July 2, 2008 9:41AM

Part Three: The Oil Speculator Witch Hunt

By Elizabeth MacDonald

Before I get to the thunder bolts being thrown at oil speculators from Mount Washington–some of it a needed attempt at more transparency in oil trading–there’s more lazy thinking on the oil supply and demand front that ignores the bigger, macroeconomic factors at play.

Don’t let the facts get in the way of the narrative here, the thinking goes, don’t let the truth ruin a polluted stream of oil consciousness. I find the oil witch hunters a tedious, self-serving, unreflective and rather boring crowd. They are habitually self deceiving, and listening to their orgy of self-righteousness, I can feel my brains running out of my ears.

They tend to lead with their muscle and not with their minds, because it’s oh so much easier to get out the rakes and torches. Especially elected officials who find it easier to pass the blame buck in this political season, with scapegoats now in season, rather than make the tough legislative decisions to make energy affordable for cash-strapped American taxpayers hit with soaring costs for health care, college tuition, you name it.

Thinking about their daily struggle, I find myself constantly grinding my teeth into Tic Tacs on their behalf.

Now you’ll hear an attempt at a reasonable argument from the witch hunt theorists who say oil speculators are solely to blame for oil price spikes–which on closer look is just lazy spitballing that ignores what the pros are saying.

Trust me, I think oil speculators are partly to blame, but they are part of a much larger picture. I’ve said so repeatedly on camera and in prior blogs, based on my reporting–no one can say definitively and with any veracity how much oil prices have risen due to oil speculators. You’ll see estimates that are all over the map.

However, watch what the Paris-based International Energy Agency, the big oil industry think tank, just said about oil speculators, that there is “little evidence” that large investment flows into the oil futures market have sparked an imbalance between supply and demand and led to the surge in oil prices.

Or that the IEA specifically said that “money flows and speculation can have a day-to-day influence on prices, but it is not one that can be sustained for any length of time without a market imbalance being apparent,” adding in its report that ”the economy is impacted by fluctuations in spot oil prices, not futures prices.”

Or that the IEA says demand is to blame as demand for oil is rising, as it is still forecasting global consumption of oil products will increase 1.6% a year on average through 2013, largely due to demand from non-OECD countries, including China and India.

Or that the agency also says because oil production is slowing worldwide, that caused it to cut its outlook on global oil supply levels in production from the Organization of Petroleum Exporting Countries members and non-OPEC nations. The IEA also said that poor supply performance since 2004, combined with strong demand from the developing world, started to push prices higher.

Despite those facts, you’ll hear from the oil speculator witch hunt crowd that oil price spikes are not a supply and demand issue, because US gasoline reserves are at their highest levels since the early 1990s, laudable since the nation’s refineries like Valero (VLO) have been dialing back on their gas production as their margins have declined.

You’ll hear too from the oil speculator witch hunt crowd that there is no supply problem because average gasoline reserves on hand have risen since this past October, and the US oil stockpiles in this country have gone up nearly every week this year.

To wit, the argument is that because there’s more stockpiling going on, there’s no shortage of gasoline or oil in the U.S. today, because we have near-record reserves on hand.

You have just witnessed an advanced case of severe rectal cranial inversion.

What’s missing in this argument? The reason why countries stockpile and set up reserves to begin with: because countries are doing so in the face of rising demand or supply shocks.

Just as a publicly traded company books increasing cookie jar reserves to take care of future losses, (witness the financials now), so, too, do countries stockpile to protect against future rising costs and/or losses in oil supplies. Or in the face of growing demand. As China is now doing with its offline stockpiling so it won’t face embarrassing shortages during the summer Olympics in Beijing.

And as reserves rise, it’s the quality of the oil increasingly coming on-stream that has also helped oil prices go ballistic. There is a glut of sour crude, sulphurous grades that is way more expensive to refine than the sweeter crudes, now becoming increasingly rare, say oil traders and oil statisticians at the IEA.

Oil prices go up after Nigerian oil attacks because Nigeria pumps out light sweet crude that’s cheaper to refine, versus the sour grades swamping the markets, according to sources. The Sauds pumping more sour crude–when it has historically pumped sweet–is not a good sign for the markets. And has been taken as a negative, which is why oil futures have risen.

You can talk all you want about how gas reserves are at their highest levels. But if all the world has to refine is an increasing amount of sour crude, then listen to the oil pros and oil majors who say that going forward, you can expect a squeeze on those reserves. Which is why oil prices are going up.

“Refiners are paying record premiums for the high-quality crude oil they use to produce diesel and petrol, a sign of strong demand in the physical oil market that calls into question claims that soaring oil prices are being driven by speculators,” the Financial Times reports.

It’s a big reason why Valero Energy may sell one-third of its refinery operations due to poor margins in recent months.

You’ll also hear arguments from the Cotton Mathers in the oil-speculators-are-solely-to-blame crowd that this is not a demand issue, because demand in the US is flat-lining or expected to go down due to higher gas prices. The US is the world’s largest oil consumer with 20.7 mn barrels of oil consumed in the country daily (a quarter of the world’s consumption).

Now it’s true that the US government’s energy officials now expect US demand will be lower than had previously forecast due to the recent gas price surge. The IEA has predicted that global oil product demand in 2008 would grow by 0.9% or a teensy 800,000 barrels a day, with predictions that US demand would drop up to 2.5% this year, down to 20.3 mn barrels daily.

But yes and let’s sit on our couches with our remotes and Cheez Doodles (*(I love cheese doodles, the hard kind) and never go outside our own front door to see what else is going on in the world.

It’s expected that 1.8 bn new entrants will join the middle class next 12 years by 2010. The world’s middle class will grow to a staggering 52% of total world population, up from 30% now. That means increasing demand for gasoline.

Explosive middle class growth in formerly poor countries, such as China, Russia and the Middle East means they will consume more crude oil than the U.S., burning 20.67 mn barrels a day this year, an increase of 4.4%, according to the International Energy Agency in Paris.

Economic growth of more than 8% in China and India, coupled with increasing car ownership among the countries’ combined populations of 2.45 bn people, will more than compensate for falling U.S. demand, the IEA says. Oil use worldwide will increase 2% this year because of growth in emerging markets, the Paris-based IEA says.

China has a tiny 15 passenger cars for every 1,000 people–meaning it’s Japan circa 1963, when Japan had 13 cars per 1,000.

China has 1.6 bn people. Which is why the US automakers are saving themselves by piling into the Middle Kingdom. Which means gas consumption will soar in this country for decades to come.

Demand is rising everywhere. Last year Mideast’s six largest petroleum exporters, Saudi Arabia, United Arab Emirates, Iran, Kuwait Iraq and Qatar curbed output by 544,000 barrels a day. At the same time their domestic demand increased by 318,000 a day.

You’ll also hear arguments from the Pierre de Lancres of the oil speculator witch hunt crowd, that oil production is still moving apace, with some suggesting oil production is expected to increase by 3.3% in the second quarter, and by as much as 4.1% by the third quarter.

The game here is this: throw a dart at stats pasted to a barn door, with the game’s rules saying you get 1,546,789 tosses to hit the stat you like to suit your argument.

Officials at OPEC and the IEA say oil production is decreasing in 54 of the world’s top 60 oil producing nations, including the US which produces 5 mn barrels a day, down fm 11 mn in 1970. The overall amount of oil discovered has been falling for 40 years. Sadad al Husseini a former top executive at the state-owned oil company Saudi Aramco, says Saudi production already hit a peak and will begin dropping in 15 years or less.

I’m exhausted, there are more oil production stats I can give you, but I am getting bored.

Ok I’ll go on.

You’ll also see the argument from the witch hunters that all is well, that the U.S. daily buffer for oil production against demand, which was a paltry 1.5 million barrels as recently as 2005, is now up to 3 mn barrels in excess capacity today.

What’s missing here? A worldwide outlook-enough with the US-centric focus here. You need to compare the worldwide spare cushion to overall daily demand, and that comparison is terrifying.

The world’s spare capacity, the oil cushion as it were, has dwindled to just over 2 mn barrels per day with global demand at 86 mn barrels a day. That’s way down, by more than half, from 5 mn nine years ago vs 76 mn barrels consumed daily, says the U.S. Energy Information Administration. And again much of today’s surplus is sour crude, high in sulphur, which refiners loathe.

Don’t forget that the oil price spike story is a weak dollar story too.

David T. King, a former chief of the New York Federal Reserve’s Industrial Economies Division, noted on the editorial page of the Wall Street Journal earlier this year, when oil prices were at around $120, that last August the dollar price of oil was $70. King points out that the current spike in oil and other commodity prices coincides almost exactly with the Fed’s decision to turn on the monetary spigots to save Wall Street.

The day that the barrel price of oil in dollars was exactly the same as in Euros was in 2002, when both were about 25, King notes. Since then oil has risen by 50 Euros in the past five and a half years. It now stands at 75 Euros, triple what it was then.

But check this out: in the US, the price is over $120, about five times what it was then, King says. He says that the collapse of the dollar exchange rate explains at least half of the increase in the pump price of gas over the past five years.

