Did Speculation Fuel Oil Price Swings?

For those of you who thought the market was being manipulated – you were right!

Duh.

OMG you got to be joking. There is plenty of regulation in the oil and futures trading businesses. Oil prices dropped simply because demand dropped when the whole economy tanked. Duh.

#2, What people fail to realize is that if the goobermint hadn’t bailed out these companies they wouldn’t have tried that again because they wouldn’t be in business any longer.

Deregulation is ok as long as people are willing to pay for their mistakes. Deregulation combined with taxpayers propping them up when they screw up is asinine.

Spekrlation, if you had watched the show last night you would be knowledgeable in the subject matter. It was stated in the show that the price of oil and gasoline went UP as demand went DOWN. The price of oil went down because the big players got out of the oil speculation business.

#8,

[Tinfoil Hat On]

Personally, I think it was artificially lowered so people would have more money to spend at Christmas.

[Tinfoil Hat Off]

#10 — what was never discussed was the closing of the “Enron loophole.” THAT is why prices dropped. Also the fake trading centers in London and Dubai were also never mentioned. There was a lot of details left out of the story.

Prices were being manipulated on the transatlantic “dark” markets via the Intercontinental Exchange (ICE), which is based in Atlanta. At one point, there were as many trades on this exchange as on the New York Mercantile Exchange (NYMEX).

The 2008 Farm Bill, passed in June, re-authorized the Commodity and Futures Trading Commission (CFTC) to oversee the transatlantic trades, and it was soon after that oil prices began to drop, as the manipulators didn’t want to face jail time. This was the closing of the so-called Enron Loophole.

The fact that the banking collapse began a few months later made me suspect that the banks were driving up oil to try to rescue their debt.

Your headline is a big duh! We’ve known it and said it for a long time. And speculation was mentioned over a year ago too.

Remember, the more business is removed from a local business, the larger it gets, the more this is true: Big Business isn’t amoral, it’s unimoral. That is, it only has one moral, making money. And anything that stands it the way of that goal will be ignored; anything that furthers that goal is acceptible. Thus, the larger a business gets, the more regulation and oversight it needs. The corollary to this is the smaller a business is, the less oversight and regulation it needs. That small mom and pop operation the get incentives to being small. They should have less paperwork. This is the way it should be. It’s not the way it is.

There are two ways of defining big business. The bigger the business, the more money it generates. The bigger the business, the more employees it has. Both should trigger making the business follow more oversight and regulation. And yet, when you are at the top, you really get less regulation and oversight. Thank you neocons from Nixon onward for this corruption.

#8 I did. Turned in my 23MPG American car for a 35MPG Honda. Lowered my thermostat from 72 degrees to 70 & dropped the night temp. too.

All simple things that help us reduce our dependency on foreign oil

Investors, for a time, replaced the power of supply and demand of the commodity with the trading on the commodity’s value. The same thing happens all the time per Bob’s quote “price was driven by traders with deep pockets but its been done time and time again”. Is 60 Minutes not explaining that during it’s broadcast just as unconscionable?

I loved the story last week about how they had run out of oil tankers to store supply and lo the market crashed. Hmmm, I don’t think hyperbolist speculation has ceased just yet.

And the manipulation had two goals:

1) get rich with oil futures (like, duh!)
2) try to recover the loses from the mortgage fiasco.

Fortunately (I guess), they failed the latter.

#2 I’m sure no Dem. got advantage of that.

Sigh, when people want to be as blind as #2, one has to wonder how much people like to be screwed over.

Now I have to wonder, what triggered Madoff’s fall, could it be that he couldn’t cover his own loses with the falling oil price?

Mike and Paddy, you need to find a better group of experts to tell you things.

I recall the MSM screaming that this didn’t make sense as a supply/demand issue, and congressdicks on both sides, especially those with Texas roots, claiming this was all just normal markets. The right-wing was especially ardent in the claim that this was supply/demand. I clearly recall that Rush L dickwad railing at the liberal media for not understanding how the markets work.

# 27 Olo Baggins of Bywater said, “Mike and Paddy, you need to find a better group of experts to tell you things.”

Don’t worry, I don’t listen to the enviro nuts.

The problem with this story is that it is told from an American only perspective and omits other factors that amplified the price swings. What they failed to mention when comparing prices of oil over time is that value of the US Dollar also dropped though the floor during this time, then recovered.

Even though oil is traded in US dollars, at some point those dollars need to be exchanged overseas. When you sell a barrel of oil for USD$50, and now it only gets you half of the Euros, Yen, Rubles, or whatever, then the price will go up.

I think absolutely this is theory of speculators driving the price up is true. But it became a self serving cycle (hence, a bubble). Investors had money that was not doing much on in stocks and securities. The value of the US Dollar was falling. By buying oil contracts, they get some protection from the falling dollar, and they hope they can also turn around and the make that a profit.

The actual oil consumers, such as gas stations, home heating oil, etc, had to compete for that oil against these investment funds. The cold hard fact is that the investment funds can out bid the consumers.

The theory about the “no place to store it” is also true, but only a smaller factor for the price run up. The companies that took delivery of oil and shipped it discovered that the the price fluctuations were so rapid that they made an impact on during the time it took to deliver a ship of oil. So they did what was in their best interest. They slowed down the ships. Every day a ship of oil was at sea meant that ship’s cargo became more valuable, to the point where the profit gain exceeded the cost of sitting on the oil.

But that too could not be sustained. Eventually they did run out of places to park oil and had to deliver it. The US dollar recovered, and demand did truly drop. I certainly could see it in the traffic (or lack of traffic) I saw on the Los Angeles freeways. People were simply not driving.

The same forces that joined together to drive the price up so fast turned around and drive it down with the same way, only in the other direction.

In fact, the downward price was amplified even more by the collapse of the US economy. The speculators had killed the Golden Goose. Oil doesn’t operate in a vacuum. It impacts the price of everything.

I can’t help but also wonder if the fighting in Gaza is partly driven by the Hamas and Hebollah paymasters in Iran and KSA trying to drive the price of oil back up. After all the 1973 war was very profitable for them.

This crap is why we need to go to electric cars and invest in a nuclear power generation system in this country. Our energy needs are too important to leave to whims of market manipulation and enemies of our state.

#31 said: “I can’t help but also wonder if the fighting in Gaza is partly driven by the Hamas and Hebollah paymasters in Iran and KSA trying to drive the price of oil back up…”

Heckuva job at that, huh? Oil still down. Under 38 as of writting time.

# 19 Arous
“Is 60 Minutes not explaining that during it’s broadcast just as unconscionable?”

Of course not. Who did 60 Minutes rob?

#36 Look what I found in an online dictionary!!

Denial: Something conFusion practises with excellent execution everyday.

#31 I do not know if the fight in Gaza is partially driven to drive up the price of oil. But I’d bet my last dollar a lot of the attacks on oil pipelines and kidnappings of oil company personnel in Nigeria can be tracked back to some oil exporting countries such as Iran, Venezuela, and Russia. Never forget, Putin was in the KGB before the fall of the Soviet Union.

#40 The price drop had more to do with the large investors and speculators having to bail from the market to cover their losses.