wildly? Some argue that the volatility is a result of supply-and-demand fundamentals. More and more observers, however, believe that excessive speculation in the oil futures market by investors is driving oil prices sky high.

      Why do you think these two viewpoints are incompatible? It could be that speculators are driving the prices of oil futures higher because they see a supply problem in the future. Which, in case you haven't read about peak oil and growing populations, there is a supply problem going forward.

      2) What is the context of your opening statement? Why are you comparing assets of financial institutions to the GDP? That comparison makes absolutely no sense to me. Plus, doesn't pretty much all money in the economy come to us through loans made to the banks by the government? So shouldn't their balance sheets reflect massive assets (and massive liabilities - namely the repayment of said loans)?

      Try looking at things another way.

      by atheistben on Fri Sep 16, 2011 at 11:31:00 AM PDT

      [ Parent ]

      •  real supply (2+ / 0-)
        Recommended by:
        mickT, elwior

        real supply and demand issues would effect the price of oil within a few percentage points one way or the other.  

        What speculators do is take a momentum move created by real supply moves and greatly magnify it.  So what would be a two percent move turns into a 10% move.

        so really save you peak oil nonsense, while it may be a macro problem, it simply isnt a daily trading problem right now.  The world at this time has plenty of oil.

        Bad is never good until worse happens

        by dark daze on Fri Sep 16, 2011 at 11:56:11 AM PDT

        [ Parent ]

        •  Why do you think (5+ / 0-)

          the price of oil would only be affected by small percentages? Demand for oil is very price inelastic, meaning you buy about the same amount, regardless if it costs $3/gal or $4/gal. This means that it takes large changes in price to change you behavior such that you use less of it and the market reaches an equilibrium.

          In markets where there is speculation, price fluctuations tend to be moderated by the speculation.

          Try looking at things another way.

          by atheistben on Fri Sep 16, 2011 at 01:51:53 PM PDT

          [ Parent ]

          •  wrong 100% (2+ / 0-)
            Recommended by:
            mickT, elwior

            macro demand and supply change in small 1 to 2 %  yearly.  Price however can change by as much as 10% in a week.  Speculation my friend is the cause.

            God I'm so sick of having this conversation with people who just dont understand nor get it.

            Bad is never good until worse happens

            by dark daze on Fri Sep 16, 2011 at 03:51:19 PM PDT

            [ Parent ]

            •  Change in supply and demand (5+ / 0-)

              is not the same thing as change in price.

              I'm going to simplify the problem. Assume you have 10 people who are buying oil. Person #1 is willing to buy up to 10 barrels at a price at or below $20, person #2 is willing to buy up to 10 barrels at a price at or below $30, person #3 is willing to buy up to 10 barrels of oil at a price at or below $40, etc. In this case, when supply is 100 barrels, price is $20 and all oil gets sold. But when supply is 90 barrels, price rises to $30, and person #1 doesn't buy any, resulting in the 90 barrels being consumed.

              You are assuming demand curves that, like these, are at 45 degree angles. That's the only way you get price fluctuations that vary by the same percentages as the change in actual supply and demand.

              Here's the real oil market. Almost everyone is willing to pay $150+ per barrel. But we've got a few stragglers (say 2% of oil purchasers), who will stop buying oil when it rises from $60 to $90. So, in order to make up for supply decrease of 2%, the price would have to rise from $60 to $90 to get those people to drop out of the market. That's the only way you get to equilibrium.

              This is a basic microeconomics problem. I'm telling you where you are screwing it up: you're assuming a demand curve shape that is far more price elastic than reality. Give that some thought. Let me know if you need me to further clarify.

              Try looking at things another way.

              by atheistben on Fri Sep 16, 2011 at 04:34:45 PM PDT

              [ Parent ]

              •  Right (2+ / 0-)
                Recommended by:
                cacophonix, atheistben

                Excellent explanation.

                Another way to think of this: your town doesn't have any external trade and can produce food for 100 people with a population of 98. Food is comparatively cheap. Now another person comes into town, then another. There are now 100 people in town, food is still cheap.

                Now another person walks in and the town's population is now 101. Food is now horrendously expensive! What happened? Demand only increased by 1% but prices are up 1000%! It must be speculators, right?

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Fri Sep 16, 2011 at 07:53:39 PM PDT

                [ Parent ]

                •  my god (0+ / 0-)

                  the ignorance you show by this comment is staggering, and whats worse, you dont even realize it.

                  Bad is never good until worse happens

                  by dark daze on Sat Sep 17, 2011 at 09:06:23 PM PDT

                  [ Parent ]

                  •  Lol (0+ / 0-)

                    It's an illustration of inelastic prices. Perhaps you can point out the flaw here.

                    (-5.50,-6.67): Left Libertarian
                    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                    by Sparhawk on Sun Sep 18, 2011 at 01:30:42 PM PDT

                    [ Parent ]

                    •  that all goes out the window (0+ / 0-)

                      when you have actors within the system who only care about short term price manipulation.

                      You really dont understand what goldman, jp, or any of these other banks are up to.  They arent acting in good faith, they are taking advantage of a system.

                      Speculation in its original intent is fine, what is being performed however is not that.

                      Bad is never good until worse happens

                      by dark daze on Mon Sep 19, 2011 at 08:02:18 AM PDT

                      [ Parent ]

              •  wow (0+ / 0-)

                you sir have NO idea how the commodity markets actually work.  Thanks for proving it.

                Like a clueless teacher teaching in theory, when in reality, theory has little bearing on the games that are played.

                Bad is never good until worse happens

                by dark daze on Sat Sep 17, 2011 at 09:08:45 PM PDT

                [ Parent ]

              •  embarrassing (0+ / 0-)
                Almost everyone is willing to pay $150+ per barrel.
                 and you act as if your comment are serious.  

                Bad is never good until worse happens

                by dark daze on Sat Sep 17, 2011 at 09:10:20 PM PDT

                [ Parent ]

            •  You should pay attention to Atheistben (3+ / 0-)
              Recommended by:
              cacophonix, AnnCetera, atheistben

              That's one of the best explanations of price inelasticity that I have seen for a long time.

          •  100% wrong (1+ / 0-)
            Recommended by:
            elwior
            In markets where there is speculation, price fluctuations tend to be moderated by the speculation.
            you just showed you have no idea what you are talking about on this subject.  Not uncommon.

            Bad is never good until worse happens

            by dark daze on Fri Sep 16, 2011 at 03:52:22 PM PDT

            [ Parent ]

            •  The whole point of speculation (3+ / 0-)
              Recommended by:
              Wham Bam, Sparhawk, cacophonix

              is that it mitigates price fluctuations by slightly raising the price. But the incentives it creates on the supply side can reduce or in some cases reverse even that price increase.

              I refer you to the wiki summary of the benefits of speculation.

              Try looking at things another way.

              by atheistben on Fri Sep 16, 2011 at 04:45:23 PM PDT

              [ Parent ]

              •  my god (0+ / 0-)

                in theory yes, NOT REAL LIFE PRACTICE.

                This is exactly why goldman and their ilk get away with it, people SIMPLY DONT understand what they are up to and what they do every fucking day.

                Bad is never good until worse happens

                by dark daze on Sat Sep 17, 2011 at 09:03:41 PM PDT

                [ Parent ]

            •  Actually, he is totally right (2+ / 0-)
              Recommended by:
              Sparhawk, cacophonix

              For example, futures markets serve to smooth out minor supply / demand issues since some buyers can substitute a later (or earlier) purchase for a current purchase.

              For example, when people lock in a heating oil price for the winter that serves to smooth out prices for them.  It is done with futures contracts.

              •  that is how it is suppose to be (0+ / 0-)

                it isnt how it works in reality.

                You people need to understand the difference of theory and practice.

                Goldman, JP and the rest have turned everything upside and on its head.

                Bad is never good until worse happens

                by dark daze on Sat Sep 17, 2011 at 09:02:31 PM PDT

                [ Parent ]

                •  You know, you've used this (0+ / 0-)

                  "theory vs reality" argument up and down with this thread, but you've failed to actually highlight where and why reality is different from theory. My viewpoint is that it isn't. So why don't you tell us exactly how the markets are being manipulated, because it looks to me like the investment banks just saw a buy-low-now;sell-high-later opportunity with oil. And that is up the up and up in our economic system.

                  Try looking at things another way.

                  by atheistben on Tue Sep 20, 2011 at 10:56:01 AM PDT

                  [ Parent ]

      •  For the foreseeable future, the US, Europe (2+ / 0-)
        Recommended by:
        jm214, elwior

        and the world economy, will continue to be stagnant at best, and increasingly likely to fall into recession again. So it's not likely there will be a supply problem going forward, at least in the short-to medium turn.

        And given the fact that oil prices are determined more by the OPEC cartel/big oil cos., rather than supply/demand fundamentals, when you then add a rise in speculative demand, it's not hard to keep oil prices artificially high, even in the context of a sluggish economic environment.

  •  There are only 535 (22+ / 0-)

    members of Congress, and the richest of the rich have hundreds of billions to buy them off.