The falling value of the dollar has caused the price of gasoline to soar. Gee that was hard to figure out wasn’t it?

I’ve said at the outset that speculators are adding to the price spikes, we just don’t know by how much. The hope is that more sunlight in their trades will help market watchdogs and regulators stop the torquing that goes on, especially when a hedge fund like Amaranth Advisers or a miscreant firm like Enron want to game the system.

Really?

NEXT UP: The regulatory blow torch aimed at oil speculators.

FOOTNOTE: After this story was published, the IEA released a report stating that supplies may not keep up with demand, noting that the growth in global spare capacity will peak at about 2.5 mn barrels daily in 2010, dropping to–watch out–less than a million a day for the ensuing three years. Crude oil prices hit a record in trading after hours on the report. Already the haymaker of inflation has come a cropper, due to oil price spikes.

92 Responses to “Part Three: The Oil Speculator Witch Hunt”

Comment by Greedom

Jul 2nd, 2008 at 9:52 am

from article:

“I find the oil witch hunters a tedious, self-serving, unreflective and rather boring crowd. They are habitually self deceiving, and listening to their orgy of self-righteousness, I can feel my brains running out of my ears.”

What imagery !

I have to pause here and get my software working, I can’t wait for the rest of the article!

ha ha ha on the brains out of the ears. I usually recoil to frustration of wanting mass review and accountability wen someone is promoting some righteous line that is out of check with community.
Comment by Greedom

Jul 2nd, 2008 at 10:27 am

A very fun read - and trying… I’m not sure one of those words in there is something I expected to see !

To quote John Abbigail in Catch Me If You Can “I Concur” on the finishing end notes.

My intuition tells me the dollar is at root, as I witness everything inflate in price, when the goods volume doesn’t change - in the case of food ? if I observe often the oz.’s go down from 15 to 12.9 etc. by example on some packages. Cheeze Doodles might be just one of these products the volume goes down AND price also is going up.

Perhaps Cheeze Doodles is a fair marker for oil, I’ll have to compare these, one never knows. This was not the authors intent here, but to add humor, short of the shape of the dollar influencing oil, one might toss in the cheese, or as some call it lately the doodle factor ! in speculating on whether the speculators are not speculating that it’s the speculators speculating.

Just gaining understanding that the US Dollar plays so hard into oil, and other futures, AND stocks no doubt - even auto stocks as fallout from people saying ‘I can’t afford gas, how can I buy a new car ? ‘ I am still left with near zero in understanding why the dollar is failing so badly. Seems just understanding the problem is only a tiny part of the solution here, but certainly critical.

I’ve felt bad before, thought - wait, I’m not going to my doctor, it will be throwing darts - and that last spout with 6 neurologists, that was worse than DARTS. Hmm. An Econologist ?
Comment by Greedom

Jul 2nd, 2008 at 10:45 am

The game here is this: throw a dart at stats pasted to a barn door, with the game’s rules saying you get 1,546,789 tosses to hit the stat you like to suit your argument.

This article effectively paralyzed me at first to realize the is no simple answer.

I think I side on the ‘bored’ part, although I am never bored, rarely. But I find myself going in circles as I react to different data.

I can’t discount that my food, and so many other aspects in my lifestyle cost more dollars, where I don’t make more dollars, and the volume of the product is either staying the same, OR going down.

One thing I CAN discount though I suppose is taking any theory for granted. I mean, there IS/ARE real causal factors behind this 2x increase in oil, tracking it/them down can lead to remedy. Whether it’s blow torching the leaks in the commodity trading reality vs fantasy, or perhaps this author meant blow torching commodity regulation where it’s overkill !

One thing for sure, whatever is behind the 2x increase in oil, it’s killing consumerism, and crippling people financially that make 30, 40k a year.

DOE says expect $4 a gallon until end of 2009. Sheesh, some people work 2 hours a day to pay for gas. Our species can do better ! ?
Comment by Dan from Navarre

Jul 2nd, 2008 at 10:47 am

Many folks like to point at demand and tight supplies. It seems that everyone is getting their oil, stockpiles are up. Now the argurment of all the tensions in the world is bunk. Explain how when Nigerian rigs are attacked and 200,000 barrels are off line temporarily and price per barrel shoots up. Now the Saudis within recent months have raised their output by 500,000 and no effect on prices. Please, this mantra that speculators have no play in the prices is a load.
Comment by Eduardo Nogoy

Jul 2nd, 2008 at 11:27 am

I think the biggest culprit in soaring oil prices is the weak US Dollar. We have wars going on with Iraq and Afghanistan and we spend a lot of money to support and finance both. Where did the US government get the money ? I don’t remember and federal tax increase to support and pay for this wars. If we printed more currency to pay for them, then there you have it, the main source of U.S. currency inflation. So investors and businesses that consume oil have the right to hedge for a weakening U.S. currency as well as protect itself to a certain extent for future oil price hikes. I’m mot worried about the speculators because remember the old adage, pigs get slaughtered.
Comment by Josh

Jul 2nd, 2008 at 11:30 am

This article is incorrect concerning US demand. The US demand is actually declining for the first time in 8 years.
Comment by ThePunisher

Jul 2nd, 2008 at 11:37 am

This article is a joke!
Comment by Sorros

Jul 2nd, 2008 at 11:38 am

I agree with her main point she “can feel [her] brains running out of [her] ears.” Obviously she has no brains left. There is only one cause for the dramatic rise in oil price beyond that caused by increased world demand.

1. The devaluation of the dollar due to the WAR.

2. The instability of the oil producing region due to the WAR.

3. The cashed strapped American tax payer due to the WAR.

The only people working 2 hours to pay for a gallon of gas are illegal immigrants they want to kick out of the country.

Oh my gosh a over paid pundit at Fox feels our pain! Oh my.
Comment by Karen

Jul 2nd, 2008 at 11:45 am

thank you for the great articles.
very best regards,
Karen
Comment by mike

Jul 2nd, 2008 at 12:03 pm

The numbers speak for themselves. Demand up by about 1.7%, and astronomical prices. Math is math, and no matter how you cut it, prices are way out of line.

One reason I am watching Fox less is the simplistic crud about opening ANWR, and offshore drilling.
Even if we drill every single available barrel on and offshore, we will still be importing from our “friends” such as Saudia Arabia.

And oh by the way, next time some nut in the middle east wants to invade or topple the kingdom of Saudi Arabia, I am for it.

I voted for Bush twice, and I get repaid by economic rape. Won’t get fooled anymore.
Comment by Carla, Ballwin, MO

Jul 2nd, 2008 at 12:09 pm

Elizabeth - Please do an hour long interview with Muriel Seibert, she is awesome. Prior to your interview, I have only seen her on Charlie Rose. Thanks!
Comment by Karen

Jul 2nd, 2008 at 12:12 pm

Thank you for your articles…..greatly appreciated…
Comment by Kenny

Jul 2nd, 2008 at 12:30 pm

“NEXT UP: The regulatory blow torch aimed at oil speculators.”

There is nothing wrong with the regulations being discussed in Congress.

Unless of course, you feel the need to leave the same loopholes open that allowed the likes of Enron and Amaranth to operate.

If investors/speculators have nothing to hide than they don’t need to operate in these unregulated, nontransparent loopholes.

I find it funny that the media always sides with Wallstreet in these situations.

I remember the media reporting that supply and demand was the problem in both the Enron and Amaranth incidents. All that did was put fuel on the fire and drive up the speculation even more.

Why doesn’t the media show the public how for the first time we have large invesment banks taking crude oil physically off the market and holding it in storage tanks? The same large investments that are up to their necks in oil futures. The same banks that are always predicting higher oil prices. The same large investment banks lobbying to keep the unregulated markets open.
Comment by Greedom

Jul 2nd, 2008 at 12:47 pm

Comment by Dan from Navarre
2008-07-02 10:47:08

Many folks like to point at demand and tight supplies. It seems that everyone is getting their oil, stockpiles are up. Now the argurment of all the tensions in the world is bunk. Explain how when Nigerian rigs are attacked and 200,000 barrels are off line temporarily and price per barrel shoots up. Now the Saudis within recent months have raised their output by 500,000 and no effect on prices. Please, this mantra that speculators have no play in the prices is a load.

Navarre-

I’ll place my Keno bet on greater part the US Dollar- and that fuels the abuse on speculation.

er, I’ll wager the weak dollar is an enabler (don’t you just love when people go ‘they’re an enabler ?’) to the rampant futures playouts for payouts (hmm, I kinda hit a Jesse Jackson there).
Comment by Donaldd

Jul 2nd, 2008 at 12:51 pm

The dollar is down and our IOUs are up supply exceeds demand. The Republican Congress and Bush $5 trillion National debt increase has reduced the Dollars demand and lowered it’s value.

Every time Bush or Israel threaten Iran the Crude price jumps higher through speculation.

China’s largest oil company is investing in Iran’s oil fields to increase supply of which China now buys 12% to be refined in it’s Chinese plants and sold in their service stations in which Exxon Mobil owns a 25% share, Saudi National Oil Company Aramco owns a 25% share.

