Third Party & Independents Archives

The Shell Game; a la Exxon, BP, QT, Conoco, Mobil …

So, the stock market has plummeted more than 300 points in three days because of what might happen in Libya, even though the civil and military unrest in the nation’s capital is literally on the opposite side of the country from where the oil fields are, and there is a billion-barrel surplus reserve to ensure absolutely that there is no shortage.

Yet, somehow, oil prices have spiked more than $20 in three days, and gas prices in the U.S. have ballooned by more than 30 cents per gallon in just the past week (and that’s on gas that was already in the ground at your local gas station).

But here’s the kicker, folks: The United States imports no oil from Libya whatsoever.

Will we never learn? How many times do we need to see crystal-clear proof that speculators are driving the nation’s economy before we wake up and stop letting fear-mongers control our finances?

It used to be that financial experts foresaw trends and changes in a given industry and their buy/sell actions caused ripple-effect changes in the markets. Then the speculator profession appeared out of nowhere, and investors started hedging based on what the speculators predicted, and the markets reacted accordingly.

But now, the speculation monster is so far out of its cage, that all someone has to do is vaguely hint that some Rube Goldberg-esque series of events might be possible – regardless of how strongly the facts support or denounce the rumor – and BAM! The Dow drops 200 points, and American greed kicks into overdrive.

It’s a self-perpetuating prophecy: Speculators guess, prices rise. So speculators guess what the price increase will cause. And prices rise.

We saw it start when the protests in Egypt started. Though Egypt exports no oil itself, the U.S. Energy Department still classifies it as one of the few World Oil Transit choke points. Every day, 3 million barrels of oil and fuel products pass through the canal and the Suez-Mediterranean Pipeline, which also traverses Egypt. That amounts to 2.5 percent of global oil production. About two-thirds of that energy is traveling north toward Europe. It accounts for 5 to 7 percent of Europe’s oil consumption. Disrupt these shipments, and European supply — and global prices — would be “affected tremendously,” Dalton Garis, an associate professor at an Abu Dhabi energy-research center, told the Wall Street Journal.

But not one drop of oil in any shipment was disrupted. European supply didn’t change one iota (nor did the United States’ supply). Not so much as a can of oil was lost. But oil prices rose $11 a barrel that day anyway.

A four-year-old could punch holes in the the math of Garis’ prediction. If the canal only supplies 2.5% of global production, how can it create an increase of *MORE THAN* 2.5%? It’s easy, if your entire industry is based on making exactly that happen.

But it’s not just America getting gouged for what’s proven to be no reason whatsoever.

“Canada imports no oil from Libya, so speculators are fueling an artificial situation that they created, as the per barrel price of oil rises past $110 on the world market,” Liberal Minister of Parliament Dan McTeague said Wednesday. “Gas prices may rise another 2 to 3 cents overnight because of the “overblown” response to the situation in Libya. We are paying extra (for gas) today, because a grumpy dictator made some threats yesterday that he hasn’t acted upon.”

David Detomasi, professor of International Business at Queen’s University, agreed with McTeague’s estimate that the response has been overblown and caused partly by speculation, and partly due to deregulation of the oil industry.

“Although Canada and the United States does not get any oil from Libya, the speculation is affecting the price of gas futures on the world’s stock markets. There is some fear that what is going on in Libya will spill over to the rest of the Middle East,” Detomasi told CTV.ca. “And there are people who are looking to make a profit from that possibility.”

Oil was at under $75 a barrel when Egyptians took to Facebook and, subsequently, the streets of Tahrir Square earlier this month. Then the oppressed citizenry of three other nations followed suit. Through it all, hundreds were shot, dozens were killed, but not one drop of oil was wasted, destroyed or flow-stopped. But oil is $110 per gallon today.

Why? If none of the things that would have caused price increases happened, why have prices increased *anyway*?

Three words: Speculator fear-mongering.

The prices you and I see every day are immediately changed by what speculators say *might* happen. What the hell will the grocery bill and gas pump going to look like if any of the fear-factors ever actually happen? Can you say high-interest soup-mortgage?

It’s painfully simple to prove that the oil and gas industry lies to us on a daily basis.

In 2003, the primary gasoline provider to the Phoenix Valley in Arizona, Kinder-Morgen, announced that they were opening a brand-new second supply line into Phoenix that would immediately increase supply by 40%. Throughout the fight that Kinder-Morgen put up to get permits to build the pipeline, they argued that decreased supply in contrast to customer demand was what caused Arizona’s gas prices to top $4 a gallon.

