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That was as recently as last May.

Oil Speculators have a LOT to say about what a gallon of gasoline ends up really costing us at the pump, above and beyond the actual economics of "supply and demand" ...

Even Oil Companies Know That Oil Prices Are Rigged
Jason Raznick, Contributor -- Forbes  -- 05/13/2011

In a surprise statement, Exxon Mobil CEO Rex Tillerson told the Senate Finance Committee that oil prices did not currently reflect supply and demand.
“When we look at it, it’s going to be somewhere in the $60 to $70 range if you said: ‘If I had access to the next marketable [marginal] barrel, what would it cost?’”
Since the price of oil barrels is currently over $100, it is clear that something beyond the laws of supply and demand is driving the high price of oil, and with it, the high price of gasoline. Well, if it isn’t supply or demand that is driving the price of oil up so high, there’s really only one other culprit: oil speculators.

What, exactly, are oil speculators? They are social parasites, gamblers who produce absolutely nothing of value. They bet on the price of a barrel of oil, and use their low margin requirements and influence in the market to drive the price of commodities higher and higher. They then feed off each other, like lemmings off a cliff, speculating and pushing the market higher. When the market seems prime for a dip, they switch their bets. This drives the price back down some, allowing them to magically make money on both sides of the transaction.

Parasite -- Definition,
1. organism living on another:  a plant or animal that lives on or in another, usually larger, host organism in a way that harms or is of no advantage to the host

2. scrounger:  somebody who exploits others without doing anything in return

{ Mid-16th century. Via Latin < Greek parasitos "somebody who eats from another's table" ...> }

crude oil price

Friday, March 9, 2012: NYMEX West Texas Intermediate Crude Oil for April delivery closed up $0.82 at $107.40 per barrel.

How much of that $100+ price is based on the actual factors of supply and demand?  ... you know, like on the FREE Markets of actual consumers and actual producers?

Under Questioning by Cantwell, Exxon CEO Estimates Oil Should Cost $60-70 Per Barrel

link to video

Uploaded by SenatorCantwell on May 12, 2011

On May 12, 2011, when questioned by U.S. Senator Maria Cantwell (D-WA) at a Senate Finance Committee hearing, Exxon Mobil Chairman and Chief Executive Officer Rex Tillerson said that oil should cost between $60 and $70 per barrel, if the price of oil were based on supply and demand fundamentals. Oil was trading at $98 per barrel on Thursday morning, after inexplicitly plunging 5.5 percent yesterday.

For more information:

So that's roughly 30-40% of the price of a barrel oil, which is above and beyond what "supply and demand" would have priced it at that week -- IF the Oil Speculators were NOT in the picture.  So says the Exxon Mobil Chairman, in his testimony in the Senate Hearing last year.  

That's a 30-40% "finders fee," I guess.  They find the Time and Capital, We find the extra Fees ... to make our obligatory daily commutes.

But wait other Oil Futures market-players have calculated this speculative premium too, but instead on a commodity supply-cornering basis ...

Goldman Sachs says speculation behind much of recent oil price rise, tells clients to “sell”
by Joe Romm, ClimateProgress, -- Apr 13, 2011

Exactly how much speculation is driving up oil prices remains contentious:
   Goldman estimated in a research note on March 21 that every million barrels of oil held by speculators contributed to an 8 to 10 cent per barrel rise in the oil price.

Using Goldman’s 8- to 10-cent estimates and data on speculators’ positions from the U.S. Commodity Futures Trading Commission, Reuters calculated that as of last Tuesday, the total speculative premium in U.S. crude oil was between $21.40 and $26.75 a barrel, or about a fifth of last Tuesday’s price. [...]

Goldman Sachs disputed the Reuters calculation on speculative premium.


What can stop the 'Opportunistic Behavior' of the Oil Speculators, trading in opaque, over-leveraged markets?

Who has the ability and the responsibility to reign in these gamblers, who's lone purpose is, to profit off the misery of others?

Oil Speculators Must Be Stopped and the CFTCNeeds to Obey the Law”: Sen. Bernie Sanders
by Morgan Korn, Daily Ticker, -- Mar 7, 2012

The CFTC was given authority in the Dodd-Frank Wall Street Reform and Consumer Protection Act to impose position caps on oil traders beginning in January 2011. These limits have not yet been implemented by the CFTC. In an interview Wednesday with The Daily Ticker, Sen. Bernie Sanders (I-VT) says the CFTC doesn't "have the will" to enact these limits and "needs to obey the law."

"What we need to do is…limit the amount of oil any one company can control on the oil futures market," says Sanders, who has long advocated limits on speculation. "The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell."

 -- The St. Louis Federal Reserve has also recommended that the CFTC do more to prevent oil speculators from driving up the price of oil. Fed officials studied the effect of oil traders on the price oil over five years and determined that "speculation contributed to around 15 percent to oil prices increases."