    One of the great questions of our time is whether the American people, through Congress, will control the greed, recklessness and illegal behavior on Wall Street, or whether Wall Street will continue to wreak havoc on our economy and the lives of working families.

    The question answers itself. Indeed, it already has.

    The real question, then, is What To Do About It.

    Obviously, it is futile to try to work within what is a clearly corrupt institution. That leaves us pondering how to go about working on it from the Outside.

    Al Qeada is a faith-based initiative.

    by drewfromct on Fri Sep 16, 2011 at 09:18:09 AM PDT

    •  thanks for this, PW (1+ / 0-)
      Recommended by:
      melo

      the Solyndra thing has RW think-tank PR fingerprints all over it.  I can smell the stench from here.

      With my wonderful ex-Congressman Cliff Stearns right at the forefront, how nice.

      We need to counter these bastards.

      Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

      by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:39:57 PM PDT

      [ Parent ]

  •  Good luck with that (11+ / 0-)
    "Prior to joining Treasury, Chairman Gensler worked for 18 years at Goldman Sachs, where he was selected as a partner; in his last role he was Co-head of Finance."

    http://www.cftc.gov/...

    "Forget it Jake. It's Chinatown."

    •  He is actually FOR strong position limits (1+ / 0-)
      Recommended by:
      cocinero

      It is one of the other 3 Democrats on the panel who votes with the Republicans but he is supposed to be replaced by another Democrat, Mark Wetjen, as soon as the entire Senate votes.  I am not sure when that will be scheduled.

      President Obama, May 5, 2011: "When we say we will never forget, we mean what we say".

      by Drdemocrat on Fri Sep 16, 2011 at 10:37:59 AM PDT

      [ Parent ]

    •  You mean he worked for (3+ / 0-)
      Recommended by:
      RJDixon74135, alizard, elwior

      Government Sachs and the eternal revolving door between their executives and government financial industry oversight positions?   That revolving door has been spinning at the speed of light for decades despite everyone noticing that there are no more chickens in the coops those foxes have been "guarding".

      There already is class warfare in America. Unfortunately, the rich are winning.

      by Puddytat on Fri Sep 16, 2011 at 02:21:05 PM PDT

      [ Parent ]

  •  Thank you, Senator (27+ / 0-)

    I need to tell you how heartbroken I am re: the devastation in your State -- a clear example why infrastructure funding should be increased.  I was, however, happy to read many stories of the resilience, bravery and general kindnesses of neighbors in a State I love.  Sorry if this is off topic, but I just want to thank you for caring not just for your constituents but the entire nation.  

    Vi er alle norske " My faith in the Constitution is whole; it is complete; it is total." Barbara Jordan, 1974

    by gchaucer2 on Fri Sep 16, 2011 at 09:22:59 AM PDT

  •  Appreciate your people priorities! (8+ / 0-)

    I have the same priorities. Keep speaking for us!

    "Time is for careful people, not passionate ones."

    by roseeriter on Fri Sep 16, 2011 at 09:30:33 AM PDT

  •  Wow. $12 an hour? (8+ / 0-)

    Sorry. I lust after a salary that big. My husband's been unemployed for years and I make less than $9/hour.

    "This is about the human heart, and if that sounds corny, so be it." -- Keith Olbermann

    by allergywoman on Fri Sep 16, 2011 at 09:31:04 AM PDT

  •  Senator, another question: (1+ / 0-)
    Recommended by:
    Situational Lefty

    Why did you participate in the Kabuki theater surrounding the creation of the Super Congress?

    "In any event, it is safe to assume that the ends of capitalism will be as unprecedented as everything else about it has been." -- Gopal Balakrishnan

    by Cassiodorus on Fri Sep 16, 2011 at 09:34:46 AM PDT

  •  Wrong data set (3+ / 0-)
    Recommended by:
    VClib, Sparhawk, Wham Bam

    Whether speculators can raise prices  is debatable, but if they can, it will have to show up in excess physical storage somewhere which is not tracked by the CFTC.

    •  Justa - Speculating in commodities (3+ / 0-)
      Recommended by:
      Sparhawk, Sky Net, Wham Bam

      I have the same issue that you do. At the end of a futures contract someone has to actually take possession of the oil which is big, bulky and dirty and can only be stored in specific locations. At some point real supply and demand will set the price.

      "let's talk about that"

      by VClib on Fri Sep 16, 2011 at 09:47:55 AM PDT

      [ Parent ]

      •  There was a suggestion that excess tankers (7+ / 0-)

        were being used to store the extra oil in 2008.  That is possible, but, again, wouldn't show up in CFTC data and would be rather limited  (i.e. this could generate a onetime increase in oil prices, not a sustained rise).

        •  more than a suggestion... (6+ / 0-)

          oil industry and shipping industry magazines just some of the sources for that info.

                Indeed, there was the observation that there was a shockingly large amount (I remember it as 45% but...) of tankers taken out of service just for storage and price manipulation.
               So not only was the cost of the product manipulated higher by 'scarcity' the shipping costs were up as well.
               This is a fairly tight industry as I understand it, and if someone has the big bucks to do this there are certainly plenty of pros in the woodwork all to ready to help them and add their fees. And then there are the industry magazines...
             

          ..squinting all the while in the glare of a culture that radiates ultraviolet consumerism and infrared celebrity...Russell Brand

          by KenBee on Fri Sep 16, 2011 at 10:17:42 AM PDT

          [ Parent ]

          •  the tankers were taken out of service because of (0+ / 0-)

            lack of demand during the crisis; that provided the opportunity to use them for other things such as longer term storage.  But again;

            (1)  That wouldn't show up in CFTC data, making Sen. Sanders proposal irrelevant; and

            (2)  It would provide a one time price boost which would eventually be offset (and that should likely have occurred);
             and

            (3)  This is less likely absent a lower than usual demand for tankers

            •  no, the article I read and then linked here (11+ / 0-)

              a long time ago said definitely they were taken out of service precisely for market manipulations.
                Shipping rates and orders for, prices, and construction of new vessels was also an effect.
                and that's not the single hull/double hull issue either. These were double hull 'supertankers' being parked. Full. The picture showed a huge line of them anchored all around the mideast.
              Parked 'waiting for the price to go up.'
              Parse that any way you like, the price goes up when there is low supply, what I was referring to was an intentional manipulation.  Trying to control it worldwide seems Sisyphean. This was a worldwide market manipulation.

              ..squinting all the while in the glare of a culture that radiates ultraviolet consumerism and infrared celebrity...Russell Brand

              by KenBee on Fri Sep 16, 2011 at 10:47:26 AM PDT

              [ Parent ]

            •  you are wrong (3+ / 0-)
              Recommended by:
              OHdog, drewfromct, elwior

              Goldman and so forth have to be able to take physical possession of a certain amount of this commodity.  They park tankers off coast to do so.

              Hell one of the problem of using tankers to clean up the Gulf last summer was that goldman and the like had all the excess tankers wrapped up sitting off coast in their manipulation game, so no tankers were available.

              Bad is never good until worse happens

              by dark daze on Fri Sep 16, 2011 at 11:59:30 AM PDT

              [ Parent ]

              •  You must be kidding me (1+ / 0-)
                Recommended by:
                Sparhawk

                Do you think you use oil tankers to clean up an oil spill?!?

                Hell one of the problem of using tankers to clean up the Gulf last summer was that goldman and the like had all the excess tankers wrapped up sitting off coast in their manipulation game, so no tankers were available.

                This is ludicrous.

      •  Actually you don't need to take physical delivery (8+ / 0-)

        You simply "roll over" your position to the next month or you close out your contracts by buying offsetting contracts. Here's just one of thousands of explanations

        In reality, very rarely does physical delivery take place in commodity futures. At the same time, market participants do not necessarily need to wait for the expiry of their contract to settle their obligation vis-à-vis the exchange.

        Positions are often closed by taking an offsetting position for an equal and opposite amount of contracts. For example, a buyer of a certain futures can therefore sell an equal amount of that futures, making their net obligation relative to the exchange zero.

        I thought this time it would be different. Boy, what a maroon.

        by recentdemocrat on Fri Sep 16, 2011 at 11:17:11 AM PDT

        [ Parent ]

        •  That has no effect on prices (1+ / 0-)
          Recommended by:
          Sparhawk

          Contracts which are rolled (which as you correctly note is what most speculators do) have no effect on physical prices because they do not affect the demand for physical oil.

          For speculators to have an effect on real physical prices they need to take delivery, which, as you note, is unusual.

          •  That's crap (9+ / 0-)

            Excessive speculation mimics demand, in effect creating a virtual economy.  This raises the commodity price, as futures contracts become more scarce in proportion to the level of speculation in the market, which in turn raises the rollover.  Even if a speculator doesn't take delivery (and they very, very rarely do) they've raised the price of the commodity, which ultimately raises prices as the pump.  They do this because it generates a profit.  How could you not know this?  It's not like it's a secret history, or anything.

            I mean, seriously, why in the hell do you think commodities speculators put so many billions of dollars into oil futures?  Did you think that the profit that accrues to big firms like Goldman Sachs didn't add to the price of the commodity?  Really?

            Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

            by Fed up Fed on Fri Sep 16, 2011 at 11:33:17 AM PDT

            [ Parent ]

            •  You missed a step there (2+ / 0-)
              Recommended by:
              Sparhawk, Justanothernyer

              How does a higher futures price raise the price at the pump unless you have somehow reduced supply or increased demand for physical gasoline?

              I mean, seriously, why in the hell do you think commodities speculators put so many billions of dollars into oil futures?  Did you think that the profit that accrues to big firms like Goldman Sachs didn't add to the price of the commodity?  Really?

              Definitely.

              Futures and similar instruments are about selling and buying risk.

              For example, you want to invest in an oil production facility that will only be profitable if oil is selling for more than US$100 per barrel.

              It is at $120 today, but who knows what it will be at in 5 years?

              So you sell futures today at $115, locking in your price, and plan to settle by delivering physical oil over the next five years.

              You've capped your upside but you have eliminated your downside risk.

              Meanwhile, Goldman is also doing similar deals with people who want to lock in low prices (ie. you are building a plant that can produce profitably if oil prices are less than $130 / barrel and you want to lock in that price today.)

              They sit in the middle, taking profit for minimal risk because they are betting both ways just like a bookie.

              In fact, that's a good example.

              Do you think a bookie has to manipulate which horse wins to make money?

          •  I don't get this argument. (3+ / 0-)
            Recommended by:
            recentdemocrat, mickT, elwior

            If I sell to bill for $10, he sells to ted for $15, he sells to Mary for $20, and they sell to me, I still am paying $20, instead of the $10 it cost to get it from the producer.

            And no value was necessarily added.

            Rick
            -9.63 -6.92
            Fox News - We Distort, You Deride

            by rick on Fri Sep 16, 2011 at 11:33:54 AM PDT

            [ Parent ]

          •  True...but in a period of increasing demand (7+ / 0-)

            contract deliveries is a non-issue.  There is no doubt that speculation has had a large effect on prices.  Dodd-Frank says this shouldn't be happening.

            Enforce the law.

            The Dude abides, now get off my lawn.

            by Boris49 on Fri Sep 16, 2011 at 11:46:06 AM PDT

            [ Parent ]

      •  Hot potato? n/t (0+ / 0-)

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:46:06 PM PDT

        [ Parent ]

      •  along the lines of Milo Minderbender's (1+ / 0-)
        Recommended by:
        elwior

        cornering of the cotton market in Catch-22?

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:46:33 PM PDT

        [ Parent ]

    •  Would you expand on this please? n/t (0+ / 0-)
    •  Absolute bullshit (12+ / 0-)

      Speculators can and do both increase and decrease prices on stocks and commodities all the time, often deliberately so they can manipulate prices into giving them an artificially induced profit, effectively creating fake value then cashing it in, leaving the company (and the other investors and sometimes the govt) with the bill.  

      Given sufficient capital a single investor or group of investors colluding can boost or depress an entire market sector.  The 2008 oil price spike was caused by investors who saw the impending housing collapse retreating from those positions and moving their money into oil - I read that one company alone - who does NOT use oil - owned 11% of the entire oil futures market at one point during that debacle.

      New favorite put-down: S/he's as dumb as a flock of Sarah Palins

      by sleipner on Fri Sep 16, 2011 at 10:26:32 AM PDT

      [ Parent ]

    •  Excess speculation shows up as demand. (2+ / 0-)
      Recommended by:
      elwior, rimstalker

      Demand raises prices.

      Bubbles form.

      Bubbles eventually burst, but before they do, a lot of money can be made.

      Happy little moron, Lucky little man.
      I wish I was a moron, MY GOD, Perhaps I am!
      -Spike Milligan

      by polecat on Fri Sep 16, 2011 at 10:59:32 AM PDT

      [ Parent ]

      •  Speculation can occur in the futures markets (0+ / 0-)

        without affecting demand.

        •  No, no it can't (4+ / 0-)
          Recommended by:
          aliasalias, polecat, OHdog, elwior

          Speculation is another word for demand.  Speculators buy contracts for a commodity at a set price, which means they're taking a certain amount of that commodity off the market.  All of which is a euphamism for demand.

          Speculation cannot occur in the futures market without affecting demand because it is, in fact, demand.

          Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

          by Fed up Fed on Fri Sep 16, 2011 at 11:35:38 AM PDT

          [ Parent ]

          •  Only if they take delivery (1+ / 0-)
            Recommended by:
            Wham Bam

            If they instead roll or close out the contract (and yes, rolling is a subset of closing out), there is no excess physical demand.

            •  That's a manufactured distinction (4+ / 0-)
              Recommended by:
              polecat, OHdog, pot, elwior

              In a global economy that surpasses available capital, virtual demand and "physical" demand (a term I've never enountered, by the way) are synonymous.  You're now playing semantics out of ego-defense, I think.

              Demand is demand is demand, and that's why speculators speculate, because they can pump up the price and make a profit.  To argue otherwise is to ignore the fundamental impetus behind Wall Street mineral speculation.  They don't do it for their health, they do it to make lots and lots of money by driving up the price of oil.  It's all one giant rigged casino.

              Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

              by Fed up Fed on Fri Sep 16, 2011 at 12:35:10 PM PDT

              [ Parent ]

              •  When you close the position (1+ / 0-)
                Recommended by:
                Sparhawk

                the demand goes away unless you are taking physical delivery.

                •  Your argument is oddly reminiscent (1+ / 0-)
                  Recommended by:
                  elwior

                  of Republicans saying that the ARRA created no jobs because none of them were infinite.  Short-term price spikes are kind of why they call them "bubbles."  They burst when the "demand goes away," leaving small-time investors on the hook.  This is why a lot of market watchers try to mimic the Goldman Sachs index, because that's the firm most culpable in driving up commodity prices, and the least likely to be left holding the bag when the bubble bursts.

                  Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                  by Fed up Fed on Fri Sep 16, 2011 at 01:47:04 PM PDT

                  [ Parent ]

                  •  I get the sense that you don't understand how (2+ / 0-)
                    Recommended by:
                    Wham Bam, Sparhawk

                    futures markets differ from spot markets.

                    If that is incorrect I apologize, but that seems the most likely reason for the way you misinterpreted my comment.

                    If that is correct then I will be happy to explain further.

                    •  I understand the difference (1+ / 0-)
                      Recommended by:
                      elwior

                      I get the feeling you don't understand how futures markets determine spot market activity.  Nobody was saying that speculators execute futures contracts with the intent to consume hundreds of millions of barrels of oil, but the very nature of the transaction causes the price of oil to go up.  How is this controversial to you?  Are you under the impression that mineral speculators aren't making a profit from this transaction?  If you do understand that they are making a profit, from where do you think that profit derives?

                      Really, I'm just not certain how you think the activity of mineral speculation benefits large trading houses if not for the profitable activity of inflating prices and cashing in.

                      Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                      by Fed up Fed on Fri Sep 16, 2011 at 02:16:00 PM PDT

                      [ Parent ]

                      •  Let's walk through an example (1+ / 0-)
                        Recommended by:
                        Sparhawk

                        On August 15, Speculator buys October futures on 1,000,000 barrels of oil which expire September 15th.  The futures price of the October contract should rise to reflect this transaction.

                        Today's spot price will not rise because there is no additional demand created today and the expectation is that the futures position will not lead to additional demand in the future, because the overwhelming majority of futures positions are closed before delivery.  

                        If the futures position is closed before September 15th, the price of the future will be reduced by the same amount as it increased on August 15th because the demand for the future has changed by the same amount.

                        The spot price of course doesn't drop because there is no reduction in demand today and no expected additional demand which disappeared in the future.

                        What do you think happens at each point in time?

                        •  Um (1+ / 0-)
                          Recommended by:
                          elwior

                          You apparently don't understand the economic term "demand."  All activities involved in the consumption side of the economic activity are demand, including futures contracts.

                          And your setup was really self-serving.  Yes, a one month futures contract on a million barrels of oil will effect a price change, only it would be miniscule as that much oil is barely a rounding error in the global economy.  But, first, Wall Street speculators aren't buying a million barrels of oil.  They're buying hundreds of millions of barrels.  And they're not just making one contract, they have multiple contracts over long periods of time that allow them to lock up big hunks of global supply.

                          Anyways, this has been fun and all, but I think we're down to the point where you're constructing hypotheticals that have nothing to do with what's actually happening on Wall Street.  There are no economists who take your view.  Some think that speculation has more impact, and some less, but nobody with any education in this subject thinks that oil speculators aren't causing at least some of the price fluctuations we've experienced over the past decade.  So you're kind of on your own.

                          Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                          by Fed up Fed on Fri Sep 16, 2011 at 07:02:02 PM PDT

                          [ Parent ]

                          •  I think you're admitting defeat (2+ / 0-)
                            Recommended by:
                            cacophonix, Justanothernyer

                            How, exactly, do you think a huge position in the futures market impacts the spot market?