If your price is based on the amount of supply, and you increase supply by 40 percent, simple Sesame Street mathematics tells you that price should equitably drop by 40 percent.

Kinder-Morgen got their permits and built that second supply line. And prices decreased by exactly … zero. Why? The company’s official reason was, “Unforeseen increase in demand.” The Arizona Department of Transportation reports that fueled vehicle population in Arizona has increased by a net of 4.3 percent between 2003 and 2011.

Like I said … painfully simple.

Energy speculators. Agricultural speculators. Technology speculators. Investment speculators. We even have speculators who guess at what other speculators will guess! And while they deal in nothing but potential intangibles, they all have direct, immediate, tangible impact on the active American dollar.

We, as a nation, are putting far too much stock in speculators, while the working class savings account pays the price. And we can’t get a zero-interest federal bailout when we go under, because that would be “Communist redistribution of wealth.”

But, you know me – the eternal optimist! Look on the bright side: With oil so expensive again, just think of how much the U.S. government is going to save by cutting all those home oil heating subsidies for the elderly next winter.

Posted by Gary St. Lawrence at February 24, 2011 9:49 PM
Comments
Comment #319217

When prices went up during the Bush administration, lefties blamed the “oil men” in the White House. Is the newest spike the fault of Obama?

Prices, BTW, are forward looking. You don’t sell your product for the price of the last one sold, but rather based on your estimate of the next one you will have to get.

Speculators can indeed run up prices in the short term, like George Soros did with currencies. But sooner or later they have to pay their bets and if they get too far away from reality, they lose money.

The price of oil is set on a world market. There remain some inefficiencies. “Speculators” tend to take advantage of them, making prices more uniform. If you pull Libyan oil off the market, it has to be made up someplace else. This really should come as no surprise.

The oil market is not completely free, of course. But the villains are national governments, lots of them OPEC members, who work very hard to constrain supply. Speculators are not big players, except at the margins.

You might be happy to learn, however, that Bill O’Reilly and Glen Beck are advocates of this speculator theory that you support. It is a theory that does not seem to have a left or a right side. And of course, the leading speculator of all time was George Soros, who now is a left wing idol.

Posted by: C&J at February 24, 2011 10:30 PM
Comment #319218

… “lefties” … blame Obama … “George Soros” … left wing idol …

You drop these right-wing labels it’s going out of style and you expect anyone to take you as anything other than a right-wing mouthpiece?

You’re definitely in the wrong forum.

Posted by: Gary St. Lawrence at February 24, 2011 10:38 PM
Comment #319220

Gary, look up fungible in the dictionary and get back to me when you are done.

Posted by: Warped Reality at February 24, 2011 10:48 PM
Comment #319221

Warped Reality wrote: “Gary, look up fungible in the dictionary and get back to me when you are done.”


Were you trying to defeat your own argument? Pointing out that one barrel of oil can be replaced by a different barrel of oil does nothing to support the argument that oil and gas prices were not artificially increased as a result of speculation.

Posted by: Gary St. Lawrence at February 24, 2011 10:52 PM
Comment #319222

My point was:
Just because the US doesn’t import Libyan oil doesn’t mean we’re insulated from the price effects of the termination of Libyan oil exportation. Libya’s former customers now have to look elsewhere for their oil, which means they are bidding up the price of oil exported by our usual sources.

Posted by: Warped Reality at February 24, 2011 11:17 PM
Comment #319223

Why does everyone insist on ignoring the fact that Egypt, Libya, Iran and the Saudi Emirates have all said, flat out, that there is a more-than-one-billion-barrel-reserve-surplus already sitting in tankers throughout the Middle East that completely negates the justification of any fears spread of shortages?

Posted by: Gary St. Lawrence at February 24, 2011 11:34 PM
Comment #319224

Just proves the point that drill baby drill is so stupid. All oil goes on the market. It will not lower prices at all they try and make it sound like it would stay in this country.

Posted by: Jeff at February 25, 2011 12:23 AM
Comment #319225

Speculation; kind of like when obama got elected, the price of ammunition doubled. Supply and demand; fear of obama cutting the supply drove up the demand.

Posted by: Beretta9 at February 25, 2011 12:34 AM
Comment #319226

I don’t believe Jeff or Gary understand. The oil on ships has already been pumped out of the ground. When the Saudis announced they would increase the supply, the price dropped. If Obama announced opening up drilling, the price would drop.

It is the threat of drilling or cutting the supply on which speculators base their speculation.

Posted by: 1776 at February 25, 2011 12:42 AM
Comment #319228

“When prices went up during the Bush administration, lefties blamed the “oil men” in the White House. Is the newest spike the fault of Obama?”

