Oil Companies using Enron style price fixing. Closing refineries to jack up gas prices.

[Mugsy]

From "Mugsy's Rap Sheet":

Oil Companies using Enron style price fixing.
Closing refineries to jack up gas prices.

Gasoline prices hit a new record high Tuesday with the National Average now standing at $3.08 a gallon. The primary reason cited for the rise in gas prices is the high number of oil refineries “Closed for maintenance” (which turn oil into gasoline) just prior to the “Summer driving season”.

If this sounds familiar to you, it’s because this is EXACTLY what Enron did, taking advantage of the new California electricity-deregulation laws (pushed through by Republicans in the late 90’s, arguing that it would SAVE consumers money as competition would drive costs down), to manipulate the cost of electricity. Enron closed power-plants and switching stations to create “artificial shortages” then charged exorbitant rates for what power was left.

(...)

You almost certainly noticed, along with the rest of the country, that oil prices plummeted just in time for the November election, dipping to a national low of just $2.39 on election day (falling as low as $1.99/gal for regular here in Houston) before creeping back up to Tuesday’s record high of $3.08 a mere 6 months later? The Bush Administration… namely Vice President Cheney… laughed at the notion that the government had some “magic wand” that they could just wave to bring down gasoline prices in time for the election. But that’s not exactly true. Truth is, the government has quite a few tools in their arsenal to help manage oil prices:

First… keep the “saber-ratting” to a minimum. Nothing can cause the price of oil to spike like uncertainty over the supply due to unrest in the Middle East. For as many as six months prior to the election, the Bush Administration stopped threatening the use of military action against Iran over their nuclear aspirations and began to cite progress via “talks” and “negotiation”.

Second… you suspend toping off the National “Strategic Reserve”. In April of 2006, the Bush Administration suspended purchases of oil to supplement the National Strategic Petroleum Oil Reserve, thereby leaving more oil for the consumer market and helping to bring prices down.

Third… the oil companies… on their own… at a time when they are seeing the largest corporate profits in history, it is most certainly in their best interests to maintain the status-quo in Washington. While it would be difficult (if not impossible) to prove that the oil companies kept all of their refineries online and output gasoline at a record rate in the months prior to the election in order to glut the market and drive down prices, the evidence seems clear that that is exactly what they did.

And now that the election is over, refineries are being shut down, gasoline prices are spiking, and profits are going through the roof a mere six months later.

(...)

Continued on "Mugsy's Rap Sheet"

[whistle]

1. Is it four bucks a gallon yet?

:sarcasm: :wtf:

[kimmylavin]

6. It is here.

Los Angeles, CA, and the surrounding areas.
They know we need it, they know we can't get around without it (abyssmal public transpo system), and they're charging us through the nose for it.

Saddle up for summer!

[williesgirl]

2. We need to threaten, or actually, nationalize oil in the country to keep this shit from

happening and take all those obscene profits and invest them in alternative energy. recommended

[Double T]

7. The wall street big oil criminals formulated this nation's energy policy........

with evil dick; imagine your nation's vice president is colluding on an energy policy to intentionally manipulate and over inflate energy prices while openly evading any and all questions regarding secret energy policy meetings and the names of those attending the meetings. ONLY in corrupt bushco America would this be allowed. CONServative corporate america and wall street need to be seriously regulated to their death, if necessary.

[Hobarticus]

14. I never thought I'd agree to that, but...

The time is way fucking neigh.

[Bitwit1234]

3. THIS is the investigation we should be going after

right now, with cheney's energy "committee" being called to testify under oath.

[Ezlivin]

4. It's not as easy as that

A refinery is a multi-million dollar investment. It has to operate for a fixed period of time under certain conditions to make back the initial investment. The most important variable is feedstock: Is there enough petroleum to keep the refinery operating? If not then the investment is lost.

If you are not aware of Peak Oil, then check this out.

Also, remember that there are different grades of crude oil, with the light sweet crude oil the most desirable because it requires less refining. LS crude oil is past peak; we've taken the "easy" oil out of most wells and now are left with the sour crude oil.

