The Great Oil Swindle

[Joanne98]

The Commodity Futures and Trading Commission (CFTC) is investigating trading in oil futures to determine whether the surge in prices to record levels is the result of manipulation or fraud. They might want to take a look at wheat, rice and corn futures while they’re at it. The whole thing is a hoax cooked up by the investment banks and hedge funds who are trying to dig their way out of the trillion dollar mortgage-backed securities (MBS) mess that they created by turning garbage loans into securities. That scam blew up in their face last August and left them scrounging for handouts from the Federal Reserve. Now the billions of dollars they’re getting from the Fed is being diverted into commodities which is destabilizing the world economy, driving gas prices to the moon and triggering food riots across the planet.

For months we’ve been told that the soaring price of oil has been the result of Peak Oil, fighting in Iraq, attacks on oil facilities in Nigeria, labor problems in Norway, and (the all-time favorite) growth in China. It’s all baloney. Just like Goldman Sachs prediction of $200 per barrel oil is baloney. If oil is about to skyrocket then why has G-Sax kept a neutral rating on some of its oil holdings like Exxon-Mobile? Could it be that they know that oil is just another mega-inflated equity bubble — like housing, corporate bonds and dot.com stocks — that is about to crash to earth as soon as the big players grab a parachute?

There are three things that are driving up the price of oil: the falling dollar, speculation and buying on margin.

The dollar is tanking because of the Federal Reserve’s low-interest monetary policies that have kept interest rates below the rate of inflation for most of the last decade. Add that to the $700 billion current account deficit and a National Debt that has increased from $5.8 trillion when Bush first took office to over $9 trillion today and it’s a wonder the dollar hasn’t gone “Poof” already.

According to a January 4 editorial in the Wall Street Journal: “If the dollar had remained ‘as good as gold’ since 2001, oil today would be selling at about $30 per barrel, not $99. ($126 per barrel today) The decline of the dollar against gold and oil suggests a US monetary that is supplying too many dollars.”

The price of oil has more than quadrupled since 2001, from roughly $30 per barrel to $126, WITHOUT ANY DISRUPTIONS TO SUPPLY. There’s no shortage; it’s just gibberish.

http://www.dissidentvoice.org/2008/06/the-great-oil-swindle/

[UndertheOcean]

1. Denial ,denial and more denial..

The Oil age is coming to an end.

[robertpaulsen]

5. You nailed it. Case in point: author says "There's no shortage".

BULLSHIT. As of August last year, 26 countries had rationing and/or shortages.


What about the poor?
by Dave Cohen

Of the 38 countries surveyed, 26 have suffered shortages or have resorted to rationing oil products or electricity. Developing countries are very reluctant to pass higher fuel costs on to consumers. This is a very unpopular thing to do in fragile economies where many people are just scrapping by and government budgets are tight. Net oil exporters usually try to absorb most of the price increases, but sometimes can not—see Gasoline Subsidies and Iran. (Iran is not part of ESMAP study.) Countries without oil or net importers pass some of the increased costs on, but, like Senegal, provide a cushion for consumers through subsidies. Price hikes often result in civil unrest, which happened in Indonesia in 2005. Examples abound—protests also followed a price hike in India in 2006.

To protect their citizens from higher prices, 23 developing nations have reduced fuel taxes and 20 have financed fuel subsidies from government budgets. ESMAP notes that tax breaks are especially common among the oil exporters, whose citizens can not understand why they sell oil to others but must also pay higher prices at the pump. More than half of the countries that had market pricing have now suspended it—12 nations never did have it. Various kinds of subsidies may temporarily shield consumers from real fuel costs, and leaders from being deposed, but they also take away from fiscal programs meant to provide essential social services and aid the poor. (See the Center For American Progress article on Africa, link above.)

It is sad to say, but in a world that is likely to see ever-rising oil prices, a government-funded respite from high domestic liquid fuel costs does not come with a longer term exit strategy. Such price-based policies merely postpone an inevitable crisis in which oil may eventually become altogether unaffordable in much of the developing world. The lasting effects for governments and civil societies of continued subsidies will likely be worse than the oil price shocks they are meant to remedy.

http://www.energybulletin.net/32909.html

[ChairmanAgnostic]

2. the big boys drove it up, to their profit, and now,

they are waiting for the chumps, (day traders, individuals with no AI programming support, and mas and pas, jumping on the bandwagon) to come in in substantial numbers, before they sell out.

[bemildred]

3. One bubble deserves another. nt

[DCKit]

4. If this Congress does nothing to stop the Enronization of the commodities and futures markets...

by November, not a damn one of them deserves to be reelected.

[eridani]

6. There are large underlying waves, and then there is surface froth

The large wave is Peak Oil, but that doesn't mean the speculators won't profit from manipulating frothy bubbles. We really ought to put a stop to the latter, even though it doesn't directly affect the former.

[benld74]

7. Oh they'll find it allright,,,

just like wall street found out who had placed the shorts on the airline stock for 9/11

[tom_paine]

8. Exactly. n/t

[liberalla]

9. omg. This cuts through the crap and makes it

simple to understand. Damn. Another great piece by Mike Whitney.

Highly recommended.