What lefties are you referring to C&J? I know I blamed the speculators who did not take delivery of the oil for the artificial run up in prices.

BTW does anybody else find it just a bit ironic that during the 1970’s we had two major price increases in oil and it was a cause of the high inflation of the time. Now a 30 years later we have had one just prior to the financial meltdown and possibly another one on the horizon and we are still in the same boat. Shame on us.

Posted by: j2t2 at February 25, 2011 2:17 AM
Comment #319231

The Big Three car manufacturers and Big Four oil companies - and the Congressmen/women they own will never let America wean itself off the Middle Eastern oil teat.

In Japan, the same exact makes and models of the cars driven in the U.S. today average 58.2 MPG. In America, 22.1 MPG.

The is a standing U.S. patent for a fully functional alcohol-fueled car engine link text that has never been granted federal commercial development permits beyond the prototype stage.

And then look at U.S. vs. Preston Tucker link text to see how far back the corruption goes.

Look at the big picture, people, instead of trying to pretend that only one party or the other painted the canvas.

Posted by: Gary St. Lawrence at February 25, 2011 9:20 AM
Comment #319232

Gary wrote:

“The Big Three car manufacturers and Big Four oil companies - and the Congressmen/women they own will never let America wean itself off the Middle Eastern oil teat.

In Japan, the same exact makes and models of the cars driven in the U.S. today average 58.2 MPG. In America, 22.1 MPG.

The is a standing U.S. patent for a fully functional alcohol-fueled car engine link text that has never been granted federal commercial development permits beyond the prototype stage.

And then look at U.S. vs. Preston Tucker link text to see how far back the corruption goes.”

Your article was about “Speculation” of commodities, and now you talk about politicians corrupted by corporations. I assume you are talking about corrupt politicians on both sides of the aisle? If so, how do you propose we remedy the problem?

Re/ Japan; are you saying the Japanese autos in Japan get 58.2 MPG and the same Japanese autos in America only get 22.1 MPG?

Correct me if I am wrong, but isn’t ethanol subsidized by tax dollars? The result of ethanol use in America has caused the price of food to increase to the point where some third world countries are starving, and you want to go to 100% ethanol burning autos? What would that do to the price of fuel, and what would that cost the taxpayers in subsidies?

I don’t think your link to the Tucker auto is relevant to this discussion.

Posted by: 1776 at February 25, 2011 10:55 AM
Comment #319234

Your article was about “Speculation” of commodities, and now you talk about politicians corrupted by corporations. I assume you are talking about corrupt politicians on both sides of the aisle? If so, how do you propose we remedy the problem?

1) Remedy the problem: Strip lobbyists and corporate control out of Washington. Break the link between Congress and their whoremasters.

2) Not only Japanese cars, but American cars, as well.

3) Who said anything about ethanol?

4) How is my link to the story of Preston Tucker being shut out of the automobile industry by the Big Three and the corrupt senators they owned at the time NOT relevant to my article?

Posted by: Gary St. Lawrence at February 25, 2011 12:57 PM
Comment #319238


Beretta9, did Obama cut off supplies of ammunition? Obama was able to increase profits for ammunition manufactures without lifting a finger. The monger was probably Fox News. How much has Glen Beck done for the price of gold and gold profits? A good monger is worth his weight in gold.

Obama should get the credit for increasing gold profits as well. And, they say he is bad for business. I bet he has increased profits on guns and survival equipment as well. He bailed out GM, increasing profits for the auto industry.

Gary, it is really quite simple, there is one born every split second.

When AIG went bust, who did Greenspan, Rubin and Summers go crawling to? The banks?

C&J, is conservative hate of Soros based on his commitments to progressive causes, because he is the best in the business at what he does, or both? He is sort of a Benedict Arnold type to conservatives and their gods isn’t he? He Could Have Been A God But He Choose To Be A Devil. Sounds like the title of a movie financed by the Koch brothers.

Wealth is not homogeneous, most but not all are dedicated crushing the voice of labor, progressivism, and consumer advocacy.

Posted by: jlw at February 25, 2011 4:54 PM
Comment #319240

Gary

I understand what you are trying to say. You don’t like criticism. I understand that you want to talk only to those who agree with you or disagree in your own accepted range.

When I say “our” money, I am talking about the money of taxpayers. Obama only has the money he gets from taxpayers or borrows for future taxpayers to pay. The governors represent the taxpayers of their states. These taxpayers will pay into the ObamaCare funds, whether they want to or not. Your option is for them to pay, but then get nothing back. There option would be neither to pay nor to get the Obama care. Both those options are unrealistic, the first because it is just silly and the second because Obama doesn’t plan to let them opt out.