 -- CFTC Chair Gary Gensler declared last year that "huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices."

Even CFTC Chairman concedes 'speculative money drives up prices' -- SO why isn't more being done about it?

It seems his regulatory interests are divided between those of the Host, and those of the Hostee's ... could be.

Dems blame Wall Street for high gas prices, urge CFTC action
by Ben Geman, -- 03/05/12

The March 5 letter to the CFTC bashes the regulators for failure to implement rules finalized last October that establish “position limits” on the amount of futures and swaps contracts for oil and other commodities that traders may hold.

The limits are required under the sweeping 2010 Wall Street reform law. “As the cost for American people to fill their gas tanks continues to skyrocket, the CFTC continues to drag its feet on imposing strict speculation limits to eliminate, prevent or diminish excessive oil speculation as required by the Dodd-Frank Act,” the letter states.

Yet the "One Percent Powers that Be" are not about to go silently into that dark night. Not unless there is a way for them to have their 'Free Lunch' there, too.

It seems that social parasites, really don't like to be "host-less" -- not if they can help it, that is.

Wall Street fights rule limiting oil speculation
by Jennifer Liberto, CNNMoneyMarkets -- Feb 27, 2012

WASHINGTON (CNNMoney) -- Wall Street is pushing to stop a new rule that would crack down on speculation in the energy markets, which many blame for contributing to the spike in gas prices.

The new rule -- part of the 2010 Dodd-Frank Act to reform Wall Street -- would set limits on how much traders can buy, preventing firms from grabbing large chunks of the energy market.

But those limits may not be set anytime soon. Nearly two years after the new law, the rule has yet to be fully implemented. And on Monday, two Wall Street trade groups asked a federal judge in Washington to delay or block the rule.

So far those "Price-chasing" buggers have faced very little real resistance ... to discourage their "blood-letting" activities.  

Parasite vaccine

Malaria vaccines are an area of intensive research. However, there is no effective vaccine that has been introduced into clinical practice.

And if the opportunity is there to be "tapped" ... well they're really not shy about jumping on it.  They Demand, We Supply.

That's just the Wall Street way ...

Image Source:  Malaria is transmitted to humans through mosquitoes. Photo by the World Health Organization.

BBBIZZZZZZ, BBBIZZZZZZ ......  Where'd they hide that Deep Woods Off, anyways?

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Comment Preferences

  •  Oregon Rep Peter DeFazio (9+ / 0-)

    has his own anti-pest prescription:

    DeFazio is trying to make the Gas Speculators pay
    by jamess -- Mar 07, 2012

    So far the GOP Congress, prefers the company of bugs.

    What is necessary to change a person is to change his awareness of himself.
    -- Maslow ...... my list.

    by jamess on Sat Mar 10, 2012 at 03:21:02 PM PST

  •  The "Rush" has left a trail of clueless followers. (4+ / 0-)
    Recommended by:
    jamess, cotterperson, Lujane, JanL

    Get a load of this in my local newspaper's editorial column today - not pretty ...

    Government not solution to energy problems
    President Obama recently gave a speech on energy and gas prices at the University of Miami. The talk was filled with falsehoods and distortions of the facts.

    First, he tried to take credit for the increased production of gasoline under his administration. The facts are that, under the previous administration, permits were granted and are now being implemented along with private industry innovations on drilling.

    Fact: The Obama administration has canceled leases and suspended others in Utah, Montana, Colorado, and off the coast of Virginia. Moreover, they are slowing down the process for permits in the Gulf of Mexico.

    The president says we cannot drill our way to lower gas prices. But the Institute of Energy Research has stated the U.S. has 1.4 trillion barrels of oil that our government has declared “off limits.” Renewable energy (biomass, solar, wind, etc.) will account for only 13 percent of our energy requirements by 2035, according to the Energy Information Administration. Hardly a practical solution.

    The EPA requires our oil refineries to have 18 different formulas to produce gasoline for different regions of the country. Industry sources claim that one formula for the whole country would reduce the cost of gasoline by $1 a gallon at the pump.

    Government appears to be the cause of our energy problems, not the solution.

    This is what we're up against folks, and not so pretty.

    "There's nothing in the dark that's not there when the lights are on" ~ Rod Serling

    by jwinIL14 on Sat Mar 10, 2012 at 03:52:18 PM PST

  •  of course an oil company will blame (4+ / 0-)
    Recommended by:
    jamess, jwinIL14, mightymouse, JanL

    someone else for high prices.  

    •  it's supposed to be (4+ / 0-)
      Recommended by:
      jwinIL14, cotterperson, JanL, semiot

      our own damn fault, for being so transportation-dependent.

      It's not the fault, of having congress,

      creating next to no credible mass-transit system.