                            Let's say that someone buys so many October oil futures that the price of the October oil contract goes up to $1,000 per barrel.

                            Now, how does that impact the price of gasoline at the pump?

                            Does the demand by the car driving public somehow increase?

                            Does the amount of gasoline available somehow decrease?

                            Come on, tell us?

                            Actually, for advanced students, let's admit that it does increase price at the pump a bit.  People see the price of the October future as a signal indicating that prices will increase in October, so they stockpile gasoline.

                            Then, in October, they release it to the market, smoothing out the price bump.

                            If there was no real bump - if it was just Bill Gates having fun pissing away his money - then there will be a drop in price in October as that excess supply enters the market and everyone who bought October futures or stockpiled oil or its derivatives would lose some money.  

                            But point remains - no increase in spot market prices unless people reduce supply of the physical product by stockpiling it.

                          •  What the hell are you talking about? (1+ / 0-)
                            Recommended by:
                            elwior

                            Do you even know?  Are you just talking to talk?

                            Oh, yeah you are.  Looking over your other comments, yeah, you're just talking to talk.

                            Here's how futures affect the spot market:  The price of oil per barrel affects the price of gasoline at the pump.  Are you with me so far?  Okay, so say Goldman Sachs buys up a few hundred million barrels of oil futures.  Now, what they do is, they roll it over not once, not twice, but a few hundred times over the life of the contract (which, by the way, is usually more than a month).  They do this by sometimes buying the contract from themselves, sometimes colluding with other funds, but each time it rolls over, the price increases.

                            Now, I know you think small, cuz I read a raft of your comments and it sort of figures in everything you write.  But try and wrap your head around the billions and billions of dollars in capital just one of the major New York institutions can put up to perpetuate this scam.  Now try to understand what an impact those billions and billions of dollars can have on the world market.  Now try and understand that just about every barrel of oil in the world is leveraged this way, financiers rolling futures contracts over and over and over until the price per barrel on the world market is quite a lot more than it was when it left the oil fields.

                            That's how speculation affects world oil prices, and if you don't understand that gasoline is a petroleum derivative and therefore dependent upon the supply of oil, I don't think you can be helped.  Have a good night.

                            Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                            by Fed up Fed on Fri Sep 16, 2011 at 08:31:20 PM PDT

                            [ Parent ]

                          •  Just hand waving (2+ / 0-)
                            Recommended by:
                            cacophonix, Justanothernyer
                            Now try to understand what an impact those billions and billions of dollars can have on the world market

                            I do understand... as long as they are buying oil futures, and not oil, then practically no impact at all.

                            The futures market is the tail.  The spot market is the dog.

                            The tail does not wag the dog.

                            I notice that despite your very long comment, you still have not explained why you think the futures market impacts price on the spot market.

                          •  Um, when you buy a futures contract (1+ / 0-)
                            Recommended by:
                            elwior

                            you buy the commodity.  Buying oil futures is buying oil, genius.  Wow.

                            Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                            by Fed up Fed on Fri Sep 16, 2011 at 09:13:58 PM PDT

                            [ Parent ]

                          •  You really don't get it. (1+ / 0-)
                            Recommended by:
                            Justanothernyer
                            Um, when you buy a futures contract you buy the commodity.  Buying oil futures is buying oil, genius.

                            You really don't understand this stuff at all.

                            Someone buying and selling oil futures on the CFTC is not buying and selling oil.  He's selling future delivery contracts.  You can have a huge long position while the only actual oil you own is the gasoline in your car.

                            There are many differences between oil and oil futures.  Let me give you some examples:

                            1. You can burn oil for energy.  That doesn't work for oil futures.

                            2. You can sell oil futures when you own no oil (and obviously, you also don't own future oil).  If you sell oil when you own no oil you get sued and probably go to jail.

                            3. The outstanding contracts in the futures market can (and often do) far exceed the amount of the physical commodity that can be delivered at that time.  That is common because futures contracts are for a very specific form of the commodity delivered to a particular location.  They serve as price proxies for related commodities (ie. other grades of oil in different locations) which do not have markets big enough to support liquid futures markets.

                            4. Oil is a physical commodity - it is in a particular location and it costs money to store and move it.  A future is a contract.  It is stored as electrons, it can move around the planet in the blink of an eye at virtually no cost.

                          •  Yeah, I understand it just fine (1+ / 0-)
                            Recommended by:
                            elwior

                            When you purchase that future delivery, you purchase the oil...to be delivered at a later date for a contemporaneous price.  You own that oil.

                            1.  You can burn the oil that's delivered at the agreed upon later date.  So, wrong.

                            2.  When you own futures, you own oil.  So, wrong.

                            3.  ...and your point?  There is still a contracted delivery item and a delivery date.  So, wrong

                            4.  The future contains a delivery clause for the physical commodity, so while the future can be "stored as electrons," delivery of that commodity will occur at a predetermined date.  So, wrong.

                            And apparently I understand it quite a lot better than you.  You don't purchase futures "on the CFTC."  The CFTC is a government agency that regulate futures, they don't sell them.  Jesus.

                            Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                            by Fed up Fed on Fri Sep 16, 2011 at 10:28:21 PM PDT

                            [ Parent ]

                          •  There you go again... (3+ / 0-)
                            Recommended by:
                            cacophonix, Sparhawk, Justanothernyer
                            When you purchase that future delivery, you purchase the oil...to be delivered at a later date for a contemporaneous price.  You own that oil.

                            No you don't.

                            For example, let's say BP sells me an oil futures contract.  What oil do I own?  Is it oil in a tanker?  In one of their storage tanks?  Still in the ground?  Where?  In actual fact, all of that oil is still owned by BP.  It shows up on their books as an asset.  The futures contract is a separate liability.

                            Or say it is Goldman Sachs who writes the original futures contract.  They don't own any oil at all - all they are selling is a promise that they will give me oil in the future.  So where's my oil?  

                            Of course the answer is simple - I don't own any oil.  I just own a promise.

                            1.  You can burn the oil that's delivered at the agreed upon later date.  So, wrong.

                            You can settle a futures contract with the physical commodity... but then I will own oil, not a future.  The future still won't turn a turbine.

                            2.  When you own futures, you own oil.  So, wrong.

                            Already dealt with - you own a promise, not oil.  Do you think a Call Option is the same thing as the underlying stock?  

                            3. The outstanding contracts in the futures market can (and often do) far exceed the amount of the physical commodity that can be delivered at that time.  That is common because futures contracts are for a very specific form of the commodity delivered to a particular location.  They serve as price proxies for related commodities (ie. other grades of oil in different locations) which do not have markets big enough to support liquid futures markets.
                            3.  ...and your point?  There is still a contracted delivery item and a delivery date.  So, wrong

                            Sorry, but your answer on this does not seem to be responsive.

                            4.  The future contains a delivery clause for the physical commodity, so while the future can be "stored as electrons," delivery of that commodity will occur at a predetermined date.  So, wrong.

                            You seem to be conceding my point.  The futures contract is electrons.  The commodity is a physical thing.  That's a difference.

                          •  It's amazing (3+ / 0-)
                            Recommended by:
                            Sparhawk, Wham Bam, Justanothernyer

                            How little some (most?) people on this site understand of basic financial market concepts, and this ignorance seems to extend to the esteemed author of this diary.

                            Henry Hazlitt, in his book "Economics in One Lesson" has a nice chapter on speculation. The book has the flaw of sometimes oversimplifying and sometimes attacking strawmen, but on this point that chapter is spot on. The point? Speculators in the process of speculation most often lose money as a group (though some speculators may make off really well, others will lose more than they made), but without the speculation prices will fluctuate more wildly and unpredictably than with them.

                          •  I think he understands (2+ / 0-)
                            Recommended by:
                            Justanothernyer, cacophonix

                            He is pandering to the ignorant.

                      •  You think the tail wags the dog (1+ / 0-)
                        Recommended by:
                        cacophonix
                        I get the feeling you don't understand how futures markets determine spot market activity.

                        If you think there is a mechanism for this you need to explain it clearly or point to a reputable cite.

              •  You really don't get it (2+ / 0-)
                Recommended by:
                Sparhawk, cacophonix

                Oil is a physical product - you have to put it somewhere.

                A future is a contract to deliver oil on a particular date.  It is electrons - you store it in a computer.

                All the futures contracts in the world can't change the fact that at the end of the day there are so many people who want to consume oil at specific prices and so many people who want to sell it at specific prices.  That is what sets the current market price at any time.  

                Futures contracts will not impact the market price of oil until someone makes a car that can run on futures contracts instead of gasoline.

  •  Our government doesn't do much right, does it? (5+ / 0-)
    Recommended by:
    elwior, ctexrep, Betty Pinson, 3goldens, pot

    This is one more example.  Bernie Sanders reveals one more instance of a lazy Congress that sits by and lets Wall Street put the screws to the American people.

    And we're supposed to keep voting for incumbent Dems?

    •  Congress is too busy blaming big oil (1+ / 0-)
      Recommended by:
      demnomore

      when they should be blaming big Wall Street.

      A bunch of simpletons.....