American Oil Company exec’s are demanding more off shore leases and drilling in ANWR reserve when they have 44 million acres of off shore leases they can’t drill now because there is a shortage of drill ships and production platforms. It will be a minimum of 5 years before drilling rigs are available, possibly by 2011.

American Refineries are producing finished products Diesel, gasoline, and propane for Mexico and other nations with our existing refining capacity instead of fuel for the American Market. Funny too is, you can buy those U.S. produced fuels for half the price if you cross the border into Mexico.
Comment by Zoidy

Jul 2nd, 2008 at 12:55 pm

from article:

“You have just witnessed an advanced case of severe rectal cranial inversion. ”

I’m not sure if that’s Frank Zappa or Camille Paglia channeling through MacDonald here !

made me laugh though
Comment by Karnak ..

Jul 2nd, 2008 at 12:57 pm

There is no shortage of oil.. there are just too few players controlling most of it.. The major oil producers are not going to rush into any new developments while they are making record profits at the present pace.. Why would they do anything to damage their own profit picture?? — Congress has to allow domestic development, refining, and encourage new players into the game.. And, at the same time Congress should either penalize the major oil companies or start canceling and re-assigning their leases if they don’t ramp up production..– An oil expert stated publicly 3 days ago that oil and gas could be extracted in large quantities from the Gulf of Mexico within ONE YEAR if we start drilling now.. Congress is obviously being pampered($) by the oil companies to either slow down or not allow new development.. There is no other possible answer.. Why else would anyone allow their citizens to be strangled by the price of energy, and allow hundreds of billions of dollars to be shipped overseas where it can be used against us ??
Comment by Zoidy

Jul 2nd, 2008 at 1:02 pm

Oh,

I think I finally ‘get’ the message here.

If I get it right, I agree - it’s not speculation, but the dollar.

And therefore, you’re taking an anti-regulatory stance on futures.

I disagree there if so.

We have plenty of necessary regulation, CRA, HMDA - OFAC - ?

I don’t have a problem with regulation if it can prevent exploiting a community at a lesser expense to otherwise than not (yikes- did I just type that ? ugh! - 1/2 tempted to cap it with ‘with not otherwise’ which is a useless double negate).

Point there is, hey, if it’s the dollar - fueling futures exploits ? sure - I say - fix the dollar - and problem solved.

BUT - since it’s EASIER to fix futures exploits through regulation FIRST before being able to fix the dollar ? hey - no problem here.

I think that sums it up. Now go get that free checking from WaMu - they need to raise capital before going under in Q4.
Comment by Paul

Jul 2nd, 2008 at 1:08 pm

The dollar is part of the problem, but impact is relatively easy to quantify. If the increase in the price of oil was really just a weak dollar issue, the price of oil would be stable in terms of other currencies (Euros for example). This is not the case. July 1 of 2007 crude oil was trading at 71.40 dollars per barrel. The Euro was trading at 1.36 dollars per Euro, hence the price of oil was 52.50(71.40/1.36) Euros per barrel. Today crude oil is 142.50 dollars per barrel, and the Euro is trading at 1.59 dollars per Euro. This puts the current price of crude oil at 89.60 (142.5/1.59) Euros per barrel. The simple conclusion is that in the last year the price of oil has doubled in terms of dollars, and is up 70% in terms of Euros. Hence, 30% of the incease in the price of oil is due to the weak dollar. The rest is due to other market factors.
Comment by TB

Jul 2nd, 2008 at 1:21 pm

lady, your just wrong on this article. The witch hunting people you are refering to are not the voice of those that think speculators are too blame, they are just the crowd you picking out for whatever agenda you have because they have a weak argument. The IEA said that speculation usually adds $9 to the barrel of oil, and that lately speculation is adding about $40-$60 a barrel. Speculators are looking for any excuse to use to bring up the price of oil, such as an attack in nigeria, refer to Dan’s comment. The other half is the weakness of the dollar, and trading in other currencies. The weakness of the dollar is something our government is horrible at controlling, and if the reserve and congress would get their act together, this credit and housing debacle would have never happened. This is what doesn’t make sense, the housing market fell through because the value of a home fell. The real reason is because no one was keeping mortage companies in check and allowing people to get interest only loans on homes way outside their means. Saying speculators don’t influence oil is like thinking an interest only loan is a good idea…you are on the wrong side of this argument.
Comment by Zoidy

Jul 2nd, 2008 at 1:34 pm

Just took a break to watch the MyGallons article from yesterday - when Liz MacDonald hosted Cavuto (awesome job there too!) - I find myself towards the end of the video thinking about the comment above on ‘crushing Tic Tac’s thinking of how badly the everyday - average person in America ‘ (rewording there - do pardon)… And then this interview - I kind of feel like it’s the mother asking the child ‘now, again, at the playground Steven, who’s idea was it to steal the money ? ‘ jk

I liked the point that you can’t sell to another customer, I mean, sheesh, you MIGHT as well be into commodities then I guess.

Neatest point in this interview - and I intuit to agree - is if someone is out there to ‘make gas more affordable for me’ ? chances are - as usual, I’m just late- and I’m the sucker to help someone else sit back with an extra yard ornament while I walk by their house in envy going ‘darn, I wish I had all those lawn ornaments and was successful with more money to buy them - ugh!’ heh

either way, good point, on is it the top - that we start to see people offering the ability to lock in prices. I mean - if mygallons thought things were going to go down ? they’d be standing with a losing business model right ?

interesting piece.
Comment by RR

Jul 2nd, 2008 at 1:53 pm

I check out the show when I’m not working.I liked your wit on the hedge fund manager /fugitive although he’s not a very good fugitive. He should have immediately chartered a flight out of the country to a non extraditon country from a small airport like Teterboro in NJ. Instead of schlepping around in an RV for a month to only get a couple hundred miles away. I guess that will be his last RV vacation for a while. Anyway I also grew up in Rockville Centre it was along time ago. I used to live across the street from Plaza school where I also attended. I think we might have been neighbors. I used to hang out with two neighborhood kids on my street granted I was like 5. If you lived next door to another girl about your age who you hung around with. Your last name is the same as this neighbors. My take on the market is wait it out I own a lot of great companies like AB,XOM,GS among others. What kind of crazy things do you and Cheryl get into when your not reporting on the world of business. Have fun and be safe RR
Comment by John Arant

Jul 2nd, 2008 at 1:54 pm

Wrong word….over and over with all media, and all politians.

Speculation…the hope of a return

Manipulation…known return

what we’re looking for are market manipulators.. speculators are just you & me, hoping our 401k’s survive….

invalid word will provide invalid search, will provide invalid results…
Comment by JoeB

Jul 2nd, 2008 at 2:02 pm

Follow the money and it will take you where you need to be. The Companies/Speculators, etc that are making huge amounts of profits are the source of the problems. Tax/regulate the companies and remove the billions and billions of tax dollars they get as subsidies. These companies are thought to be using some of these record profits to do things like maintain their equipment, etc so there will be no mechanical problems (BP’s problems in Alaska prove this is not true). I think if politicians conduct an “ENRON” type investigation of big oil, they will find a relationship exist between the Oil companies and the Speculators. An “Unholy Alligence, if you will. Politicians are unwilling to look to closely for fear an investigation would reveal their relationship with Big Oil AND the Speculators. In the mean time, consumer’s get screwed - prices rise - taxes rise - Politicians complain and do nothing else and Big Oil and Speculators make obscene amounts of money.
Comment by mparks

Jul 2nd, 2008 at 2:09 pm

Open your eyes not all of us can see their navel from the inside
Comment by Zoidy

Jul 2nd, 2008 at 2:41 pm

from comments:
Comment by Paul
2008-07-02 13:08:59

The dollar is part of the problem, but impact is relatively easy to quantify. If the increase in the price of oil was really just a weak dollar issue, the price of oil would be stable in terms of other currencies (Euros for example). This is not the case. July 1 of 2007 crude oil was trading at 71.40 dollars per barrel. The Euro was trading at 1.36 dollars per Euro, hence the price of oil was 52.50(71.40/1.36) Euros per barrel. Today crude oil is 142.50 dollars per barrel, and the Euro is trading at 1.59 dollars per Euro. This puts the current price of crude oil at 89.60 (142.5/1.59) Euros per barrel. The simple conclusion is that in the last year the price of oil has doubled in terms of dollars, and is up 70% in terms of Euros. Hence, 30% of the incease in the price of oil is due to the weak dollar. The rest is due to other market factors.

Heya Paul

I was thinking about this line of reasoning myself - I think you sorted it out there. I did NOT review the price of oil in other currencies, and that IS needed - I think you brought forward the first sensible fraction of what is due to the dollar @ 30%. Agreed.

I thought the same thing, that I need to check the price of a barrel in other currencies and compare to see. You did leave out the Yuan, but I wonder how that affects the 30%, that is US to Yuan. Might be best to take an average of all the currencies, against the US. I think you’re def. on the right track.
Comment by Greg

Jul 2nd, 2008 at 2:45 pm

E-mac talking the smack with fact.

Dellusions and confusion can abound.

The market is full of truths which sometimes are hard to be found.

