[Anyone] speculation

[Mike in Taos]

Well thank goodness a former cricket player from South Wales (Whitney)  has clarified the reason I'm so happy driving my Hummers on the highway with a lot less traffic to contended with. 

I love it1 My gas is paid for by one of my companies (and it becomes a tax benefit for the company) and my oil stock keeps increasing in value.

My gas is free and there is less traffic what's not to like?

While tommy is whining Mike is driving.






> Date: Fri, 27 Jun 2008 14:30:40 +0000
> To: anyone at laplaza.org
> From: totem at laplaza.org
> Subject: [Anyone] speculation
>
>
> GAS PRICE GORGING
>> by Mike Whitney
>>
>>
>>
>> Blame the investment bankers for the current rise in oil prices. As
>> commentator Mike Whitney points out, 'The whole scam is being executed
>> by the same carpetbagging scoundrels who engineered the subprime
>> fiasco. They are using the futures market to recapitalize their
>> flagging balance sheets after sustaining huge losses in the
>> mortgage-backed securities boondoggle.'
>>
>> 'I've seen this bad movie before. It's the Enron movie, which hit the
>> West Coast power-markets like a bomb because the federal government
>> was asleep at the switch. Now it's happening again with oil prices.'
>> - Rep. Jay Inslee, D-WA
>>
>> There is no oil shortage, not yet at least. The reason oil has
>> skyrocketed to nearly US$140 per barrel is because of rampant
>> speculation. The peak oil doom-sayers are simply confusing the issue.
>> This is not about shortages or scarcity; it's about gaming the system
>> to fatten the bottom line. The whole scam is being executed by the
>> same carpetbagging scoundrels who engineered the subprime fiasco; the
>> investment bankers.
>>
>> The Wall Street Goliaths are using the futures market to recapitalize
>> their flagging balance sheets after sustaining huge losses in the
>> mortgage-backed securities boondoggle. That's the whole thing in a
>> nutshell. Now they're on to their next swindle; distorting the futures
>> market with gargantuan leveraged bets on food and oil.
>>
>> MarketWatch summed it up like this on Monday:
>>
>> 'NEW YORK (MarketWatch) - Speculators now account for about 70 per
>> cent of all benchmark crude-oil trading on the New York Mercantile
>> Exchange, up from 37 per cent in 2000, according to congressional
>> findings cited in a Wall Street Journal report Monday. The report
>> comes ahead of a House oversight subcommittee hearing slated for later
>> Monday on Capitol Hill to study the role of financial investors in the
>> crude futures market. There has been much discussion recently about
>> how big a role so-called speculators have been playing in the sharp
>> rise in energy prices, though no consensus has emerged on this point.
>>
>> 'Congress, however, has grown increasingly concerned over speculative
>> investors' role in the energy market in comparison with those buying
>> futures contracts to hedge against risk from price changes. Lawmakers
>> are expected to consider legislation to set strict limits - or in some
>> cases, an outright ban - on speculative trading in energy futures in
>> some markets, the Journal reported.
>>
>> 'In 1991, the Commodity Futures Trading Commission authorized the
>> first exemption from position limits for swap dealers with no physical
>> commodity exposure, the report said. This began what Dingell said was
>> 'a process that has enabled investment banks to accumulate enormous
>> positions in commodity markets,' according to the report.'
>> (MarketWatch)
>>
>> So it's not really Big Oil or 'greedy Arabs' after all? Nope, it's the
>> cutthroat banksters again.
>>
>> Over the weekend, Saudi Arabia's King Abdullah convened an emergency
>> Oil Summit in Jeddah, Saudi Arabia to deal with the disastrous effects
>> that oil prices were having on the global economy. Rising prices are
>> responsible for everything from food riots in Haiti to truckers
>> strikes in Spain, Portugal and France. US Energy Secretary Samuel
>> Bodman delivered a prepared statement supporting the Bush
>> administration's position on the issue:
>>
>> 'Market fundamentals show us that production has not kept pace with