      The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government. - Thomas Jefferson

      by ctexrep on Fri Sep 16, 2011 at 10:43:43 AM PDT

      [ Parent ]

    •  Interesting question (1+ / 0-)
      Recommended by:
      drewfromct

      Republicans obstruct all government action, and you blame Democrats.  You've got a bit of a problem with arithmetic, fellah.  Concern troll much?

      Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

      by Fed up Fed on Fri Sep 16, 2011 at 11:23:37 AM PDT

      [ Parent ]

      •  I blame Congress. You blame Republicans. (1+ / 0-)
        Recommended by:
        pot

        Why does an independent like Sanders speak out over and over again but supposed Dems sit on their fucking asses doing NOTHING?

        Take your concern troll bs and stick it.

        •  Um, no (2+ / 0-)
          Recommended by:
          indie17, elwior

          You blamed Democrats.  You said, "And we're supposed to keep voting for incumbent Dems?"  That's concern troll bullshit, alright.  Republicans are the ones who keep blocking every single measure that could even remotely help the economy.  Yeah, there are a couple of Dems who come off more like Republicans, but for the most part they've been doing the best they can with the shittiest of situations.

          So yeah, you're a fucking concern troll.  Own it.

          Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

          by Fed up Fed on Fri Sep 16, 2011 at 07:48:27 PM PDT

          [ Parent ]

  •  the militant elite use their army of lobbyists (4+ / 0-)
    Recommended by:
    KenBee, elwior, pot, yoduuuh do or do not

    work K-Street Congress to protect the status quo

    2012 It's not about Obama it's about your Moma. ~ Rev. Al Sharpton

    by anyname on Fri Sep 16, 2011 at 09:44:47 AM PDT

  •  tobin tax (19+ / 0-)

    Senator there is only one way to stop the wild speculations in all the markets

    that is to institute a "Tobin Tax"

    a small fee on all short term market transactions
    would squeeze the volatility out of the markets

    Of course it would need to be framed not as a tax but as a fee

    so instead of "Tobin Tax" it is "Investor Fee"

    and the proceeds should be use to fund the SEC.
    any excessive revenue going into the general fund.

  •  Oil is a nonrenewable resource (2+ / 0-)
    Recommended by:
    Justanothernyer, Sky Net

    Even if the thesis of this diary were true (which I doubt), higher prices drive down consumption of and dependency on the resource, in the long run a social good.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Fri Sep 16, 2011 at 09:58:40 AM PDT

  •  Understand the imperative ... (8+ / 0-)

    to do this, but a much stronger imperative is not "energy prices" but the cost of energy services. Would it be better, for your citizens and the planet, to figure out paths to cut oil prices by a few cents per gallon or to fund paths that cut their home heating oil requirements by 75%.  

    Focusing on price manipulation takes attention away from and reduces the public's support for energy efficiency.

    Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

    by A Siegel on Fri Sep 16, 2011 at 09:58:52 AM PDT

    •  Even stronger... (4+ / 0-)
      Recommended by:
      A Siegel, Sparhawk, Sky Net, highacidity

      higher oil prices are good for the environment because they promote energy efficiency and renewables.  

      This is even stronger if you believe that the economy of the future will be aout energy efficiency and green industries.

      •  only if money is put into energy efficiency (1+ / 0-)
        Recommended by:
        indie17

        and renewables.

        You're assuming we have a logical or even a functional economy or government.

        I'm afraid we don't.  So what happens is a whole hell of a lot of people go cold or hungry.

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:49:57 PM PDT

        [ Parent ]

      •  I would agree with you 100% if (0+ / 0-)

        we had any chance right now of significant money being moved in the directions you suggest.

        the public sector won't do it.

        Why the private sector won't do it I don't know, but they seem mostly adamant  against it--or at least against it taking off and scaling up.

        Why, I'm not sure, since even oil companies like BP have got solar divisions now, but they don't seem to care about that when they're fighting against money being moved into those areas.

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:51:52 PM PDT

        [ Parent ]

    •  the speculation is killing people (4+ / 0-)
      Recommended by:
      mimi, elwior, TDreamer, Betty Pinson

      both need doing, I don't see why you think they are not parallel efforts, but whatever, the speculation and volatility in the market is deadly.

         What he is suggesting is that oil be treated more as a public utility than a simple commodity.

        I support anything you do Senator Sanders, thank you, and thank the people of Vermont for electing you.

      ..squinting all the while in the glare of a culture that radiates ultraviolet consumerism and infrared celebrity...Russell Brand

      by KenBee on Fri Sep 16, 2011 at 10:07:09 AM PDT

      [ Parent ]

      •  Sigh ... (3+ / 0-)

        Because ...

        1.  When there is (intense) rhetorical focus on "gas prices" due to financial speculation / etc, it makes people think that the prices are artificial due to 'conspiracy' / price-gouging and that 'the' solution to problems is solving this fraud rather than taking other measures.

        2.  Yes, there is financial speculation in the energy markets ... as in pork bellies ... as in Wall Street ... as in ...  I am unsure why, in particular, the oil industry merits a different form of control structures.  And, well, I tend to believe that 'speculation' is overplayed relative to real impact on energy prices. (There is, globally, a shortfall in terms of production vs demand in liquid fuels. We are burning through, globally, stocks at this time.  I would tend to expect higher prices from this.)

        Re your last point, I have incredible respect for Senator Sanders and know that the nation would be better off if we had 60+ Bernie Sanders (and Jeff Merkleys) in the Senate.  That does not mean, however, that I simply support everything that he does even as I believe is on the right track in most arenas.

        And, by the way, in this arena, I would hope that Senator Sanders recognizes the challenge/problem of the focus on unit price vs the need to change our energy service systems.

        Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

        by A Siegel on Fri Sep 16, 2011 at 10:49:49 AM PDT

        [ Parent ]

        •  sigh? (0+ / 0-)

          really?

          ..squinting all the while in the glare of a culture that radiates ultraviolet consumerism and infrared celebrity...Russell Brand

          by KenBee on Fri Sep 16, 2011 at 10:54:16 AM PDT

          [ Parent ]

          •  Really (3+ / 0-)
            Recommended by:
            claude, Sky Net, highacidity

            Get used to expensive energy, it's here to stay (in fact, it is likely still very cheap compared to the future). Nothing that Congress, Obama, the SEC, or Bernie Sanders is going to do will change that.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Fri Sep 16, 2011 at 11:08:18 AM PDT

            [ Parent ]

            •  so why did it go down whenever Bush's (0+ / 0-)

              approval ratings sagged leading up to '04?

              gas prices went down, terror ratings went up.
              as far as I remember, like clockwork.

              Oil is running out, yes.  It will stay expensive, yes.  The price is being manipulated to make it even more expensive than it has to be, yes (probably to squeeze as much blood out of this rock as possible before the game's over).  The price is also manipulated, on occasion, to accomplish political goals.  We should get off oil, yes.  We should also kick these speculators right in the a** if we have the power to do so.

              Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

              by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:55:50 PM PDT

              [ Parent ]

        •  it's not just conspiracy (1+ / 0-)
          Recommended by:
          A Siegel

          those prices are being manipulated
          that fact and peak oil can both be true
          there is no real conflict between these two data points.

          Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

          by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:52:56 PM PDT

          [ Parent ]

        •  Gary Gensler, chm of the Commodities Futures (0+ / 0-)

          Trading Commission, would disagree according to the December 11, 2011 NYTimes article by Louise Story which reported:

          The marketplace as it functions now “adds up to higher costs to all Americans,” said Gary Gensler, the chairman of the Commodity Futures Trading Commission, which regulates most derivatives. More oversight of the banks in this market is needed, he said.

          But big banks influence the rules governing derivatives through a variety of industry groups. The banks’ latest point of influence are clearinghouses like ICE Trust, which holds the monthly meetings with the nine bankers in New York.

          Under the Dodd-Frank financial overhaul, many derivatives will be traded via such clearinghouses. Mr. Gensler wants to lessen banks’ control over these new institutions. But Republican lawmakers, many of whom received large campaign contributions from bankers who want to influence how the derivatives rules are written, say they plan to push back against much of the coming reform. On Thursday, the commission canceled a vote over a proposal to make prices more transparent, raising speculation that Mr. Gensler did not have enough support from his fellow commissioners.

          Men never do evil so completely and cheerfully as when they do it from a religious conviction. -- Blaise Pascal

          by RJDixon74135 on Sat Sep 17, 2011 at 01:06:27 AM PDT

          [ Parent ]

      •  Killing far more people ... (4+ / 0-)
        Recommended by:
        Sparhawk, Sky Net, highacidity, JanL

        and to kill far more people, by the way and as you are aware, is climate change and peak oil --- if focusing on price speculation reduces our chances of getting off oil and doing climate mitigation, that concerns me.

        Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

        by A Siegel on Fri Sep 16, 2011 at 10:50:57 AM PDT

        [ Parent ]

        •  price manipulations for constituent care is the (2+ / 0-)
          Recommended by:
          A Siegel, drewfromct

          focus I believe, 'the people of Vermont'.