      It's not the fault, of Reagan,

      who total trashed, and reversed,

      President Carter's Energy agenda to make the US

      Energy Independent by 2000.

      Nope it's our own damn fault, for having to drive to work,
      to make a living.  Just ask Dick Cheney's secret Energy Commission.

      What is necessary to change a person is to change his awareness of himself.
      -- Maslow ...... my list.

      by jamess on Sat Mar 10, 2012 at 04:14:38 PM PST

      [ Parent ]

  •  All this was known 4 years ago. Here's how (3+ / 0-)
    Recommended by:
    jamess, cotterperson, antirove

    it was done:

    ICE, ICE, Baby
    May 19, 2008

    •  Personally, (4+ / 0-)
      Recommended by:
      antirove, Claudius Bombarnac, JanL, semiot

      I think it started with the first "oil crisis" in the '70s during the OPEC oil embargo. We had rationing then, and some people who drove long distances had an extra gas tank added!

      Craig Unger wrote a book, House of Bush, House of Saud, which I have yet to read, but which also influenced Michael Moore's Farenheit 911. Here's a snip from the wikipedia entry.

      [Unger] asserts that the groundwork for today's terrorist movements and the modern wars that have sprung up about them was unintentionally laid more than 30 years ago with a series of business deals between the ruling Saudis and the powerful Bush family. The Saudis received investments and military protection in exchange for cooperation on lucrative oil deals. The author claims that the result has been a shady alliance between "the world's two most powerful dynasties." Unger writes, "Never before has an American president been so closely tied to a foreign power that harbors and supports our country's mortal enemies."
      (That's Craig Unger of Vanity Fair, not Cenk Unger, just to be clear.)

      Before the embargo in the early '70s, I was paying about $0.20 (twenty cents) for a gallon of gas. During the embargo, the gossip was that the storage tanks outside of Houston were full of gas being held off the market.

      My personal suspicion has been that the military protection provided by George H.W. was why Rumsfeld and Cheney said Iraq had weapons of mass destruction. Somewhere on the tubez there's a picture of Rummy shaking hands with Saddam Hussein.

      Forty years later, it may sound like a conspiracy theory -- but it's really just my "speculation" ;)

      More about the Saudis at Vanity Fair in "The Kingdom and the Towers"

      "Let each unique song be sung and the spell of differentiation be broken" - Winter Rabbit

      by cotterperson on Sat Mar 10, 2012 at 05:29:38 PM PST

      [ Parent ]

      •  OPEC has long since lost the ability to control (4+ / 0-)
        Recommended by:
        jamess, cotterperson, JanL, semiot

        oil prices. When oil hit $150 bbl, the actual OPEC web site was saying that this price was driven solely by speculators. They said oil should have been about $80 bbl and that current sources of oil would last until at least 2080 taking into consideration estimated increases in demand.

        Here's more information on the speculators driving price increases:

        ‘Perhaps 60% of today’s oil price is pure speculation’
        by F. William Engdahl
        Global Research, May 2, 2008

        The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?
        ‘The tail that wags the dog’

        All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”

        With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

        Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the “tail that wags the dog.”

        A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”
        Hedge Funds and Banks driving oil prices

        In the most recent sustained run-up in energy prices, large financial institutions, hedge funds, pension funds, and other investors have been pouring billions of dollars into the energy commodities markets to try to take advantage of price changes or hedge against them. Most of this additional investment has not come from producers or consumers of these commodities, but from speculators seeking to take advantage of these price changes. The CFTC defines a speculator as a person who “does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.”

  •  I guess Occupy has to once again do the media's (5+ / 0-)
    Recommended by:
    jamess, cotterperson, antirove, JanL, semiot

    job and bring attention to this.  Why aren't we pointing out the fact, every single day, that WALL STREET is driving up the price of gas.  They already have a bad name.  Let's put their face to these egregious gas hikes.  Everyday that the price of oil goes up, someone needs to calculate how much money Wall Street is making--totally at the expense of the American economy.  For it to be effective, Democrats need to go on TV EVERY DAY and recite the profit figure.  So when the "media" runs their obligatory segments on the high price of gas, they will be forced to also report WHY.

    If Wall Street refuses to be reined in and abide by the rules of the CFTC, then make them pay the price.  If this is done correctly, EVERY SINGLE TIME, Wall Streeters themselves will be begging for the implementation of these rules.

  •  Come on, people. (1+ / 0-)
    Recommended by:

    Aren't we the reality-based community here? Yet many appear not to understand supply and demand.