Refineries are engineered to refine a particular type of crude oil: sweet or sour. Most refineries are designed to refine LS crude oil. Why? Because it is easier to refine than sour crude oil, as the latter has sulfur which creates sulfuric acid when refined, thus greatly increasing the maintenance and safety hazards of a refinery.

With rapidly dwindling supplies of LS crude oil and insufficient refining capacity to refine the sour crude oil, costs will certainly rise. Sure, there's oil left in the ground, but it's harder to get to, lower in quality and harder to refine.

[karlrschneider]

8. This clip from your link explains it pretty succinctly:

"Furthermore, all oil fields eventually reach a point where they become economically, and energetically, no longer viable. If it takes the energy of a barrel of oil to extract a barrel of oil, then further extraction is pointless."

Although it would have been a bit more technically accurate to say "...energy of a barrel ... to discover, drill and
extract..."

[Mugsy]

17. Argument falls flat.

Any argument regarding the "technicalities" of keeping a refinery operating fall flat in the fact of the fact (as mentioned in my Op/Ed) that they found plenty of oil to operate at full capacity to bring down gas prices in time for the election. And often, oil companies cite the LACK of having enough refinery capacity for why gas prices are so high.

[SoCalDem]

5. Which is why refineries need to be nationalized

States that need "special blends" should have their own regional refineries that cater to THEM

eastern regions that use heating oil in the winter should have their own facilities.

Our ECOMONY is at rik if we continue to allow the robber-baron oil companies to rape our economy.

It's a fiscal security issue, dammit!!

One would think that republicans would see that :evilgrin:

[camero]

9. yep

Except they call it "maintainence". Pshaw.

[Sadie5]

10. Same as Enron scheme

and our government is allowing them to get away with it.

[liberal N proud]

11. Finally, Someone else sees the pattern here

Prices magically go up and down at convenient times. Down for elections, up for holidays and peak driving seasons.
And no one with authority gives a shit because they are all getting pampered by the oil company lobbies or are former oil company execs.

[AndyA]

12. There is no doubt price fixing is happening.

How can you explain that EVERY oil company, almost EVERY gas station, across the country, raises prices AT THE SAME TIME, by the SAME AMOUNT?

Competition doesn't normally work that way, there's always a loss leader and in this case, very few stations have lower prices than the big oil company owned stations.

It's price fixing, plain and clear. And Congress needs to do something about it.

Let the oil companies pay a windfall profits tax. Penalize them for shutting down facilities for maintenance during peak times of year. You don't see retailers cutting back on store hours during the holidays to raise prices, and it's the same thing. Oil companies should prepare for peak usage in the months leading up to it, not shut down facilities just when they need them most.

And it happens every year, just like it was planned. And our government is letting them get away with it.

[bonito]

13. Kick

[IChing]

15. Gasoline Price Manipulation Before the Elections

by Peter Stojan


Now it may be hard to swallow for some that market manipulations go on, but they do at all levels. Penny stock promoters cook up their schemes, and power players have their schemes. In traders jargon, it’s called painting the tape. Indeed, the Washington Post has revealed that the government has formed something that is casually known as the Plunge Protection Team. PPT is supposed to jump in and buy stocks when things are unruly. Ronald Reagan formed the PPT when he signed Executive Order 12631. It’s just another way of painting the tape (Using your tax money, or newly printed Federal Reserve dollars, of course). Goldman is a member of the secretive PPT.


But some just don't believe these kinds of manipulations go on. I have had some email discussions in recent days with some pretty sophisticated economists who don’t believe Goldman has manipulated the gasoline market. Their argument goes: "I will continue to be an economist and look at the supply and demand issues."

My reply has been, Goldman Sachs understands supply and demand – and they also understand trading. When you sell-off $6 billion in gasoline futures contracts, you are going to have an impact – as the New York Times story correctly pointed out. That is an awful lot of supply. Further, this type of aggressive selling will result in selling by others who will receive margin calls they can’t meet. And by trend followers, who will suddenly dump gasoline and other commodities. This is, indeed, exactly what is happening. Goldman Sachs didn’t get to be Goldman by not understanding this stuff. Supply and demand can explain this manipulation completely.