          Your larger points are perhaps accurate, but when prices get manipulated regardless of whatever larger supply issues there are, when those prices make it so people can't afford it, bet wrong, and die an elected official has to prioritize and has to try.
            We can't count on President Chavez every year.

          I grew up there and know well the choices rural poor have to make.
          One choice these days would be: insulate, new windows, or save for the winter oil bill. In earlier times before green initiatives of all sorts, the question would be and still is, where can I get some cardboard, and which rooms do I seal off.
            It's a better world that people do get organized to help fellow citizens with weatherstripping and insulation efforts: it didn't used to be that way. Yet another possibility for rural and urban poor.
             Getting past the pride of rural poor is just part of the challenge.

          ..squinting all the while in the glare of a culture that radiates ultraviolet consumerism and infrared celebrity...Russell Brand

          by KenBee on Fri Sep 16, 2011 at 11:06:00 AM PDT

          [ Parent ]

      •  By the way ... (2+ / 0-)
        Recommended by:
        ScienceMom, SouthernLiberalinMD

        I can see them as parallel efforts.

        And, I can believe that so can/does Senator Sanders.

        However, that duality / parallel nature does not appear here ... in what he (his staff) posted.

        Might a sentence have been inserted along the lines of "As we secure America through steps to reduce our oil addiction, we have to secure Americans against abusive speculation and manipulation of oil prices."?

        That would have introduced the parallel items into the conversation.

        Blogging regularly at Get Energy Smart NOW! for a sustainable energy future.

        by A Siegel on Fri Sep 16, 2011 at 12:21:59 PM PDT

        [ Parent ]

    •  think Bernie wants to do both (0+ / 0-)

      Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

      by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:49:04 PM PDT

      [ Parent ]

  •  Must be lonely in Washington for Bernie (9+ / 0-)

    Keep fighting the good fight Bernie!

    PS: Please start your own Party as well. Thank-you.

    I didn't abandon the fight, I abandoned the Party that abandoned the fight...

    by Jazzenterprises on Fri Sep 16, 2011 at 10:17:19 AM PDT

    •  He's not alone. (0+ / 0-)

      I hope he knows it.

      If he stuck around occasionally or visited here after his staff posted one of his diaries, he'd know it better.

      Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

      by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:56:52 PM PDT

      [ Parent ]

  •  Senator - please take a look at the fundamentals. (3+ / 0-)
    Recommended by:
    Sparhawk, Sky Net, highacidity

    Thanks for keeping up the good fight.

    I hope you do take a look at the fundamentals of oil production as well.  Globally we have reached the point of peak oil production (really a plateau in production for the past 6 years) and this is inextricably linked to our current economic problems.  Speculation only plays a minor role - the fundamentals are due to geology.

    I hope you get a chance to look into this in more depth; Richard Heinberg of the Post Carbon Institute has a new book (available for free online) that is a good place to start.

    contraposition.org - thoughts on energy, the environment, and society.

    by barath on Fri Sep 16, 2011 at 10:35:04 AM PDT

    •  He won't (4+ / 0-)
      Recommended by:
      barath, Wham Bam, mickT, AnnCetera

      You and I are minorities. Virtually everyone else is either a Sarah Palin "drill baby drill" believer or a "this is all Wall Street's fault" acolyte. The fact that oil prices are a geological phenomenon revolving around a dwindling resource is anathema. The idea that we will have to deal with a world in which oil is expensive rather than made cheap again via magical means is equally anathema.

      So depressing.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Fri Sep 16, 2011 at 11:11:53 AM PDT

      [ Parent ]

      •  I have hope he will... (4+ / 0-)
        Recommended by:
        Sparhawk, highacidity, melo, AnnCetera

        I hope that Sen. Sanders and others like him will look at the overwhelming evidence, look at what many sincere scientists and analysts have written about peak oil and the limits to growth, and change tack.

        I agree it's not a popular position, if for no other reason than it's easier to blame someone else (wall street, oil companies, etc. - especially when they're bad actors in general) than look at the fundamentals of what's going on.  The limits to growth, like climate change, is a phenomenon we're all to blame for, whether we like it or not.

        Not only is the problem an unpopular one, but the solution is too: we can't just wave a wand, punish the bad guys (wall street, oil companies, OPEC, etc.) and have this problem go away.  We have to give up on economic growth as we've known it, give up on rising material prosperity, etc.

        But it's not about easy choices...which is why tackling this will require honesty and leadership.

        contraposition.org - thoughts on energy, the environment, and society.

        by barath on Fri Sep 16, 2011 at 11:22:07 AM PDT

        [ Parent ]

        •  Re (0+ / 0-)
          Not only is the problem an unpopular one, but the solution is too: we can't just wave a wand, punish the bad guys (wall street, oil companies, OPEC, etc.) and have this problem go away.  We have to give up on economic growth as we've known it, give up on rising material prosperity, etc.

          But it's not about easy choices...which is why tackling this will require honesty and leadership.

          I wish I had your optimism, but look at the delusion even here on a site populated with above-average intelligence people. When was the last time America had 'honesty and leadership'? And what are the odds that when Americans finally get honesty and leadership, they vote in someone like Bachmann or Perry in preference?

          The hour is dark indeed. It doesn't look good if even people like Bernie Sanders are peddling this malarky.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Fri Sep 16, 2011 at 12:08:47 PM PDT

          [ Parent ]

        •  Our prosperity does not have to depend on (3+ / 0-)
          Recommended by:
          aliasalias, drewfromct, melo

          cheap oil. There is tremendous waste in our current system, and alternatives are just beginning to be utilized. Having millions of people commuting in millions of one-person gas-guzzling vehicles is just stupid. Over-use of trucks instead of trains. Air travel instead of high-speed passenger rail, etc.

          •  Agreed it doesn't have to... (2+ / 0-)
            Recommended by:
            Sparhawk, cocinero

            but it does today.  The project of getting off of oil is perhaps the single most important thing we can do, and not just for our environment, but for the well being of our population.  It needs to be priority #1.

            contraposition.org - thoughts on energy, the environment, and society.

            by barath on Fri Sep 16, 2011 at 12:25:08 PM PDT

            [ Parent ]

          •  to make these changes requires (0+ / 0-)

            large changes in infrastructure, which requires large public works projects, which requires large government spending--or at least substantial government spending met or matched by private investment--which requires the political will both in the public and private sectors to do this.

            Leadership gently helping Americans adjust to the new reality would help too.

            None of this happens by itself without extraordinarily traumatic readjustment, and sometimes not even with it.

            You're acting like all we have to do is say these things are true and the readjustment will happen.

            Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

            by SouthernLiberalinMD on Fri Sep 16, 2011 at 09:02:06 PM PDT

            [ Parent ]

      •  Supply and demand (3+ / 0-)

        don't account for bubblenomics.  You're only partly right, and I don't think your point is so very sophisticated that it eludes everyone here but you.  I doubt anyone on this board is unaware that oil is a finite nonrenewable resource.

        But oil is not responding to supply and demand in the real economy.  It's hopping all over the place, which is the hallmark of a virtual economy.  Speculation is driving up prices by as much as 40 percent, as speculators collude to pass futures contracts around in a series of rollovers that ultimately leaves consumers holding it like the hottest of all hot potatoes.

        It's not like this is new stuff.  The same exact thing happened to grain futures in the early 1900s.  It was why Congress had to pass the Commodities Exchange Act.

        Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

        by Fed up Fed on Fri Sep 16, 2011 at 12:05:34 PM PDT

        [ Parent ]

        •  The link above... (1+ / 0-)
          Recommended by:
          Justanothernyer

          The link above is from James Hamilton, who looked in detail at speculation.  He's no oil company or wall street shill - just a down-to-earth, just-the-data energy economist from UCSD who is highly respected for what he does.  He agrees that there is some speculation that's playing a small role, but that the fundamentals are about real supply constraints.  He testified to the CFTC and said just that.

          If that weren't the case, then everyone who thinks it's all speculation would have to explain how it'd be possible for there to be economic growth (i.e. increased demand) with a fixed flow rate (i.e. production plateau since 2005) without a price increase.

          contraposition.org - thoughts on energy, the environment, and society.

          by barath on Fri Sep 16, 2011 at 12:29:53 PM PDT

          [ Parent ]

          •  I can't believe we're having this old argument (0+ / 0-)

            all over again.  In 2008, this was debated here ad naseum.    Waiting for theran to come out of the woodwork next.

            "Where free unions and collective bargaining are forbidden, freedom is lost." - Ronald Reagan - 1980

            by livjack on Fri Sep 16, 2011 at 01:20:28 PM PDT

            [ Parent ]

            •  Ok... (0+ / 0-)

              We'll see over the next several years.  But if what I'm saying an have been writing in diaries is right, we won't get another robust, self-sustaining economic recovery again ever (unless we fundamentally address our oil bottleneck).

              contraposition.org - thoughts on energy, the environment, and society.

              by barath on Fri Sep 16, 2011 at 01:24:14 PM PDT

              [ Parent ]

          •  And several other economists disagree (1+ / 0-)
            Recommended by:
            mickT

            All things being equal, price fluctuations like what we saw between the summer of 2008 and the fall of 2008 (50% decline) can not be accounted for by a production or scarcity rent model.  Which is why Hamilton's paper "Understanding Crude Oil Prices" doesn't actually answer a single question, but just problematizes as though he's far more worried about the public blaming Wall Street than actually finding answers to the mystery.