    This statement in the first article quoted displays a shocking lack of basic understanding:

    In a surprise statement, Exxon Mobil CEO Rex Tillerson told the Senate Finance Committee that oil prices did not currently reflect supply and demand.
       “When we look at it, it’s going to be somewhere in the $60 to $70 range if you said: ‘If I had access to the next marketable [marginal] barrel, what would it cost?’”
    Since the price of oil barrels is currently over $100, it is clear that something beyond the laws of supply and demand is driving the high price of oil, and with it, the high price of gasoline.
    We'll put aside the estimate of a marginal barrel ... But folks - supply and demand does not mean you pay the marginal cost! There is no link there!! If something is inexpensive to produce but in short supply relative to demand, it will sell for more than its production cost.

    Sheesh this is tiresome.

    President Obama got it right - rising demand from China, India, Brazil, etc., is the fundamental driver of higher prices.

    An ambulance can only go so fast - Neil Young

    by mightymouse on Sat Mar 10, 2012 at 06:15:34 PM PST

    •  this is the reality (4+ / 0-)

      we need to see:

      The CFTC implement rules finalized last October that establish “position limits”  on the amount of futures and swaps contracts for oil and other commodities that traders may hold.
      The CFTC was given authority in the Dodd-Frank Wall Street Reform and Consumer Protection Act to impose position caps on oil traders.

      Those rules did not come out of thin air.

      The need to be implemented, no matter what China and India do.

      What is necessary to change a person is to change his awareness of himself.
      -- Maslow ...... my list.

      by jamess on Sat Mar 10, 2012 at 07:47:14 PM PST

      [ Parent ]

      •  fine - but beware nonsensical arguments (0+ / 0-)

        from the big media.

        they are no more reliable on this than they were with Iraq's WMD, or anything else. they suck. they do not inform. they sell views and transmit narratives of the powerful.

        better to use basic info, or sources that are reliable.

        you would do us a great service if you could write a piece about how futures markets work, how people in it make money, who is in it, etc., etc. be clear, explain, factual, go easy on the "AHA," etc.

        real info.

        but pieces based on air-head quotes aren't helpful.

        you guys always want to conclude that "supply and demand isn't working here." if your argument were really good you wouldn't need to rely on non-logic.

        again, paying more than the marginal price does not mean S&D is non-operative. think about it.

        An ambulance can only go so fast - Neil Young

        by mightymouse on Sun Mar 11, 2012 at 08:10:06 AM PDT

        [ Parent ]

        •  mightymouse (1+ / 0-)
          Recommended by:

          I look forward to your post, explaining how it all works.

          All I know is I'm tired of paying their "Finders Fees" for  middlemen paper-shuffling activities

          -- me and about 200 million other Americans.

          This is not a partisan issue -- it's an economic issue.

          And the Obama Administration would be wise to take real concrete actions on it.

          Think Executive Orders, Think Regulatory Oversight.

          PS. I am not your typically low info voter.

          They will be even less charitable about this than me

          What is necessary to change a person is to change his awareness of himself.
          -- Maslow ...... my list.

          by jamess on Sun Mar 11, 2012 at 10:21:31 AM PDT

          [ Parent ]

  •  Keep deluding yourself (0+ / 0-)

    Peak Oil doesn't care at all and will smash this country flat with zero regard for conspiracy theories or demands for cheap gas. Expensive gas helps us prepare now instead of pissing away valuable strategic resources driving the kids to soccer practice in the suburbs with the Escalade.

    (-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 Sat Mar 10, 2012 at 08:37:45 PM PST

    •  Did "Peak Oil" take into consideration tar sands, (1+ / 0-)
      Recommended by:

      shale oil and ultra heavy oils which have hardly been touched? What about fracking and gas/coal based synthetic fuel? The answer is "no".

      I don't think the problem is going to be a shortage of carbon based fuel. It is the opposite - there is way too much of it and burning it will destroy the earth.

  •  Speculation (0+ / 0-)

    is the natural result of uncertainties and concerns over real issues which may not always be directly related to current levels of supply and demand but look towards the future for possible disruptions.

    Geopolitical uncertainties - turmoil in Syria, the potential for a war with Iran, declining production in the North Sea oil fields and in Venezuela, Libyan production remaining lower that it was before the regime change - have increased in recent months.

    The blockquote below presents some of the risks as per Market Watch.

    These days, threats move oil prices just as much, if not more than, actual disruptions to oil supply and demand — and rightly so.

    “This is not speculation,” said Phil Flynn, a vice president at PFG Best. “This is the market reacting to the real and growing risk to crude oil supply. This is a valid fundamental reason for rising oil prices and serves an invaluable economic purpose.”

    The markets have “to be defensive and anticipate. If they did not anticipate, order could be removed from the marketplace. It could lead to shortages and disruption of supply and wild price moves,” he said.

    Kim Pacanovsky, managing director of oil and gas at MLV & Co., a boutique investment bank, said the Iran threat has added around $10 to $15 to the oil price.

    “Humankind can not bear very much reality.” - T.S. Eliot

    by truong son traveler on Sun Mar 11, 2012 at 12:55:00 AM PST

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