Rigid supply and rigid demand; a significant change in either the price gets out of hand.

Great article,
Greg
Comment by Gregg

Jul 2nd, 2008 at 2:57 pm

Let me see if I understand this. It’s not speculators, it’s supply and demand. I guess we are to think that China and India are using so much MORE oil in the last two months that the cost of gas has risen $2 per gallon.

Let’s just pump our own. Too many people are having to suffer.
Comment by mike

Jul 2nd, 2008 at 3:01 pm

Thanks!… and that’s totally irrelevant of the cheese doodle comment, which would otherwise warrant an additional half dozen exclamation points.

I’m very glad that some people have gotten their brains working, trying to root out cause & effect rather than calculating, defending political talking points and accusations. Those of us more concerned with our own dwindling cash reserves than any political jousting, are about ready to go grab our own pitchforks, targeting those who are paid to not only fix, but should have at least minimally prevented this mess - instead they were/are padding their bank acct.s, egos, &/or political resumes.
Comment by Ted

Jul 2nd, 2008 at 3:02 pm

Wer’re back at it . OK i just visited another site with some irrifutable proof that there is no shortage of oil. The info comes straight from IEA data and it’s a graph they published called “EVEN MATCH” The graph clearly shows that the supply demand curve are evenly matched and have been for years. That says it all. NO OIL SHORTAGE. You can see for yourself if you don’t belive me. Here is the URL

http://www.usatoday.com/money/industries/energy/2008-07-01-iea-oil-report_N.htm
Comment by jeronne

Jul 2nd, 2008 at 3:08 pm

Donaldd gave me a good chuckle when he tried to blame all the country’s ills on Bush and the Republican Congress.. Maybe he hasn’t checked lately, but the Democrats have been in legislative majority for a year and a half.. When they took office there was a lot bragging about their “mandate” to stop the war, stabilize gas prices, and straighten out Bush.. — Well, the democrats keep voting to continue funding the war, gas has gone from $2.10 to $4.40/gal, and when Kucinich filed his 35 Articles of Impeachment last month he could not get even one democrat to second ANY of them.. — The President has no legislative or funding powers of his own. All he can do is ask for them.. It is the Congress that has the power to legislate, fund, and over-ride vetoes.. Democrats have done NOTHING to help the people they say they represent.. There is plenty of blame to go around for both parties, but the dem’s are in the driver’s seat right now …
Comment by Andy

Jul 2nd, 2008 at 3:31 pm

You can control 1000 barrels of oil in todays market for roughly $7000 - $10,000. You need $70,000 to equal the same $140,000 in the stock market. When the big funds bring billions into the commodities market and can control twenty times their investment, it’s quite obvious they can push the price.

Either force them to invest 50% of their money to trade on margin, or force them to take possesion of the product when the contract is up.
Comment by Zoidy

Jul 2nd, 2008 at 3:47 pm

jeronne,

Bush took the US to war on his own - the way I see it.

Even McLellan comes out to say Bush used the CIA data to promote a ‘reason’ for war.

But DonaldD’s points - if you read past the first two sentences - made a lot of sense and had nothing to do with bush.

It seems YOU are the one that’s obsessed with partisan dichotomy. But Iraq is on bush’s head, no one else promoted it to boot.

PLUS ? I tend to side with Secretary Paul O’Neil who writes that within the first weeks into office Bush went about saying “Find me a way into Iraq”. Granted Paul was Bush’s first firee. It’s also interesting to note Sec. Treasury O’Neil spotted a document on Bush’s desk WAY before 9.11 that was titled ‘Western Oil Corporate candidates for the Iraqi Oil fields’.

The writing is on the wall with bush, no ‘christian’ goes ’shock and awe- wanted dead or alive’ The guy has no integrity, no character, and will be forgotten as soon as his grip on power is gone.

As to DonaldD’s comments though, you never gave credit on the OTHER points made that had nothing to do with partisan politics.

It’s you - sheesh, I’ve already forgotten your nick. nm
Comment by lincoln

Jul 2nd, 2008 at 3:49 pm

Greg with one g, looks like you have a poem there, why don’t you do a rap with FOX?
Comment by Zoidy

Jul 2nd, 2008 at 3:52 pm

I also agree with DonaldD on every mention of Iran seemed to increase oil in the start.

I used to have a formula - if a missing white girl on Fox came up - US was closer to attacking Iran.

I’m currently working on a set of 8, 10 and 20 sided dice - That states what will happen in the world based on what Fox News reports.

Lost Child (come on, this happens 250 times a day, Fox uses these sensationalism stories to distract, unless Fox News WANTS to become the Missing Persons network, it’s manipulative to cherry pick which kids get the national coverage, and which are left to be ignored) on the 8 sided die will mean - 7 US Soldiers die.

Where’s Natalie ? more like - where’s Fox’s coverage of Iraq !

One girl in Aruba - or perhaps ‘Where’s missing woman named America’ ?

Really, what is it ? the new BCP pipeline that can’t be completed without Iran out of the way ?

is that it ?

Where Exxon, BP and Shell will pull in 7.5 million barrels a day instead ?

Chevron already OWNS 28% of the BCP out of the Caspian, how much is enough
Comment by Zoidy

Jul 2nd, 2008 at 3:56 pm

jeronne,

you complain people blame bush

and all you do is employ the VERY same thinking system.

What ? doesn’t your health care cover psychologists ?

This entire NATION is suffering from traumatic stress if you ask me

perhaps the children who’s parents were blown to bits in Shock and Awe are suffering ‘just a little bit’

But - hey, missing white girl in aruba - that’s all that matters

or my FAVORITE line of all time flipping the dial…

“And Geraldo, how many feet was the pay phone the runaway bride used - from the 7 Eleven building”

And THAT is journalism ?
that’s noise - distraction… obfuscation… hideous… I noticed some yayhoo faith healer on God TV or something like that going “and watch Fox tomorrow, we’re going to be on Geraldo” right. I don’t buy into that phony - Verb_here.
Comment by Zoidy

Jul 2nd, 2008 at 4:13 pm

jeronne,
to be fair you point out at the end of your comment:

“There is plenty of blame to go around for both parties, but the dem’s are in the driver’s seat right now …”

There exists a paper by Wolfgang Pauli and Karl Jung on ACausality.

It’s an interesting concept - that not everything has to fall under canopy of causal/non-causal. It’s the same concept of moral/immoral and amoral -

I might suggest a healthy path of apartisan approach to trying to understand economy - I mean, it’s not necessarily fitting that all matters of economy BE branded with democrat OR republican. Just suggesting this approach could prevent unnecessary dichotomy causing even more riffs - At some point, moving from a black and white world - you have to accept 3 primary colors and abandon duality of black and white.
I’ve not read or heard that before (I want CREDIT heh- jk) but it seems like fitting words to say what I’m trying to express jeronne.
Comment by Zoidy

Jul 2nd, 2008 at 4:20 pm

btw - linear temporal models go out the window with entry of acausality - (seems spell check here doesn’t even like that word) - but if you’re any fan of Cantor or Hilbert, you need this concept to understand the transfinite.

Too bad David Hilbert isn’t around, I’m sure he’d have some insights into trends in global futures markets. Nothing is random, everything has some history to it. Oil futures have a cause behind them. I’m VERY happy to see this subject up on the chopping block here - but unfortunately it’s not in such a venue to allow for heavy commentary - as one might expect on Washington Post or MarketWatch or so many of the online forums people share their insights (and insults unfort. Hey, I’m guilty too- workin’ on it, workin’ on it) using.

The above article left me wondering, is this sarcasm ? then I wasn’t sure if it was stating -hey - look - it’s not that simple, alas the barn door comment, OR ? is it as simple as I’d LIKE it to be, which is the US dollar is simply worth less, and therefore oil, food, durable goods, services, etc take MORE dollars.

UK’s retail consumer index of 3.x % when it was expected to be negative left me thinking was it perhaps UK citizens buying US products ? and therefore under the radar of what was SOLD in the UK ? as I’m sure that’s involved in computing that figure- MORE support perhaps the US dollar is wreaking havoc around the world.
Comment by Zoidy

Jul 2nd, 2008 at 4:27 pm

Hey

let’s not discount you’ve got the US head of the Comptroller of Currency touring the US saying ‘big problems ahead for the US Dollar, all this borrowing is killing us, and enslaving our children’

Government Accountability Office is offering up BAD news lately.

Could it be ? the US Comptroller of the Currency has a clue ?

I mean, they ARE at the top ? viewing the 40,000 foot view.

Probably the 80,000 foot view.

In bizarre ways, maybe we CAN call this the ‘China Syndrome’

As the US borrows more from China, sending down the value of the dollar ?

Oh well - it’s a catchy title - idddn’t it !

2 years ago I was tearing up the W.Post boards on China’s new driving class creating a new demand on oil - that their middle class alone is 300 million.
I don’t know that that is the issue anymore, BUT I do know that the USD is losing face to the world.
Comment by Zoidy

Jul 2nd, 2008 at 4:44 pm

Hmm

At least commodities don’t drive people’s ability to care for each other !