            I haven't seen anyone pretending that oil prices are soley determined by Wall Street speculation.  That's binary thinking, and how's about we just leave that to wingnuts.  What people are saying is, oil prices are going to go up, but restricted supply is in no way going to account for this level of price volatility.  Because an Econ 101 analysis of the global demand and the global supply simply does not add up to $140/barrel.  It just does not.

            Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

            by Fed up Fed on Fri Sep 16, 2011 at 01:39:40 PM PDT

            [ Parent ]

            •  Sure, but... (0+ / 0-)
              Because an Econ 101 analysis of the global demand and the global supply simply does not add up to $140/barrel.  It just does not.

              But that last blow-off spike in prices in 2008 - from say $120 to $147/bbl - which was definitely all speculation, that lasted what, a couple of months?  The price rise over the course of the previous year was what did the economic damage, not that last little spike.  By then the recession was already well under way.

              Anyway, the point is you could fix the speculation problem and still not solve the underlying issue, and the economy would still be stuck in neutral.  Whereas if you address the issue of oil dependence head on, then speculation becomes a moot point.

              contraposition.org - thoughts on energy, the environment, and society.

              by barath on Fri Sep 16, 2011 at 02:10:37 PM PDT

              [ Parent ]

              •  Yes (0+ / 0-)

                Bubbles tend to be short, usually a couple of months.  That how they work, short term manipulation for big gains is the new way Wall Street does business.

                Anyways, we're talking at cross purposes.  I take no issue with the fact that oil prices will rise as global demand increases and global supply remains flat.  My main contention is that in addition to the reality of rising oil prices, we have massive pots of money being used to leverage price fluctuations to the benefit of wealthy speculators.  That this is happening, that this has happened since the mid-19th Century, is simply undeniable.  It is, and it has.

                So we have to transition away from oil, but we need to be aware that every commodity is vulnerable to this kind of perniscious behavior.  That's all I'm saying.

                Very few is able to beat thro all Impedements and Arive to any Grat Degre of superiority in Understanding. - Jane Mecom 7/4/1786

                by Fed up Fed on Fri Sep 16, 2011 at 02:34:00 PM PDT

                [ Parent ]

            •  How do you come to that conclusion? (2+ / 0-)
              Recommended by:
              cacophonix, Sparhawk
              Because an Econ 101 analysis of the global demand and the global supply simply does not add up to $140/barrel.  It just does not.

              Do you remember price inelasticity from Econ 101?  Near vertical supply and demand curves?

              Oil is the typical example of this kind of curve used in... you guessed it... Econ 100.

        •  40%? How did you get that number? (2+ / 0-)
          Recommended by:
          cacophonix, Sparhawk
          Speculation is driving up prices by as much as 40 percent, as speculators collude to pass futures contracts around in a series of rollovers that ultimately leaves consumers holding it like the hottest of all hot potatoes.

          And how do consumers end up holding futures contracts?

      •  this is a really black-and-white and annoying (1+ / 0-)
        Recommended by:
        pot

        framing of some Kossacks' positions (including mine).

        It's a distortion of what I, at least, believe.

        See my other comments in this diary.

        BTW, my main goal when I was a lobbyist was energy efficiency and renewables financing to bring those industries and projects to scale.

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 08:59:07 PM PDT

        [ Parent ]

    •  Yay, oil "truthers" (0+ / 0-)

      Don't count on us running out of oil.  The system will find a substitute, like oil sands, deep water drilling or even nukes.  All of these things are made more acceptable to the public with peak oil theory.  

      Keep your eye on Wall Street mendacity, not "physical limits".  The latter has always been Malthusian ruse.

  •  When is the new CFTC member going to (1+ / 0-)
    Recommended by:
    Betty Pinson

    come up for a vote in the Senate?  His name is Mark Wetjen and he could be the deciding vote on position limits.

    President Obama, May 5, 2011: "When we say we will never forget, we mean what we say".

    by Drdemocrat on Fri Sep 16, 2011 at 10:36:19 AM PDT

  •  I represent Vermont... (10+ / 0-)

    With all do respect sir, no you don't.  You represent all of us.

    The 'Free Market' will decide. It will decide that the United States cannot consume 25% of the world's resources and the upper 1% cannot control 50% of the wealth.

    by RichM on Fri Sep 16, 2011 at 10:42:24 AM PDT

  •  This is a diary that need to stay for days. nt (0+ / 0-)
  •  why isnt the price at the pump DOWN now? (0+ / 0-)

    the price of a barrel of crude hasnt been above $90 in a while and yet the price we pay at the pump hasnt dropped much at all...

    we didnt used to  pay almost 4$ a gallon when the price of a barrel of crude was this low and yet that is what we pay now....

    we have waited and waited for the powers that be to do or, at least, say something about this strange pricing of gas but no one has said a word (sigh)

    at the price BIG OIL is paying for a barrel of crude WE shouldnt be paying more than 2$ and yet even though the wholesale price has dramatically DROPPED from its (articifical) HIGH we are still being soaked at the pump...

    wtf is up with that?

    "Orwell was an optimist"

    by KnotIookin on Fri Sep 16, 2011 at 11:39:42 AM PDT

  •  and (1+ / 0-)
    Recommended by:
    Betty Pinson

    thank you Senator.  After two years of taking flak on DKOs about speculation being the driving force behind oil and gas prices, can I finally say..." I told you so".

    Thanks senator, do your best you are one of only a few in our govt I admire.

    Bad is never good until worse happens

    by dark daze on Fri Sep 16, 2011 at 11:50:35 AM PDT

  •  Links missing from original post (1+ / 0-)
    Recommended by:
    Justanothernyer

    The original post on Bernie Sanders' website has links that don't show up (for me at least) in the repost here as a DKos diary.

  •  this will end sooner rather than later, (0+ / 0-)

    Please do not tell me you are involved by being a member of DK4.... really get involved...... http://october2011.org/frontpage.... The goal is not to bring your adversaries to their knees but to their senses. -- Mahatma Gandhi

    by Mindmover on Fri Sep 16, 2011 at 12:35:11 PM PDT

  •  We could replace almost all of our petroleum use (4+ / 0-)
    Recommended by:
    leema, drewfromct, Mike Taylor, indie17

    in America and create millions of new business opportunit­ies and domestic jobs by eliminatin­g the shameful prohibitio­n of industrial hemp. If we planted industrial hemp for fiber, pulp and seeds on just 6% of American lands we could regenerate our industrial base and create 100% of our energy needs here in local factories that would employ millions of Americans producing advanced biofuels, biomass electrical energy, hemp cordage and textiles, hemp fiber building materials, hemp paper and card stock, hempcrete and hemp biodegrada­­­ble plastics to list of few of the 25,000 things that can be made from hemp. We don't need to use nearly the amount of petroleum as we currently consume. As hemp grows it sequesters carbon out of the atmosphere and releases it back when the hemp is burnt but petroleum carbon was sequestere­­­d millions of years ago and when it is burnt the centuries old carbon is also released into today's environmen­­­t. Using hemp to replace wood for paper and building materials would significan­­­tly reduce deforestat­­­ion and further reduce green house gases in our atmosphere­­­. Yes, Jack Herer was right, Cannabis can save the world.
    To learn more visit http://www­­.rmforbes­.­net

    Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

    by RMForbes on Fri Sep 16, 2011 at 12:37:19 PM PDT

    •  And then we could all drive Cheech&Chong mobiles! (0+ / 0-)

      Groovy man!  Got any potato chips?

      •  Not as far out as your snarky remark suggests (0+ / 0-)

        In Europe they are already producing automotive body parts from hemp plastic that is not only dent resistant but also 10 times stronger than steel per pound and safer in a collision than other plastic products. In 1941 Henry Ford produced a car made from plastics produced primarily from hemp with some wheat straw. Hemp is 85% cellulose and produces excellent and completely biodegradable plastics among the 25,000 other things. The only rub is that industrial hemp contains almost no THC so it is not valuable as an intoxicant and growing it around marijuana would cross pollinate reducing the potency and economic value of elicit marijuana grown domestically over time.  

        Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

        by RMForbes on Sat Sep 17, 2011 at 09:38:53 AM PDT

        [ Parent ]

    •  again, problem of political will. (2+ / 0-)
      Recommended by:
      indie17, RMForbes

      we keep coming back to the same thing.

      If it were up to the people of this country, we would have been on our way down the practical path long ago.

      We can't get the government to respond to us because it has been broken by big money.

      What are we going to do?

      Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

      by SouthernLiberalinMD on Fri Sep 16, 2011 at 09:04:55 PM PDT

      [ Parent ]

      •  It's what caused the prohibition in the first (1+ / 0-)
        Recommended by:
        SouthernLiberalinMD

        place and continues to be the problem. We have a government of the moneyed interests by the moneyed interests and for the moneyed interests. It's time we take our government back.