They ask, "Why would Goldman Sachs trade this way and lose money?" The answer here is that Goldman doesn’t lose money. This is a managed commodity index. Goldman manages the index, but the actual money put up comes from institutions, hedge funds and other unlucky saps that trusted Goldman to manage the commodity index as a hedge against inflation – not to bail out of $6 billion in contracts over a few weeks. The result: Unlucky saps – Major losses. Goldman – Zero losses and their man running the Treasury. Which side of this trade would you want to be on?>>>>>snip

Peter Stojan has traded commodities full time for over twenty years.

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Is Goldman Sachs manipulating the gasoline price?

There has been some speculation that the Saudis have been driving down the price of oil to help Republicans in the upcoming elections. I personally haven't seen any evidence that the Saudis are doing this, but it sure looks as though Goldman Sachs is doing some strange trading in the gasoline futures market. Can the Saudis be far behind?

Check out this timeline:

President George W. Bush nominated Henry M. Paulson, Jr. to be the 74th Secretary of the Treasury on June 19, 2006. The United States Senate unanimously confirmed Paulson to the position on June 28, 2006 and he was sworn into office on July 10, 2006.

Before coming to Treasury, Paulson was Chairman and Chief Executive Officer of Goldman Sachs.

So what does Goldman do just weeks after Paulson is sworn in as Treasury Secretary?

It announces a subtle move that drives down gasoline prices, short-term.

Nice move, coming just months before the election.

This weekend (They always hide the good stuff in the low circulation Saturday edition.), Heather Timmons at the New York Times spilled the beans on the maneuver:

Politics and worries about oil supplies may have caused gasoline prices to go up at the pump earlier this year, but one big investment bank quietly helped their rapid drop in recent weeks, according to some economists, traders and analysts.

Goldman Sachs, which runs the largest commodity index, the G.S.C.I., said in early August that it was reducing the index’s weighting in gasoline futures significantly. The announcement did not make big headlines, but it has reverberated through the markets in the weeks since and some other investors who had been betting that gasoline would rise followed suit on their weightings.
“They started unwinding their positions, and those other longs also rushed to the door at the same time,” said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation.

The August announcement by Goldman Sachs caught some traders by surprise.The firm said in early June that it planned to roll its positions in the harbor contract into another futures contract, the reformulated gasoline blendstock, which is replacing the harbor contract at the end of the year because of changes to laws about gasoline additives.>>>>snip


http://select.nytimes.com/gst/abstract.htm...

http://www.kellerkomments.com/2006/10/gaso...

[hunter]

16. Or worse, they can't get oil for the refineries and are trying to hide that.

Simple price fixing is the dream scenario -- there is a political solution to that.

Peak Oil is the nightmare scenario -- you can't extract oil that isn't there.

[Mugsy]

18. "Peak Oil" brought to you the same scientists that dispute Global Warming.

I'm sorry, but I've looked at the "peak oil" science, and it's just not there.

"Peak Oil": brought to you the same scientists that dispute Global Warming.

[hunter]

21. I don't have a horse in that race.

What will be, will be.

As Philip K. Dick said, "Reality is that which, when you stop believing in it, doesn't go away."

At the moment I don't think either point of view is going away. This could be short term price gouging, or it could be indicative of the rats stuffing their suitcases with as much portable wealth as they can before they steal the lifeboats.

La, la, la, just another sunny day on the Titanic...

[NobleCynic]

22. Really now.

All right, I'll bite. On what grounds are you challenging peak oil?

The scale approach, that it is farther off than predicted because of incomplete exploration?

Or that their exists a replacement mechanism for geological hydrocarbon other than the standard explanation?

[Rosemary2205]

19. K & R nt

[Mugsy]

20. Thanks, though...

...this seems to be a story no one wants told.

DU won't pick it up, when researching data for the article, CBS was the only one of "the Big Four" networks to even mention the refinery closings, and NO ONE has drawn the same obvious parallel with Enron and their manipulation of the electricity market.

[Rosemary2205]

23. Well it's kind of an open secret.

Everyone knows they are doing an Enron, but proving it, and stopping it with a complicit Congress and White House is just so difficult that I think they figure what's the use of even covering it.

Although for the big mainstream media giants, they are in bed with big oil just like the rest.