On THAT ?

These hard times are merely a temporary blip on the screen of hard time for humanity until the big ole meteor hits !

Fox had on some ’smilin’ jim recently talking about how he played the $10 margin between 130 and 140 - I couldn’t help thinking, wow, this guy actually thinks base 10 means something, he was smiling saying “yeah, I win if it goes up, and I short it if it goes down” After seeing the Muriel interview ?

I think if Murial was in the same room with this guy ? He had to be maybe 30 yrs old ? and believed it was alllllll about how you could play the system, you know, someone that didn’t care about anyone but his own personal afterlife plan, wait, no, that’s hitting below the belt, he didn’t bring up religion, but they guy might as well be some yayhoo in a casino.

Somewhere Wall Street perhaps has turned into Vegas. I think that’s what I picked up from Muriel Siebert (I am terrible with names, but her name I will remember).

When the mob discovers people are exploiting the games, they take em into the back room and ‘ask em some questions’ - maybe this is needed on Wall Street ?

Somewhere - without apparent demand matching the prices, something is askew.

Everyone relies on everyone else to figure it out, I’m here because I deduce I can rely on MacDonald’s insights to get closer to the truth. I wonder what the finality will be on what’s driving oil though.
Comment by Greedom

Jul 2nd, 2008 at 4:49 pm

I once saw a person from China discussing food in China.

Here in PA, I see General Tso’s Chicken. In MA? I notice it’s General Gao’s Chicken.

This person on this food show said ‘There is no such product in China’

Somewhere in here - with the http://www.gao.gov

there is a joke to be had between - things that don’t exist, China and the Government Accounting Office ?

Perhaps it can go like this:

“I ordered General Gao’s chicken and they served me a box filled with worthless US Dollars”

ok, - that’s weak.

Hmm- somewhere - over the rainbow - there is a pot of gold that can be traded for TWICE it’s amount in oil by the end of any trading day on commodities futures exchange ?

I better get back to work, I’m flaking out here !
I don’t like the network - or Murdoch’s grip on media, but I think FBN has a handful of good people there. I’ll look PAST the Fox part for now.
Comment by pfft

Jul 2nd, 2008 at 4:54 pm

u hedge.

“I’ve said at the outset that speculators are adding to the price spikes, we just don’t know by how much.”

but with magical reasoning, u conclude that speculators aren’t primarily responsible for the price spike when u admit that u don’t know how much they are adding.

pfft. u also conveniently set up straw men of cotton mathers who believe that ONLY speculators are to blame. and bravely light them on fire. boring…

to polish off your piece, u use the shotgun approach and fire off other causes also responsible for the oil spike to completely cover all bases and rear ends.

the standard techniques combined with the prosaic bluster and belittling used to mask … bored.

oil is different from the supply and demand curves of widgets sold. oil isn’t the final product. costs will be passed down. products will become more expensive. inflation. recession. i ate, but i still feel hungry.
Comment by Greedom

Jul 2nd, 2008 at 5:02 pm

Wow

Dow down 160 today

what’s it going to be like when the resets start showing up on peoples balance sheets ?

sheesh

9500 dow ?

8500 ? as 100’s of billions slam wall street - leaving people going

‘but but - I was doing so well on oil, no, not now ! not now ! ‘

Is that part of it ?

people are AFRAID to invest ? because they deep down KNOW there’s going to be some serious fallout yet to come ?

and they’re all playing in the commodities sand box ?
Even if people aren’t afraid of the markets aside from oil, with write downs coming from the resets they oughta be afraid ? hmm, no, fear is never a good motivator, it has its place, but I wonder what the best strategy for these up and coming write downs should be. negative 160 today riding on the coat tails of the worst june since 1929, sheesh. It’s EXPECTED to get worse when these phony mortgage started in 2003 start to come through yes ?
Comment by Greedom

Jul 2nd, 2008 at 5:03 pm

Note to admins here:

Although I think i’m DONE with MarketWatch - an ‘edit’ feature does exist for correcting typos etc.

Perhaps consider adding an edit feature here too - I’m sure it’s GOT to be the same tech staff that does MarketWatch as FBN. If not, take a look at MW. I do so much hitting return and seeing a blatant typo or misspelling.

Thanks.
Comment by GeneralGaoChicken

Jul 2nd, 2008 at 5:48 pm

I think I enjoyed most post Katrina on c-span in congress was this:

All the US oil corporation CEO’s where there.

Accused of price gauging ? a sane response brought forward that - oil prices are set globally.

I have observed Liz MacDonald to emphasize this too - and others. Off subject, when people suggest drilling locally in the US will change that the price of oil is set by globally demand ? All that one can argue is that the profits at least won’t go to an indoor ski resort in the desert in Dubai, but they will go to a ski resort in Aspen Colorado probably ! (If “I” ever go to Aspen, it will be wondering about the trees in the snow, NOT to go watch some flat screen TV in the mountains in some resort. )

But my favorite point made was that refineries are kept DOWN intentionally - as you can make more money selling less gas at a higher price. That many refineries are in hurricane alley ? No one objected. (I’m just focusing on the risk here, not environmentally, just the risk of further a constriction on demand).

So -that post Katrina c-span interview with the oil corp’s CEO’s helped me separate oil from gas - AND understand that gas is controlled more so by intentional minimalism on refineries.

It looks though like current problems aren’t about refineries crimping gas output, but mis-use of what futures according to Muriel Siebert are or were designed to be used for - price setting for industry specialists, not yayhoo 30 yr olds who can stand there smiling on Fox- or any network really- stating how much they are raking in playing the futures to their advantage, all the while playing part in creating what I think we can all agree is - ARTIFICIAL DEMAND.

This term ‘artificial demand’ hasn’t surfaced yet but I think it’s KEY to understanding what mechanism is involved in oil futures skyrocketing. What DRIVES that mechanism MIGHT be money that is too afraid to be put into Wall Street otherwise - I just considered that today, regarding expected write downs.

Maybe the people who KNOW how badly their investment firms are hit hard, are playing futures because they know the real write downs coming ? ok ok - that’s crossing to paranoia ! oh well…

I recommend Telemann’s Fantasia VIII (IIX if you’re conservative ! Odd IIX isn’t traditional) in E Major to forget all todays troubles (third movement is just killer, short of a few measures I swear that don’t belong, but hey, it’s his gig) - In fact, I wager until hearing the third movement - one is missing out on just how celebrative happiness CAN be expressed in music.

Hope everyone has a bike ! Saudi’s gave bush one ! I think it’s sarcasm on their behalf !
Comment by William G Stockglausner

Jul 2nd, 2008 at 5:52 pm

There are plenty of people who disagree with you on this, so don’t sound so sure of yourself. By the way, I think you should have to disclose your financial interests in the crude oil futures market.
Comment by Frank J Dioguardi

Jul 2nd, 2008 at 11:08 pm

Well I just read all the excuses and all the Know it alls, tell all they do not Know at all.
First things first, anyone remember Silver Certificates?? Anyone know why they were taken away from us?? Figure out what the World Bank Has to do with this.
Second…Has anyone actually seen the ANWR drilling area?? Not the pretty mountains and streams picture. That is not it. I am talking about the REAL drilling Oil Rich Area?
I’m talking about the Coastal Plain that is right my friends 2000 acres out of 19000000. Right off of Kaktovic….Google it my friends.
Not a blade of grass in this area….And no Birdies either. Yet, these lying Politicians would lie to you about this Wonderful Wildlife Area. Not the Drilling site. It is barren my friends, No Birdies, No Weasels, No Flies to protect. Only politicians protecting their pocketbooks. Millions upon Millions of Barrels of oil. And just out in the water not too far away in the Beaufort Sea….More… Trillions…enough for 2 or 3 Hundred years. Wake up….. Somebody..Wake up. Google it!
This is getting Boring no one is hearing, seeing, caring.
Comment by Perry Adams

Jul 3rd, 2008 at 12:52 am

Amazing analysis using stats to make the point that futures are not holding the oil gun to our heads. No commodity increase 2 fold in such a short time unless the commodity availability is reduced drastically. I am sorry, but there’s more to the uncontrolled oil price orgy than supply and demand and shutting down the Nigerian rigs for a couple days. Unfortunately, nothing is going to happen in short term to bring about a correction. In the meantime, consider the future - November and December when the retailers will see the worst holiday season since the Great Depression…Maybe we’ll be buying gasoline gift cards as presents instead.
Comment by William G Stockglausner

Jul 3rd, 2008 at 2:32 am

I found this while researching. I thought Lizzy might like to see it.

“The most surprising e-mail came from Chris Cook, a former director of the London Petroleum Exchange—now ICE Futures Europe. Cook wrote: “I am convinced there has been manipulation of the Brent Complex [the term that defines North Sea Brent crude prices] by ICE members for the last 10 years at least. I think it is quite likely that the Brent forward price is being kept artificially high—which does require deep pockets and accounts for the continuing barrage of Goldman [Sachs] forecasts and much of the other oil market hype that passes for news.”