RE the word “liberal” if you are insulted by it, maybe it is your problem. I use it to describe policies that are … wait for it … liberal. Liberals make up around 20% of the population. Since more than that call themselves Democrats, clearly not all Democrats are liberal, and so I cannot use that term. Would you suggest a better term? I notice you use the word liberal yourself, BTW.

jlw

I don’t hate Soros. He did a good job in Eastern Europe. He is doing a bad job now. Both those things are my opinions, of course. I was only pointing out that he made his big bucks in the ultimate type of manipulative speculation. That is not my opinion; it is just true. Didn’t you know that?

BTW - you seem to hate the Koch brothers. Do you know how they made their money?

J2t2

I am glad you did not blame Bush. Only idiots thought that. But there were plenty.

“The price of oil is… is attributed to two oil men in the White House and their protectors in the United States Senate.” - Nancy Pelosi, 2008.

Re your comment on the 1970s, I don’t understand. Are you advocating inflation like we had then.

Posted by: C&J at February 25, 2011 5:39 PM
Comment #319269

C&J wrote: “I understand what you are trying to say. You don’t like criticism. I understand that you want to talk only to those who agree with you or disagree in your own accepted range.”


No, clearly you DON’T understand what I’m trying to say. If you did, you wouldn’t have this seemingly pathological need to change subjects, and try to put words in my mouth/keyboard.

I have no problem with criticism.

What I have a problem with is tunnel-visioned trolls who go from thread to thread in the Independent/Third-Party forum and spew absolutely nothing but patented right-wing tripe, lies, distortions and the ever-present “attack the messenger” fallback position.

SO, the way you use “liberal” in reference to me isn’t an insult. Well, then neither is my use of the words “frightwing neo-con” and “denial-ridden Rovian parrot” in reference to you.

And yes, I use the word “liberal,” usually as an adjective. I just don’t use it as a noun and an insult and with a tone of disgust and self-superiority the way you do.

And newsflash, chuckles: There’s a hell of a lot more than 20% of the population in this country who are liberal. If you got your information from anyplace other than Fox News and it’s bobble-heads, you’d know that.

And it’s now obvious that you either refuse, or are simply incapable of admitting that the GOP governors I cited are hypocrites because THEIR actions countermand THEIR words. But you just keep trying to spin off into your little rant about where the tax money came from, because it seems to placate your lack of understanding.

Posted by: Gary St. Lawrence at February 26, 2011 12:38 AM
Comment #319271

jlw said,

“Beretta9, did Obama cut off supplies of ammunition? Obama was able to increase profits for ammunition manufactures without lifting a finger. The monger was probably Fox News. How much has Glen Beck done for the price of gold and gold profits? A good monger is worth his weight in gold.”

Sorry jlw, forgot I was dealing with children. The subject was “Speculation” and I said,

“Speculation; kind of like when obama got elected, the price of ammunition doubled. Supply and demand; fear of obama cutting the supply drove up the demand.”

At what point did I say, Obama cut off the supplies of ammunition? What is it with you lefties? Do you have to try to make an argument out of everything?

Yes, Obama did help the ammunition manufacturers, simply by being elected. Pray tell, what does ammunition have to do with Fox News or GB?

Posted by: Beretta9 at February 26, 2011 12:44 AM
Comment #319274

Gary

If you want to call them hypocrites for taking money that is taken from their ratepayers, not matter what, that is okay. I am proudly in that same group. I would/do take that kind of money. It doesn’t bother me if they do that. Maybe that is why we have a misunderstanding. You think it is a bad thing what they did. I think they did the right thing. They are playing the game chosen by the President.

Re liberal - sorry that you feel it is an insult, which you must, since you equate it “frightwing neo-con” and “denial-ridden Rovian parrot”, which are not particularly descriptive. I didn’t add any of those kinds of childish additions to “liberal”. You could call me a neo-Con or a conservative. I am not ashamed of those terms.

re liberals being around 20% - google the studies. Gallup has been doing surveys on this for around twenty years. Self-described liberals linger around 20%. Self-described conservatives are around 40%. In the most recent poll, 21% called themselves liberals; 40% called themselves conservatives; 35% were moderates and a few didn’t know - http://www.gallup.com/poll/120857/conservatives-single-largest-ideological-group.aspx.

This is probably why conservative politicians usually call themselves conservative, while liberal politicians tend to “avoid labels”.

