Found this via one of my favorite economic blogs Naked Capitalism. I cannot find the words to describe the disdain I feel for the Financial Sector. Always had a suspicion that speculators were responsible for the 30% premium (which is an estimate from various economic sources) we pay for crude oil. But never had a "smoking gun" to point to. Now I have one...
Had it not been for the rogue trader behind this mess, it would have never been publicized. From the web site oilprice.com:
On June the 30th 2009 oil mysteriously jumped by more than $1.50 a barrel during the night, to reach its highest price in eight months, the kind of swing that is caused by a major geopolitical event.
The amazing, true cause of this price spike has now been released by a Financial Services Authority investigation (FSA).
Although not authorised to invest company cash in trades Steve Perkins, a long standing, senior broker at PVM Oil Futures, had managed to spend $520 million on oil futures contracts throughout the night.
On the morning of the 30th an admin clerk called Mr Perkins to ask why he had bought 7 million barrels of crude during the night. Mr Perkins had no recollection of the transactions, and it turned out that he had made the trades during a “drunken blackout.”
You have to wonder how much the present price of oil is actually the market price, vs the amount of "Speculation Tax" we're having to pay. All the more reason to strive for Energy Independence.