This confirms other information I have found asserting that certain very powerful individuals have a direct and impassioned interest in seeing the price of crude rise to $150/bbl or higher.
Comment by Marco

Jul 3rd, 2008 at 3:20 am

Just like Califronia has an fake electric energy crisis a decade ago. What we were told then is there is a supply problem. What was the truth it was a manipulated market. The Dollar is down by 7% to the Euro, the price of oil has risen 48%. It is not the weskening of the dollar which only plays a small part. Demand is down in the USA which is the largest market, but we are told it China & India. Can you explain to be how India & China populace will be able to pay for $5-$10 a gallon gas and keep growing at 8% a year?
Comment by GeneralGaoChicken

Jul 3rd, 2008 at 6:06 am

Just noticed on FBN ticker at the bottom of the screen.

It’s not JUST Fox Business Network - but no one shows the US Dollar on the ticker.

I find it more evident how this plays into things.

That is, the ratio- or standing of the US dollar to the other Bretton Woods currencies as I like to call them.

More and more of the world unpegs from US currency - and yet ?

as it becomes worth less in trade ?

All I see is people going ‘look at how much more valuable oil is, or this or that’

meanwhile ? no

it’s just that ‘look at how much worth LESS the USD is ‘

and yet ? Is it me ? am I missing something ? How can we just ignore this, even IF - as a comment above suggets JUST on the Euro alone it’s about 30% of oil due to the USD.

EVEN 30% ? I figure is 30% of $145 - hey, let’s be generous, we’ll call it $150 and 33% - to make for an even $100

That’s ONLY $10 above $90 where oil used to live at - personally I think once you bring in the Yuan - and other Bretton Woods world currencies - it will be above 30% - and I WAGER - I BET that it places oil adjusted at $80 to $85.

I could be wrong, but my intuition tells me - and the analytical reasoning side of thinking tells me I HAVE to ‘correct’ oil to the devalued USD.

If I don’t - then I’m irresponsibly reacting to oil as IF it’s going up in trade (I don’t trade, I’m a software engineer), and creating problems for it to burst when everyone realizes - uh oh, it WASN’T oil going up, it was the dollar falling and we ignored it.
Comment by GeneralGaoChicken

Jul 3rd, 2008 at 6:19 am

By the way people

If the ECB acts like Bernanke SHOULD have - and they probably will- as they actually CARE about inflation with the Euro - the US Dollar sinks even lower as a result in relation.

And - hey all you oil futures traders out there that just don’t get it - and I ESPECIALLY mean you yayhoo’s who say it’s peopel placing their money in oil because it’s ’safer’ or ‘more potential to profit’ you might as well continue your delusion today and go long !

There is sarcasm intended in there, as I am convinced oil isn’t going up, it’s just the meter we use to measure it is becoming more distorted.

All people are doing when they ‘think’ they are making any money on oil futures - are postponing the wake up call they not even be lucky enough to get - alerting them their base currency is in jeopardy.

All that said, I am investing my TIME, not my money (which is depreciating before my eyes anyway - ALL $150 of it !) into learning what contributes to the falling dollar, and what can be done to protect it, or what can be done to save it.

My MEAGER understanding is - Bernanke raises the rates and the integrity of the dollar improves. I GATHER he doesn’t because he wants people to be able to borrow at lower rates - encouraging more access to funds - perhaps to prevent another collapse.

Glick’s interview yesterday with that yayhoo who wants to drill drill drill- and if it were Andie McDowell in GroundHog day at the festival talking about carroling, and drill some more - comments that HAD the borrowing window existed BEFORE for Bear Stearns - they’d not have gone out of business.

My reaction to that is, great- to use Liz MacDonald’s term ‘toxic waste’ what OTHER toxic waste has the Fed already taken on, or WOULD they take for collateral if so. But my point on that in context to THIS post is - gee -If Bernanke wants to keep rates low so banks such as BS can have access to monies that are affordable as loans from the Fed ? Gee - what kind of rock and a hard place IS that ?

Can’t raise rates or the investment banks collapse, can’t lower rates, or the dollar collapses in months rather than years - can’t stay where we are at because oil and everything else pegged to the US Dollar are leading 80% of the yayhoo’s on Wall Street to think oil is actually going on, and the 20% remaining that see it as the dollar condition underlying are left to probably want to get out of Dodge as well.

What’s next ? GE Money relocates to Latvia ? or China ? GMAC is already in China, maybe they’ll move outta Horsham and get the Rosetta Stone package for Chinese ?

I don’t know what’s in store, I LOVE challenges, and I find myself without a clue on how the US Dollar can find it’s way back.

I’m not even sure the US HAS the exports to take advantage of a low currency anyway as I read in the 1980’s was the magic formula - lower rates, increase exports- dollar adjusts. Now ? It’s just lower rates, watch commodities exploits grow by yayhoo futures traders - (I just started saying yayhoo, no clue on the etymology, feels good saying it though !), and try and figure out what the US will be exporting all the while CAFTA and the Texas corridor are clues we’re going to be importing from 3rd world JUST to keep people having materialistic crapola to distract them from realizing we ARE 3rd world according to our currency sooner than later.

anyone have any thoughts (with exception to my language ? )
Comment by M.L. Bushman

Jul 3rd, 2008 at 8:04 am

You know, I just wasted an hour here on a reply to this so-called report, and now I’m wondering why I even bother.

I give you credit for admitting that speculators are a “part” of the problem with oil prices, but failing marks because you can’t be bothered to do more than report that “no one knows how much.”

Just for fun, why not be a real journalist, get down and dirty and all specific here, and tell us who exactly is doing all this speculating? Who is making all the money? Someone is, and it ain’t the People getting screwed daily at the pumps, that’s for sure.

Why not take a look at who exactly provided the data for the “government” report yesterday, a report no one in media appeared to want to make much of a fuss about, that said inventories in the US had dropped “unexpectedly” from the week before to the tune of 100 million barrels, I believe. Again, I ask who is doing the speculating? Who is reporting the “data” to the government? Who ensures the accuracy of these so-called reports? What about the insider trading aspect? Why isn’t insider trading illegal on the oil futures market?

How widespread is the influence these vast amounts of money are having on our do-nothing-but-bluster Congress?

The point is, even the most conservative among us are now talking a second American revolution. So, whose side will media be on then? And will we trust you?
Comment by Geoff

Jul 3rd, 2008 at 11:30 am

Why did this Congress impose a $.54/gal fuel/import duty on the sugar ethanol that South America wants to sell to us?? Are they protecting the corn ethanol industry or the oil companies, or both ?? Sugar ethanol is much more viable product than corn ethanol.. Why would our own legislators enact such a tax knowing that it penalizes the consumer by causing further inflation in fuel prices and is a protectionist measure for an industry that doesn’t need it ??
Comment by rw

Jul 3rd, 2008 at 11:34 am

Reuters report dated today indicates Paulson discounts the dollar as major factor on current price of oil. “The dollar has had a very small impact…” according to him
Comment by Greedom

Jul 3rd, 2008 at 1:45 pm

rw-

one person here that posted speculated on the USD to Euro ratio (pun intended on ’speculated’) - coming in at about 30%

JUST on USD to Euro I figure that’s take 30% off of oil and you are wearing the x-ray glasses you get as a child from the back of comic books as to what’s underneath these oil prices !

It’s realistically STILL about 90 to 100 the way I see it.
MIGHT be lower if you go basket currency on all bretton woods currencies and attempt evaluate the USD against an average of all the others.

Yeah, strange isn’t it ? According to Paulson - oil is going up.

Seems he LIKES that point of view

Yet ? According to the relationship of the dollar - oil may actually be DOWN from even 2-3 years ago.

I’m saying, oil never left $85 a barrel when we started to see the escalation, all we REALLY have watched is the US Dollar go down.

All in all - we’re only hurting ourselves pretending otherwise.

Kind of like walking on a broken leg, if you think it’s a sprain - and have taken pain killers- you could really mess it up.

Or as I did as a child - dentist office, novacain - once it wore off, I realized- oh my - that rubbery lip I was chewing on has real pain receptors !

Question is - when will the novacain wear off on everyones perspective that oil is actually going up.

Gee- president of OPEC says it’s the dollar.

US oil corporations say ‘no increase in demand HERE’

Saudi’s say - ‘Odd, we will produce more, but we’re telling you, we have no buyers’

Gee ? Speculation ?

nope.

In the meantime - we’re losing precious time, unless Paulson WANTS the USD to fall !

these days I have to wonder on incompetence or intentional abuse of the dollar.
Comment by Greedom

Jul 3rd, 2008 at 2:08 pm

Wow Liz MacDonald

I just went to put in ‘Hunt Oil’ into news.google.com

because of small story I heard regarding Bush and Hunt oil interested in Iraq ?

Odd - this VERY page comes up as #3 on news.google.com

Why ?

You have Oil - and Hunt in there - interesting.

heh- accidental, but I’m very interested in this Hunt story because I KNOW for a fact Secretary Treasury Paul O’Neil stated WEEKS into 2000 term with Bush - he saw a document entitled confidential with the title ‘US corporate candidates for the Iraqi oil fields’

and you know ?