>> growing demand for oil, resulting in increasing - and increasingly
>> volatile - prices. Even despite higher global production for oil so
>> far this year, inventories have been drawn down and current world
>> production (spare) capacity is below historic levels - at fewer than
>> two million barrels per day.'
>>
>> Baloney.
>>
>> Demand is not out-pacing supply. That's a myth started by the people
>> who are profiting by betting up oil futures; investment bankers.
>> They're led by their chief defender and former G-Sax scalawag, Henry
>> Paulson.
>>
>> Consider the remarks of Philip Davis in a recent post at Seeking Alpha:
>>
>> 'Now we have the Saudi oil summit this weekend and Saudi Arabia took
>> 1.5M barrels a day off-line since July of '05 in a series of cuts and
>> is currently producing just over 8Mbd out of their estimated 10.5Mbd
>> maximum capacity. It is forecast by the EIA that next year OPEC alone
>> will have over 3Mbd of spare capacity so this would be a terrible time
>> for global demand to take a nose dive or there are going to be a lot
>> of idle wells� Should global demand drop another 5 per cent in the
>> next 12 months, we could be looking at 8Mbd less demand than there was
>> just a year ago.
>>
>> 'As the London Telegraph points out, not only does OPEC have a current
>> production surplus of 2M barrels a day but that surplus will rise to
>> 3.5M barrels a day by next year. Also, non-OPEC production is rising
>> fast with a 1.5Mb gain in non-OPEC production coming down the pike
>> next year... Iraq, by the way, is no longer included as OPEC or
>> non-OPEC production, a very clever way to hide 2.4 million barrels of
>> production by the energy apologists.' (Philip Davis, 'The Oil
>> Shortage, and Other fairy Tales' Seeking Alpha).
>>
>> There's no shortage, no scarcity. In fact, oil is being deliberately
>> kept off the market to keep prices high. Consider this: if supply
>> isn't keeping up with demand then why aren't there any lines at the
>> gas stations like there were during the '70s?
>>
>> Because it's all a fabrication. Prices are up because of speculation;
>> that's all.
>>
>> Here's what Saudi Arabia's King Abdullah said on Sunday: 'Among other
>> factors behind this unjust increase in oil prices is the abhorrent
>> acts of speculators seeking to undermine the market.' That's why he
>> called the meeting to begin with. The King insists that 'speculators'
>> have played a key role.' (AFP)
>>
>>
>>
>> Consider this: if supply isn't keeping up with demand then why aren't
>> there any lines at the gas stations like there were during the '70s?
>>
>> How about Kuwait?
>>
>> The Kuwaiti Oil Minister Mohammed al-Olaim insisted that 'there is
>> enough oil to supply the market... We believe that the market is in
>> equilibrium. The price is disconnected from fundamentals. It is not a
>> problem of supply. Why would you have a supply problem when demand is
>> going down'. (AP)
>>
>> Of course, demand goes down in a recession.
>>
>> What about Libya?
>>
>> 'We believe speculation has its impact,' the OPEC chief said. Libya
>> may reduce its oil production because there is more than enough oil in
>> the market, according to Oil Minister Shokri Ghanem. 'We may have to
>> cut production... We don't see any need for more oil. There is plenty
>> of oil in the market,'' Ghanem said, commenting on Saudi Arabia's
>> decision. (Bloomberg News)
>>
>> How about Iraq? Can we at least count on our brothers in Iraq to
>> maintain the administration's falsehoods about supply problems?
>>
>> According to Reuters: Iraq's Oil Minister Hussain al-Shahristani said,
>> 'Any increase in world oil output would not have a significant impact
>> on record-high crude prices that are being driven by speculation...
>> Regulations needed to be introduced to stabilize oil markets. I do not
>> think increasing any amount in the international market will have a
>> significant impact on the prices. It is up to the stock exchange and
>> the regulations in the industrialized nations. It is not something
>> OPEC can contribute to. We did not see any impact on the prices from
>> the Saudi's previous increase.' (Reuters)
>>
>> Venezuela?
>>