        Really don't mind if you sit this one out. My words but a whisper -- your deafness a SHOUT. I may make you feel but I can't make you think..Jethro Tull

        by RMForbes on Sat Sep 17, 2011 at 09:24:08 AM PDT

        [ Parent ]

  •  Oil (1+ / 0-)
    Recommended by:
    Justanothernyer

    I'm much more concerned that the price of oil is too low, not too high.  High oil prices aren't fun in the winter, but Congress (and Bernie Sanders) should be focused less on trying to cast around for someone to blame, and more on how to help people cope with inevitably higher fuel prices.  Time for more on energy efficiency and alternative fuels.  Going after Wall Street is just a political stunt.

    •  going after the Street is not a political stunt (0+ / 0-)

      seeing as how they are one of the primary owners of our government

      otoh, maybe that's why it is a stunt, if you assume the gov't could never throw off those chains

      but regardless, you will never get energy efficiency or alternative fuels with both the private and the public sector dominated by the players who are holding the reins now.  and for the most part, I'm not talking about elected officials.

      Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

      by SouthernLiberalinMD on Fri Sep 16, 2011 at 09:06:55 PM PDT

      [ Parent ]

  •  Crooks and Liars has a great post on this (6+ / 0-)

    http://crooksandliars.com/...

    Leaked Documents Name Names: Hedge Funds, Wall St., Koch Brothers, Big Banks And Oil Companies Were Behind 2008 Oil Price Shock
    Lee Fang at ThinkProgress follows up on the Sen. Bernie Sanders' leak of oil speculator names. Major players include the Koch brothers and the Wall Street banks:
    Last month, Sen. Bernie Sanders (I-VT) leaked confidential data about oil speculation to a number of media outlets, including the Wall Street Journal. Ordinarily, the Commodity Futures Trading Commission, the regulatory body that oversees futures trading, does not provide identities of speculators to the public. However, the data leaked by Sanders provides a rare snapshot into the trading volumes by major speculators right before the oil price spike in the summer of 2008.
     As experts from Stanford University, Rice University, the University of Massachusetts, andauthorities have concluded, rampant oil speculation was the prime driver of the record highprices for crude oil three years ago.

            To view a copy of the data, click here for documents leaked by Sanders. To view an organized spreadsheet, click here.

       Notably, the top speculators are noncommercial players, meaning they are companies that simply and buy and sell crude contracts with no interest in actually refining and selling the product. Each contract in the list represents 1,000 barrels of oil. The documents show the total volume of trades made on one specific day shortly before the record high price of $148 per barrel.

        The data, though revealing, still does not give a complete picture of trading strategies. Speculators invest in multiple private exchanges, and trading tactics can shift from day to day. Moreover physical plays, such as buying up large quantities of actual oil and storing it on tankers or in large containers, are still largely hidden from public view.


    (emphasis mine)

    without the ants the rainforest dies

    by aliasalias on Fri Sep 16, 2011 at 12:52:40 PM PDT

    •  there you go. Good find. (1+ / 0-)
      Recommended by:
      aliasalias

      "Where free unions and collective bargaining are forbidden, freedom is lost." - Ronald Reagan - 1980

      by livjack on Fri Sep 16, 2011 at 01:21:56 PM PDT

      [ Parent ]

      •  what I don't understand is why (0+ / 0-)

        acknowledging this fact makes us any less aware of peak oil, any less desirous of moving to a non-oil-based economy, or puts us on the other side of the fence from A. Siegel, who is one of the few folks I actually follow on DK (yes, I like his diaries that much).

        I don't get why there's even an argument here.

        Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

        by SouthernLiberalinMD on Fri Sep 16, 2011 at 09:09:27 PM PDT

        [ Parent ]

  •  Thank you, Senator Sanders. (1+ / 0-)
    Recommended by:
    greengemini

    Would to god there were more people like you in Congress.

    Just because it's made up doesn't mean it isn't true.—Plan 10 from Outer Space

    by mofembot on Fri Sep 16, 2011 at 01:37:29 PM PDT

  •  thank you senator (1+ / 0-)
    Recommended by:
    drewfromct

    i didn't know i could get more furious at our government but this did it.

    time to shutdown wall street and washington dc with protest.  it's time for a revolution because our government is irrevocably corrupted.

    Stop Prohibition, Start Harm Reduction

    by gnostradamus on Fri Sep 16, 2011 at 01:38:11 PM PDT

  •  I thought that being able (0+ / 0-)

    to speculate in oil is relatively recent.  Wasn't it illegal before the Commodities & Futures Modernization Act?

    I would love to tell Goldman Sachs that they suddenly have to keep all that oil they bought.  hehe - load up their posh offices with millions of stinky barrels of the stuff.

    "Mediocrity cannot know excellence." -- Sherlock Holmes

    by La Gitane on Fri Sep 16, 2011 at 02:49:27 PM PDT

  •  Senator Sanders (0+ / 0-)

    I am from Connecticut, but you represent me - thank you for that !! Keep up the good works.

  •  Sen. Sanders, do you feel like the only sane (0+ / 0-)

    person left on capitol hill?  Because you are the only one that sounds sane to me anymore.

    •  John Conyers, Sherrod Brown, Maxine Waters (0+ / 0-)

      Donna Edwards, Sheldon Whitehouse, even more mainstream people like my Congressman Chris Van Hollen--there's a number of them still around.

      Nowhere do I understand that national security is a substitute for the law.---Thomas Drake You cannot tell from appearances how things will go.--Winston Churchill

      by SouthernLiberalinMD on Fri Sep 16, 2011 at 09:10:31 PM PDT

      [ Parent ]

  •  Did you notice who purchased (2+ / 0-)
    Recommended by:
    RJDixon74135, greengemini

    all of the oil released from the strategic reserve a couple of months ago?
    Oil sold off to ease the price of gas at the pump was bought by the banksters and immediately placed back into storage.

    •  Not too shocking. JP Morgan Chase and UBS have (0+ / 0-)

      already admitted to anti-competitive violations of the anti-trust laws and agreed to pay paltry fine, probably a few days profits. What's to stop them?

      Men never do evil so completely and cheerfully as when they do it from a religious conviction. -- Blaise Pascal

      by RJDixon74135 on Sat Sep 17, 2011 at 01:27:47 AM PDT

      [ Parent ]

  •  Its not just oil its food too (1+ / 0-)
    Recommended by:
    greengemini

    Gasoline made from the tar sands gives a Toyota Prius the same impact on climate as a Hummer using gasoline made from oil. ~ Al Gore

    by Lefty Coaster on Sat Sep 17, 2011 at 02:16:43 AM PDT

  •  A bit off topic, but I was watching a (1+ / 0-)
    Recommended by:
    AnnCetera

    European commercial for a version of the Kia Rio thatt gets 88mpg. It has a 1.2liter direct injection diesel engine. Wh aren't vehicles like that available in the U.S.?
    Is it our government regulations or politics?

    •  The 88mpg was w/imperial galllons, U.S. =74.3mpg (1+ / 0-)
      Recommended by:
      AnnCetera

      Here is a link..

      http://www.totallymotor.co.uk/...

      We need to allow vehicles like this in the U.S.

      It always  thsame b.s., not all 50 states allow the sale of diesel powered passenger cars, and or other regulation makes it too costly for the manufacturers to sell them here.

      If Kia could sell this vehicle here, they would not shortage of customers..  It wouild be even better if they made them here..

  •  Matt Taibbi got this in Griftopia (0+ / 0-)

    It's how he first began to realize something was very wrong with our government and our economy. IIRC, it was during the 2008 campaign season, when gas prices jumped - and none f the reporters covering the presidential campaigns could really explain why.

    He has an entire chapter on commodities, etc. and how deregulation and secret letters of permission to ignore regulations/limits have turned our economy into a rigged game.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Sat Sep 17, 2011 at 05:26:35 AM PDT

  •  With all due respect Senator Sanders! (1+ / 0-)
    Recommended by:
    cacophonix

    While speculation may be a culprit causing higher oil prices it still doesn't change the overall outlook for oil supplies worldwide.  Higher oil prices like the sun rising in the east are inevitable.  It does this nation no service to try to deny supply is the main factor that will drive oil prices even higher in the future.  Like Global Warming living in denial of the shrinking supply of oil in the world will have disasterous consequences for our nation.  Yes higher oil prices are contributing to the downturn in the economy in a significant way.  People will suffer this winter but the net effect should be an even more determined drive towards  the developement of alternative energy sources.  

    Link to story about September 2011 International Energy Agency Report(IEA)

    The IEA reports that its preliminary estimate for world oil production in August was 89.1 million b/d despite the loss of 1.6 million b/d of Libyan production. The Agency, however, maintains that the demand for oil has been running ahead of global production since the second half 2010 when the demand for oil surged.

    Liberals believe speculators are responsible for high oil prices and Conservatives believe we can drill our way back to low oil prices.  Between the two of them the energy future of the US looks very bleak indeed!

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