Paulson -who I TRUST - ALSO said bush went around saying ‘find me a way into Iraq’

so, adding 1 + 1 ? when I see a story about Bush and Hunt oil ? and sneaking past Iraqi Oil Ministry ? you BET I’m checking that out - and here is YOUR article - this very one ! as #3 under those search terms - STRANGE-
STRANGE because I JUST left this page to go to that story - heh.

What ARE the odds !

I keep ending up back at your forums !

heh - that’s because I think you’re a top class journalist and enjoy the subject matter you choose -you have an amazing track record in standing up for people- kind of like a civil rights attorney without being one, or a politician - only with integrity !

Hope your 4th is uneventful ! I say that because I find holiday’s OVERBEARINGLY stressful - so I always wish people uneventful holidays.

Up to age 15 - they were great ! now ? ugh! X-mas is the WORST - it’s like just get it OVER with - I LOATHE the forced family gatherings - augh! oh wel…
Comment by Greedom

Jul 4th, 2008 at 9:31 am

There is Paulson, Sec. of Treasury today (or maybe they had the clip a day late) going:

“This is ALL supply and then it’s some demand”

Claiming the US dollar is in great shape - and US markets are expanding globally like never before.

My favorite part revealing his gifted ability to tell the future:

“If you had asked me a couple months ago if oil would be $130 ? $140 ? I’d not have ever been able to predict it”

Yet ? There is Saudi Arabia saying “No new observed demand here”
US Oil Corps going “No new rise in demand here ?”

What oil is Paulson talking about ?

I forgot to chop off the head of my golden goose

If Paulson admits he couldn’t have predicted $140 an oil - and it IS ?

in a few months ?

what ELSE can we rely on this guy for ?
Comment by Greedom

Jul 4th, 2008 at 10:18 am

Just posted a longer reply - site doesn’t let you know if it made it

Sometimes it lists posts saying ‘Your comment is awaiting moderation’

But I don’t even see my posts with that at the bottom.

To admins: Maybe you could enhance user feedback as to status of whether a post made it.

I mean, sheesh, if I’m going to take time to fill out a textbox with insights, if I KNEW it was to go out the window - I’d not write it.

Thankfully ? Browsers ALWAYS have Alt-Back Arrow or Alt-Forward Arrow to navigate - even IF the buttons are taken off, and the content IS still here to save.

Oh Alt-Back Arrow/Forward Arrow has saved me in some windows where the navigation buttons were intentionally taken off.

JUST to pass that on.

and Be Aware of Prilosec - proton pump inhibitors deny muscles ability to absorb ions according to my pharmacist - and can shut a muscle down - INCLUDING the heart.
I was taking 2 at a time, pharm pointed out that was beyond the dosage but that very well COULD be the constricting pains in the heart - that guess what ? STOPPED when I stopped taking that stuff. It’s also only supposed to be used for 14 days.

Pharmaceutical lobbyists.

hey, did you know ? AMA says Acetaminophen is the #1 cause of liver failure in the US ?
Another 14 day limit- and how many people follow that ?

I’m sure there is someone out there going “darn it, I’ll take 5 if I want, AND burn some tires while I’m at it ! It’s America, and my insolence rules the world ? ”

Hmm- they were working on their doctorate in Organic Chem - before switching, what would THEY know eh ?

Using Prilosec is like using a sledge hammer to open a peanut.

That’s not medical advice - or intended to be- that’s just insights.
Comment by Greedom

Jul 4th, 2008 at 10:22 am

I give up

this is too frustrating to use

too much time is wasted on the technical side of even KNOWING if what I write makes it.

forget this

hire some real web developers or something - you just lost a participant that no longer can tell if what is written even is being receieved at the server.

Odd - all my OTHER posts seem to make it

I’ll try it line by line to see if it’s filtering on a key word.

Would be interesting to find out what word it’s filtering.
Comment by Greedom

Jul 4th, 2008 at 10:23 am

In 17 parts: ONE of these lines is preventing the entire post from making it.

part 1
Gee,

Maybe the US should oust Paulson and Bernanke and just outsource the ECB.
Comment by Greedom

Jul 4th, 2008 at 10:24 am

Part 2:

Hmm - maybe they could set up an arrangement to start injecting Euro’s into the US economy so people can get used to them ?

The way I see it - after my 6 months of aggressive education in matters of economy:

Bretton Woods set apart the world’s currencies post WW II - leaving the USD as the leading currency.
Comment by Greedom

Jul 4th, 2008 at 10:24 am

Part 3:

No more.

USD is no longer as the Duke in Escape From New York (a movie) would say “I’m # ONE” (Saw it YEARS ago, noticed it’s on more often now).

The USD MAY have toured the world, but now ? it lives as if it IS trying to Escape From New York - it is imprisoned, and it’s being held hostage too !
Comment by Greedom

Jul 4th, 2008 at 10:25 am

Part 4:

I hope Bernanke’s backup plan isn’t to find a Bat Phone and summon BatMan to solve this caper. It’s CLEAR the Joker and Riddler are in on THIS one.

Hmm - that wasn’t correlative to my fast paced education on economics regarding Bretton Woods currencies.

Way I see it - consolidation - it’s consolidation consolidation consolidation.
Comment by Greedom

Jul 4th, 2008 at 10:25 am

Part 5:

I see record corporate consolidation occurring, Bush certainly (for better or worse) promoted deregulated energy to allow for TXU to set a Wall Street record on the largest Energy company corporate consolidation - hmm- didn’t really make corporate lobbied news - Let’s just hope a 1 trillion dollar company like Exxon doesn’t own any oh, several billion $ BEANS news stations as mouthpieces, that kind of FCC deregulation would be - as Vick (Dan Aykroyd) in the movie Neighbors says “would make for bad blood”.

I see banks consolidating.

Now, gee, everyones consolidating
Comment by Greedom

Jul 4th, 2008 at 10:26 am

Part 6:

Ya think (to quote Liz MacDonald’s trailing line on the ‘New Bottom of the Housing Market’ video segment (TONE of voice especially - loved it) ?

Ya think by ANY chance ? Currencies will consolidate ?

Gee ? People trade in corporations, they consolidate

People trade currencies, ya THINK they’re next ?

Ya THINK maybe ? JUST Maybe ? America was ’something else’ before the settlers came ? And - by the way - who’d the Native Americans steal it from - Inquiring minds want to know.
Comment by Greedom

Jul 4th, 2008 at 10:27 am

Part 7: (this seems to be working - breaking it up, it wouldn’t take my post as one large post, and I orig. typed it IN this window, no ‘1500 char limit’ or anything.

Who’s stealing it now ?

The Sub Prime - CountryWide - and it WAS CountryWide all right - scams - with CW being the Nations largest mortgage issuer ? REALLY swindled some people AND banks out of property - loans - and yikes, let’s just HOPE no one - PLEASE - let no one have taken out HELOC’s on those 5 year no money down mortgages that are - thanks to Liz MacDonald bringing this to surface - NOW resetting.

Are there NEW settlers in this land ?

One thing for sure Abu Dhabi can just BUY 1/3 of ALL real estate in America - right now, and that’s just Junior’s SPENDING money.

I just LOVE this admin - or WHOEVER’s watch it happened on eh ?

I don’t even bother to blame partisan side anymore, I just question who’s responsible and who had knowing ill-will- or intent to deceive. I can look past ignorance - unless I suppose it’s some yayhoo flying around with nuclear weapons over my head not knowing they have them on board, or worse, someone burying spent nuclear rods thinking - no one will find em HERE Jake ! ?
Comment by Greedom

Jul 4th, 2008 at 10:27 am

part 8:

I’ve observed in my BRIEF self education in economy that the world’s currencies are consolidating, and JUST that we HAVE basket currencies - AND in Feb 2008 ? I see the Fed moved Special Drawing Rights over to paper, a first. What does THAT do for Gold ? when at nation state level ? it’s been decided it’s paper only now ? Sheesh - how many years before gold traders get wind of THAT ? or even comprehend it !

Don’t get me wrong, I’m not one of those New World Order nutcases, I’m actually PRO-globalism. I think globalism solves two problems. One ? No one to attack using nuclear weapons, and two ? I figured out last month that if you remove the nation state ? or nationalism ? Terrorism just - like Josh Waitskin says of Bobby Fisher - just disappears (FINALLY spelled that word right).

I’ve observed Terrorism is really ? a reaction to nationalism. IN that nationalism is dying and globalism is emerging, I think it’s probably natural to expect terrorism to show up as a temporary blip on the radar.

Come on, did ANYONE really want to - US Homeland style advising the kids ‘To live in fear of terror forever’ ?
Comment by Greedom

Jul 4th, 2008 at 10:29 am

part 9:

I blocked the Fox News channel today - the 3 yayhoos on Fox n Friends rendered uncontrollable feelings leading to vomit. I don’t block Fox Business News though.
Fox promotes this fear terror message as I observe. In fact ? I STILL can’t help to notice the mortages that were sold and taken out as IF there would be no tomorrow all started at the same time as the message of hopelessness based on BAD intelligence data we ALL know about now - THANKS McLellan for coming forward too - others will surely follow.