Posted by: C&J at February 26, 2011 1:30 AM
Comment #319283

“The price of oil is… is attributed to two oil men in the White House and their protectors in the United States Senate.” - Nancy Pelosi, 2008.”

C&J, is this statement due to the fact that when you invade an oil producing country it tends to affect the prices of oil on the market? Wasn’t there some disruption in Iraq oil deliveries due to the occupation of Iraq?

“Re your comment on the 1970s, I don’t understand. Are you advocating inflation like we had then”

C&J, advocating inflation? Really. What I was pointing out is how oil affects the price of most other goods and services. I was pointing out how after the crisis ran it’s course it was consume consume, consume instead of reduce reuse and recycle. How during the ‘80’s we veered back into supporting middle eastern dictators instead of developing alternative technologies and cutting demand for oil from the middle east. I was pointing out how it seems we have had another oil” crisis” just prior to the financial meltdown and prices are heading up again and we find ourselves in basically the same boat, kissing middle eastern dictator ass to feed our addiction to oil. It just seems to me Carter keeps looking smarter and smarter as time goes on.

Posted by: j2t2 at February 26, 2011 1:13 PM
Comment #319288

j2t2

By 2008, we had beat back the insurgents and Iraqi oil was flowing. I suppose it might have been too much to expect Pelosi to understand that. In fact, oil was lower priced during the actual disruption than it was when Nancy was making a fool out of herself.

But we can stipulate that Nancy is dumb. I was just pointing out that some people (i.e. Pelosi) did indeed blame Bush for the oil prices. You claimed you didn’t, so why try to defend Nancy anyway?

Re inflation - I really did not understand what you were saying. It was not a provocation.

Re the 1980s, we starting using more oil because it got very cheap again. It is hard to ask people to pay more for fuel that is less convenient. That is probably why we need to maintain a higher price.

Re Carter - Carter had the right idea re changing from oil, but he had the wrong way to do it. Thankfully, the Carter synthetic fuels stuff didn’t work, or else we would have a lot more CO2 in the air. Carter, in his wisdom, tried to keep the price of gas low. He wanted both cheap oil and alternatives. Not something you can have.

Carter was what you can call an educated fool, a man who seemed to know everything about nothing. He did a good job with Camp David and his human rights push was good. Everything else he did was either a failure or was saved by random chance or those around him.

Carter should have stayed retired, BTW. He made his reputation fighting for human rights. Now he embraces dictators. I suppose he thinks he is doing good. He is wrong.

Posted by: C&J at February 26, 2011 5:45 PM
Comment #319291

C&J, 2008, the great recession has started so yes oil prices had come down over the course of the year, but gas prices seem to lag on the downward side, In 2007 oil prices were breaking records, speculation rampant, gas prices higher than ever.

The point with Carter is he attempted to move the country forward. Had we continued forward perhaps the ‘07 oil “crisis” would not have had such an impact on us. Nor the next oil “crisis”.

BTW here is a Gallup poll on ideologies

http://www.gallup.com/poll/146348/Mississippi-Rates-Conservative-State.aspx

Posted by: j2t2 at February 26, 2011 7:44 PM
Comment #319299

j2t2

Carter attempted to move the country, but it would not have been forward. I doubt he would have come up with much, but his synfuels was very carbon intensive. It was not his fault. In those days, we didn’t think CO2 was pollution. But it would have been a disaster had the programs to use oil shale or make gasoline from coal worked out.

Anyway, much of our oil “crisis” can be solved by abundant natural gas that has recently become available because of new technologies.

Government is not very good at choosing winners. Consider the ethanol debacle, not to mention Carter’s synfuel failure. We can spend a lot of money and get nothing.

The Germans and the Spanish subsidized solar like mad. Presumably we could copy what they did IF it worked.

We will develop alternatives when it makes economic sense to do it. We have already become much more energy efficient and we do use alternatives more than before.

IMO - great promise comes from wind coupled with natural gas.

But the problem will never be solved. As we have more energy, we use more energy. It all depends on the prices. Low cost energy creates its own demand.

Posted by: C&J at February 26, 2011 11:44 PM
Comment #319304

Say what you will C&J but here we are in the same boat 30 years later. Carter had the right idea but it was laughed at and left behind, resulting in the US still kissing middle east dictator ass,(kmeda)(but don’t google it)to this day.

Had we forged ahead with solar or any other alternatives back in the day, as some of the Big oil companies say they are doing now we could have been a leader not a follower.

Posted by: j2t2 at February 27, 2011 10:54 AM
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