One piece of legislation is why the price of everything is going through the roof

[LSK]

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

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

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

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

much much more....

http://www.star-telegram.com/104/story/651928.html

[LSK]

1. Randi is covering this now

[KoKo]

2. The sewage of "Wall St. Rigging" is starting to bubble out of the manhole covers..

and we wonder why they won't "IMPEACH!" Because they are COMPLICIT! They will go down with the Bushies if it all came out...so the sewage keeps bubbling up...slowly so that it's reported, here and there, but there's no way for the average American to keep track of it all.

For those of us who know more than most from compulsive reading and the web....it's overwhelming. Maybe it's better not to know what we know...especially when we can do so little and those who do try are pushed back if not outright ignored.

Thanks for posting this.

[LSK]

3. Part II

Record high prices without record low oil inventories, analysts saying that so much money flows into oil commodities that it gives the impression of shortages, when in fact no shortage exists. That mirrors the situation in the commodities market for food, as Bloomberg pointed out in its April 28 article, "Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin": "Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies." That’s right; food, oil and gasoline have become an "asset class." No longer are you fighting a neighbor at the supermarket over the last box of Cheerios®; now you’re fighting the futures traders, who are actually determining what you will pay for that cereal.

We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?

It wasn’t always this way.

In the past, the Commodities Futures Trading Commission acted as the cop on the beat, ensuring that buyers in the market were not distorting or manipulating prices beyond what supply and demand normally dictate. Certainly, if a hard frost hit Florida and cost growers an orange crop, then bidding up the price of the remaining oranges was both a wise investment and allowed under the trading rules. Right now investors know that if they borrow and invest huge amounts in commodities futures, they can create a shortage on paper – which drives prices up just like an actual shortage of any given product would. What kept traders from cornering the market that way in the past were the government’s anti-manipulation rules.

http://www.star-telegram.com/ed_wallace/story/659081.html

[snappyturtle]

5. Excellent article....even I could understand it! n/t

[LSK]

4. Refinery capacity has been trending down since 2004

http://tonto.eia.doe.gov/dnav/pet/pet_pnp_unc_dcu_nus_a.htm

[snappyturtle]

6. Doesn't that just help 'them' convince 'us' that the supply is down and

then justify higher prices?

[LSK]

7. it would if anyone was saying there is an oil shortage

but the Saudis are saying they are pumping a lot and the oil executives do not say there is some oil shortage.

Also see this:

http://www.chron.com/disp/story.mpl/business/5833333.html

and

http://tonto.eia.doe.gov/dnav/pet/pet_crd_crpdn_adc_mbbl_a.htm

In addition, the demand in America should be down because who can afford to drive a lot $4/gal??

[underpants]

10. Great work here LSK

:applause:

[snappyturtle]

11. Oh I agree that demand has to be down! But I wouldn't know it by

listening to the talking heads on MSM. There are LOTS of people saying that there is or soon will be a shortage....downside of peak oil...which feeds the future's traders. But recently I have been reading about oil in North Dakota and Gull Island and blah blah. Even if there is absolutely no shortage, we need to get off the stuff for the sake of the planet. Thanks for the links.

[underpants]

9. I haven't read LSK's link but no not necessarily

Refineries are the only spigot that the oil companies have a control on

they can't control what is pumped out of the ground overseas
they can't control what is shipped
they can't even control what we put in our tanks OR is used to make products

what they can control is what is refined.

The Chevron Texaco and Mobil memos show that they are all about controlling the "refinery margin"\
http://journals.democraticunderground.com/underpants/45



Also see this
http://journals.democraticunderground.com/underpants/31

Okay they could claim that this diminishes supply but in doing so they are failing to mention that THEY have a hand in it too

[snappyturtle]

15. Oh I agree! My point is that the oil companies want us to believe

the supply is low hence less refining. They may have a huge supply of crude and choose not to refine it.....tin foil hat here----> If one buys into true end of oil scenario, this whole trading charade and reduced refinery output allows the oil companies to get top dollar for the last "drops".

And, I agree that they have their hand in it too. Truth among thieves keeps them from revealing this tidbit.

[LSK]

12. google OPEC capacity, they have been increasing it over the years

http://www.opec.org/home/Special%20Features/2005/fea051705.htm

http://www.energyintel.com/DocumentDetail.asp?document_id=210901

[cojoel]

8. reduced refining capacity would not raise crude prices

Reduced refinery capacity could result in higher prices for refined products but not for crude oil. If anything, reduced capacity to refine would result in lower prices for crude, because why buy more than you can refine?

Hopefully the market manipulators will soon be hearing these words: "Margin call, gentlemen".

[snappyturtle]

16. If the suppliers of crude know that the end product is bringing higher

and higher selling prices, why wouldn't they inflate crude too?

[LSK]

13. heres another great find:

From 1975 to 2000, the U.S. Environmental Protection Agency (EPA) received only one permit request for a new refinery. And in March, EPA approved Arizona Clean Fuels’ application for an air permit for a proposed refinery in Arizona. In addition, oil companies are regularly applying for – and receiving – permits to modify and expand their existing refineries.<1>

http://www.citizen.org/print_article.cfm?ID=11829

[Rosemary2205]

19. American refiners are cutting back production due to low profit margins

The bullshit speculation is making us dependent not only on foreign crude but also imported refined gas.

http://www.businessweek.com/lifestyle/content/apr2008/bw2008041_945564.htm

[KoKo]

14. Another Kick...for the "Night Crowd."

:kick:

[LSK]

17. another factor about demand i just read is that oil demand is less in recessions

So how on earth is demand up 50% in the past year?????

[izzybeans]

18. They are capitalizing on most of us not evolving past bunk textbook theories

It helps us ignore the real world.

"Well what you got here is a supply and demand issue" It works for everything. Try it. Everyone will instantly turn stupid and ignore their lying eyes as soon as you say it...even when you say it for anything.

[Richard Steele]

20. K&R

[lostnfound]

21. This speculation has risen to level that ordinary business people discuss it

For the most part you can't or shouldn't talk politics when you are representing your company with another company.
But economics is a different matter, and very many visitors have brought up or been interested in this topic recently. It is recognized that it is speculation and there is anger about it.

It's a good topic to open eyes with.

[leveymg]

22. The same thing happened during the faux "Iran gas shortage" of '80

The Iranian revoution temporarily removed some crude oil from the international market, and the futures speculation on the spot markets went through the roof.

Dept. of Energy data showed that domestic supplies were also at a historically high levels, so there should have been no supply interuption within the U.S. What happened next was a crime that was never prosecuted -- the multinational oil companies shut down refineries, kept fully-laden tankers at anchor outside th 5-mile limit, and withheld refined product from retail distribution, creating an artificial "shortage" that justified a doubling of prices at the pump.

The bastards are at it again.

[Raster]

23. The shortage of 80 also had another motive: inflating gas prices to further sway voters away from

Jimmy Carter. The Texas-American Petroleum Mafia and their Middle East accomplices CONSPIRED to rig an American presidential election. Couple that with the "arrangement" with the Revolutionary Guards in Iran to hold the hostages longer and you have the perfect electoral storm. Viola! It's Ronnie the Raygun and "morning in America."