Intentional or NOT - and it’s odd General Tommy Franks, as Rush Limbaugh likes to point out - who ran BOTH wars, Afghanistan AND Iraq - NOW sits on Board of Directors of Bank of America ? the company that stands to REAP HUNDREDS of BILLIONS of FREE MONEY resultant from the mortgage fraud inherited through CountryWide - GO FIGURE -!

Intentional or not, I say it was the perfect storm - bad loans to people who HAD to have thought the world was ending to take a loan they KNOW they can’t afford, nor, would have EVER been able to get on a 500k home - and live rent free for FIVE YEARS.

Probably came with FREE Fox News too ! jk That’d be awesome if Bush played out a plan from his brother who looted the Savings and Loan - to loot the entire US mortgage sector - put up a prop TV station - Fox - to run the CountryWide ads and promote fear - and promote why the US MUST go to war… meanwhile - the people who take the bait loans - live in the house, BORROW against it on a no money down for 5 year plan, PAY for Fox New in cable - and in turn watch Fox using the money derived from Fox offering the CountryWide Ad. wow.
Comment by Greedom

Jul 4th, 2008 at 10:32 am

Well well well -

it’s eleven parts - not 17 apparently:

You know ? What’s worse ?

11 fragment parts for the readers ? or one long post ?

You’d think Fox Business News would take what it could get to bring people to read the articles and forums/blogs - considering the REAL ratings. I can tell what the real ratings must be - because of the quality of advertisers on Fox and Fox Business News… They’re pretty seedy.

part 11:

If Stars can consolidate to form matter and then molecules and then planetoids and then planets and then people to reflect on this (Hey this doesn’t mean there isn’t a teleological commitment to god adopting that God creates stars too, OR that silly universe model- of course I wouldn’t want to cherry pick texts from 4th century B.C., 2nd, then 1rst century A.D., 2nd century A.D. etc and consolidate THEM into some dogma I promote on a TV news network as anything OTHER than consolidated antiquities texts) ? Then nation states can consolidate and further, currencies can consolidate.

Let’s try this in Latin

con - With

oh - nm - no ones going to be interested.
Comment by Judith Bisso

Jul 4th, 2008 at 10:49 am

I am beginning to admire Elizabeth more and more. I wonder if Bill O’Reilly will invite her to appear on his show, in order to point out the error of her ways regarding oil specuators. Would be an interesting show.
You go, Gutsy Lady.
Comment by Greedom

Jul 4th, 2008 at 1:13 pm

OH NO - my last post didn’t show up as saying Your Comment is awaiting moderation.

Now I don’t know if it made it

If the web scripting has a block on size ?

then it was lost

so here goes - I’m breaking it up

part 1:

Who knows

Maybe by the time McCain or Obama get in ?

The US will have realized that nationalism is dead.

That the US military was USED for one last rant to promote corporate petro occupation in Irq

and that the US housing / mortgage sector was looted - payoff to the Bank of America where the TWO senior architects for the War on Terror sit - Larry Di Rita - press architect and General Tommy Franks - military architect for Afghanistan and Iraq.

Looted ? why ?

why- Abu Dhabi can buy the US real estate sector if it wants anyway.

well - 2 trillion is coming on line from Abu Dhabi to buy into the 12 trillion US real estate sector.

now, ask yourself, with an estimated (I arrive at about 6 too) 6 trillion total loss/depreciation in US real estate sector ? all of a sudden 2 trillion is into 6 - 33%.

I am just considering that by the time McCain OR Obama gets in - Bush comes forward to say “Look, the world is growing up, it’s a global economy globalism is here”

Then he announces, “Now, we’ll still have nationalism in the sense of tourism, but we’re moving to the Amero”

heh -
Comment by Greedom

Jul 4th, 2008 at 1:23 pm

WHY is this filtering !? ? ??

What kind of company IS THIS >?

I bet Obama will say “darn, I become president and they move the White house to Dubai !”
Comment by Greedom

Jul 4th, 2008 at 1:24 pm

sry folks - breaking this up

ONE sentence in here is being filtered by Fox:

I was only pro Biden - I don’t have any support for any of the yayhoo’s running.

Least Biden seemed truly immovable as to corporate lobbying.
Comment by Greedom

Jul 4th, 2008 at 1:24 pm

But - I do wonder if Obama, OR McCain - EITHER ONE get in (remember Rove DESTROYED McCain, in Rove - Bush’s Brain the movie ? (or book) the author points out Rove went about to all the christian fundamentalists and made SURE they knew he had a ‘black’ daughter by a ‘black’ prostitute- and you know ? his daughter was adopted from an orphanage Mother Theresa ran - Rove attempted to DESTROY McCain - Rove is a total slime ball - and here he’s ON McCain’s campaign ?

Either way- if either one get in ? I bet full circle - Paulson’s denial on the dollar against what the rest of the world says- and Bernanke’s inability to raise rates risking investment banks falling because of risk from CountryWide fallout induced by people signing up for loans as if the world was ending -because Fox told them it was - OR risk destroying the lower class if he doesn’t raise rates ? I bet Bush comes out in December saying “Well, it’s all changed now, and now we must face what we face”
Comment by Greedom

Jul 4th, 2008 at 1:25 pm

Sheesh

you people need to fix this:

you can’t just WRITE what you want

and I’m NOT writing anything obscene

or with mal-intent here

last part:

then he’ll serve up some nationalism is over speech.

Even if Bush doesn’t serve up this speech - it’s coming.

Most of the products in MY house are from China

And “Is Six Flags American” What IS this crapola ?

what IS American ?

the workers ? what of the nearing 20 million mexicans - and hats off too - I’m PRO humanity ! I have NO problem with the bottom of the statue of liberty- which - originally ? was an Muslim woman with a scarf around her -AWESOME history there.

I’m torn on the bridge of ignorance - I think education is the answer to anyones salvation.

I think we need to think twice on what our currency means without a nation state and what a nation state means without a currency

-end part

WHAT A HEADACHE even attempting to share thoughts here
Comment by Greedom

Jul 4th, 2008 at 1:26 pm

I’m going to try to give up posting here

That I can’t just write what I want ?

it’s sucking the life out of me to play CLEANUP on where FBN didn’t hire the RIGHT talent to allow a TEXT BOX on a WEB PAGE in 2008 to function.

Sheesh
outsource to India or something
Comment by Greedom

Jul 4th, 2008 at 1:33 pm

Doesn’t mean I still don’t think you’re one awesome journalist Liz MacDonald !

My wife said “What’s next ? you’re going to ask me to wear a mask ? ”

I joked saying “yeah, I’ll get Alexis and Liz and you can choose which to wear around the house”

We’re still talking ! heh

no, people in MY life - unbounded humor comes first - humor is the all of it !

I have fully integrated your face crunch smile though- trust me - it’s priceless - I’m a guy - age 40- and I find the expression life changing !

USED to think you were being smug with it, then somewhere I realized- holy cow - she’s genuinely happy there ! Admire your being too - trying to learn to sit and listen the same - if I can get there, I’ll in great shape.

You oughta put out a social etiquette book perhaps - manners or mannerisms !

You TRULY - I think at least - have it together on that regard.

Life - indeed, short - you clearly are enjoying the moments.

Thanks for all the articles/work.

Hope you find yourself in the best of company - you deserve the best there Liz MacDonald - Therefore, you should be content with yourself !
Comment by Greedom

Jul 4th, 2008 at 1:38 pm

and make SURE you keep separate my thoughts on Fox network - FBN is in my view - a pet project of Cavuto - but - I loathe Fox News and the dreaded second floor -

but - You, Cavuto- and Charles make for great material/presence - Neil has a flaw though of being manipulative - I think with guests.

All in all ? I SUPPOSE Alexis isn’t evil hearted, just perhaps a bit on the road to discovering that humility actually LINKS humanity - I swear I see a shared root there in humility and humanity -I have to look up the etymology- all in all - I SUPPOSE I’d add Alexis to my list of people that I don’t think I have to second guess as to being without questions - team players- decent people- there for the purpose of bringing forward financial news. - Alexis - you stray on that ! heh - oh well- maybe you’re trying to have as much fun as you can with it - I suppose that’s not the worst thing in the world.
Comment by Greedom

Jul 4th, 2008 at 2:05 pm

Half of what I say is meaningless
Comment by Greedom

Jul 4th, 2008 at 2:31 pm

Dear Fox Business News:

I suggest you clean out everyone but Neil, Charles, Liz and Alexis.

Keep your international contacts:

Let Alexis flll in the gaps with guests: that could be 4 hrs on air and give her 4 hours to catch up on the blog

That’s 4 hrs a WEEKDAY - Alex - scheduled.

give Charles his own mainstay too of 2 to 4 hours - if he can handle the 4.

Charles TOO I’m sure could bring in some great people - and he’d probably get a ride out of the deal too - the kid in him - point being - if he wants 2 hrs, the OTHER 2 hrs would be with people that would rock his world.

that’s 8 hrs down

Give Liz 2 hours min. a day - All the Presidents Men type of reporting - let her go off on Housing, the Doll