>> Venezuela Oil Minister Rafael Ramirez refused to join the weekend
>> conference because 'We believe it is not necessary to increase
>> output... Oil production levels aren't behind the increase in prices,'
>> Ramirez said, adding that soaring oil prices were caused by
>> 'speculative interest, a falling dollar and global inflation'.
>> (Reuters)
>>
>> So, are all the oil ministers lying or is the Bush administration
>> intentionally misleading the public about supply problems?
>>
>> It's always easy to point the finger at Big Oil or 'greedy' Arabs for
>> price gouging, but that's not what's really going on. The Bush
>> administration is colluding with their Wall Street buddies to fleece
>> the public by inflating another bubble; this time in commodities.
>>
>> Congress could end this charade in a minute by passing legislation
>> that would close the Swaps Loophole and require steeper margin limits
>> on oil futures. But don't hold your breath. Wall Street is the biggest
>> contributor to political campaigns which explains how we got into this
>> pickle to begin with. It also explains why Congress's public approval
>> rating has shriveled to 12 per cent.
>>
>> Do Bush and (Ben) Bernanke know what the banks are up to? Do they know
>> that billions that are being loaned to the banks via the Fed's
>> 'auction facilities' are probably being diverted into the commodities
>> market and driving up the prices of raw materials and oil, while
>> pushing the world towards global recession?
>>
>> You bet they do and they're probably doing everything in their power
>> to keep the banking system from buckling beneath the weight of its own
>> massive debts.
>>
>> Here's an excerpt from Spiegel Online's 'Are Pension Funds Fueling
>> High Oil? which explains the whole scam:
>>
>> 'Commodities exchanges limit the number of positions an investor can
>> take in the market, but Michael Masters, of Masters Capital
>> Management, says the Commodity Futures Trading Commission (CFTC) has
>> allowed unlimited speculation in these markets through a loophole.
>> This so-called swaps loophole exempts investment banks like Goldman
>> Sachs and Merrill Lynch from reporting requirements and limits on
>> trading positions that are required of other investors. The loophole
>> allows pension funds to enter into a swap agreement with an investment
>> bank which can then trade unlimited numbers of the contracts in
>> futures markets.'
>>
>> 'Some experts fault the CFTC, charged with regulating commodities
>> markets, for allowing such loopholes. 'Congress has provided the CFTC
>> the power to control this unlimited [speculation]; the law is very
>> specific about establishing position limits,' says Steve Briese,
>> author of The Commitments of Traders Bible and
>> CommitmentsOfTraders.org, a site that focuses on US futures markets.
>> 'The problem is they have abdicated this role.'
>>
>> 'The dramatic surge in energy prices has helped to spark inflation
>> across the economy and, as others at the hearing testified, has cut
>> into profits of most in the supply chain. Briese points to Treasury
>> reports that the the top five users of swap agreements are investment
>> banks, four of which dominate swap dealing in commodities and
>> commodities futures: Bank of America, Citigroup, JP Morgan Chase, HSBC
>> North America Holdings, and Wachovia.' (Spiegel Online)
>>
>>
>>
>> The Bush administration is colluding with their Wall Street buddies to
>> fleece the public by inflating another bubble; this time in
>> commodities.
>>
>> Citing the harmful impacts record high crude oil prices are having on
>> consumers, US Rep. Bart Stupak (D-Mich.) introduced a bill to close
>> regulatory loopholes:
>>
>> 'The numbers back this up: Between Sept 30, 2003, and May 6, 2008,
>> contracts held by traders jumped from 714,000 to more than three
>> million, a 425 per cent increase. Since 2003, commodity index
>> speculation has increased 1,900 per cent from an estimated $13 billion
>> to $260 billion invested. Stupak said CFTC data show that in 2000,
>> physical hedges that airlines and other businesses use to ensure a
>> stable price for fuel in coming months and actually imply delivery
>> accounted for an estimated 63 per cent of the total futures market,
>> while speculators represented about 37 per cent. 'By April 2008,
>> physical hedgers only controlled 29 per cent and speculators had taken
>> over a whopping 71 per cent of the oil futures market.'
>>
>> He said 85 per cent of the futures purchases tied to commodity index
>> speculation comes through swap dealers-investment banks that serve as
>> intermediaries for their pension fund and sovereign wealth fund
>> customers. One report found that $55 billion of total worldwide
>> commodity trading over 55 days came in as swaps. 'The CFTC has allowed
>> 117 exceptions to swaps. When that many exceptions are allowed, they
>> are not really subject to oversight. We have a CFTC that's supposed to
>> be doing its job. I'm not certain that it is,' he said.
>>
>> Another Smoking Gun
>>
>> On May 20, 2008 Michael Masters, testified before the Senate Committee
>> on Homeland Security and Governmental Affairs, on the role that
>> speculation has played in recent commodity price movements. He said:
>>
>> 'In the popular press the explanation given most often for rising oil
>> prices is the increased demand for oil from China. According to the
>> Department Of Energy, annual Chinese demand for petroleum has
>> increased over the last five years from 1.88 billion barrels to 2.8
>> billion barrels, an increase of 920 million barrels. Over the same
>> five-year period, index speculators demand for petroleum futures has
>> increased by 848 million barrels. The increase in demand from Index
>> Speculators is almost equal to the increase in demand from China!'
>>
>> Masters is right; there is massive speculation which is distorting the
>> market, but who is responsible? Clearly, the pension fund managers
>> aren't to blame. After all, the largest US pension funds, which is the
>> California Public Employees Retirement System (CalPERS), has only
>> invested about $1.1 billion in commodities swaps contracts. That's a
>> far-cry from $260 billion. The investment giants and hedge funds are
>> probably leveraging the money they receive from the pension funds many
>> times over to increase the size of their bets. Keep in mind, oil
>> futures can be purchased for a mere $.06 on the dollar; that's a lot
>> of potential leverage.
>>
>> Masters again: 'Commodities prices have increased more in the
>> aggregate over the last five years than at any other time in U.S.
>> history. We have seen commodity price spikes occur in the past as a
>> result of supply crises, such as during the 1973 Arab Oil Embargo. But
>> today, unlike previous episodes, supply is ample: there are no lines
>> at the gas pump and there is plenty of food on the shelves. Today,
>> Index Speculators are pouring billions of dollars into the commodities
>> futures markets, speculating that commodity prices will increase.'
>>
>> Index Speculators have now stockpiled, via the futures market, the
>> equivalent of 1.1 billion barrels of petroleum, effectively adding
>> eight times as much oil to their own stockpile as the united states
>> has added to the Strategic Petroleum Reserve over the last five years:
>>
>> 'We calculate that Index Speculators flooded the markets with $55
>> billion in just the first 52 trading days of this year. That's an
>> increase in the dollar value of outstanding futures contracts of more
>> than $1 billion per trading day.
>>
>> Doesn't it seem likely that an increase in demand of this magnitude in
>> the commodities futures markets could go a long way in explaining the
>> extraordinary commodities price increases in the beginning of 2008?'
>>
>> Yes, it does. And it also explains where billions of dollars from the
>> Fed's 'auction facilities' are going. After all, they're certainly not
>> going into mortgage-backed securities anymore, and MBS represented
>> nearly 70 per cent of bank revenue. So, where would a desperate banker
>> turn if his main revenue-stream had dried up and the corporate bond
>> market was frozen solid?
>>
>> How about oil futures and commodities; the only game in town? As the
>> MarketWatch article suggests, oil prices are inflated by about 70 per
>> cent.

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