President Bush to Lift Executive Ban on Offshore Drilling

[Parkbandit]

About fucking time... let the hippies start to protest and hold signs "We can't drill our way out of this!"

[Ashliana]

The executive ban is in addition to the congressional ban. Without both removed, it can't begin.

[Drew]

Saying we can't drill our way out of an oil crisis is like saying we can't eat our way out of hunger.

[Daniel]

Saying we can't drill our way out of an oil crisis is like saying we can't eat our way out of hunger.

Actually, it's like saying we can't eat our way out of a famine with one bag of rice.

[crazymage]

^^^^^^^^^^^^

[crb]

1 bag of rice is better than no bags right?

The solution isn't going to be one thing. Not wanting to do something because it'll only help a little bit is retarded.

We need to conserve more, we need alternatives, AND we need more supply. Do it all.

[Gan]

Every little bit helps.

Now the stresspoint for offshore drilling is now on Congress.

[Ashliana]

1 bag of rice is better than no bags right?

The solution isn't going to be one thing. Not wanting to do something because it'll only help a little bit is retarded.

We need to conserve more, we need alternatives, AND we need more supply. Do it all.

Depends on whether or not that one bag of rice damaged the environment, or potentially damaged the environment, to make.

You're right, that we need a multifaceted approach. But I don't believe the way to go is to tap all of our oil resources now while we're only in a pinch, as opposed to in a disaster. By selling this oil on the global market, hoping it has an effect, we're using our resources to help the entire world's oil market.

The best thing for our economic and political security is to develop an alternative to oil as quickly as possible and send these crackpot dictatorships like Iran and Venezuela into the shithole by making their previously invaluable resource, petroleum, comparatively worthless.

[CrystalTears]

I would rather we not wait until we're in a disaster to tap our oil resources.


We need to conserve more, we need alternatives, AND we need more supply. Do it all.
Agreed

[Ashliana]

Well, absolute disaster, no. But if an alternative to oil isn't developed, the price of oil is going to continue to skyrocket as demand outpaces supply. If we don't play our hand until we need to, we'll be in a much better position then, than we would be if we drilled it all now and had nothing to rely on when we got to the disaster situation at a later date, don't you think?

[CrystalTears]

You're assuming that we're able to tap out our oil resources that quickly. If alternatives are actively worked on, the smaller reliance on oil wouldn't cause a disaster.

[Clove]

Demand isn't outpacing supply, however, we do need a multifaceted plan that includes enough alternatives to wean us off dependence on foreign oil imports especially OPEC imports.

Ashliana is correct when she observes that "it depends upon the cost of the bag of rice" however, I think the degree of environmental impact due to expanded drilling is VERY debateable. Personally, I'm comfortable with the decades of technology that have gone into making oil recovery operations very environmentally friendly, just like I'm comfortable with the nuclear power plant 15 miles from my house. It can be done safely and I believe that it will be.

[Ashliana]

I mean the growth of demand versus the slowing growth of production. Given the two, at current rates, predictions state the demand will outstrip supply in 2037, according to our Dept. of Energy. When that happens, we'll see the true skyrocketing of oil, if a viable alternative hasn't been developed.

http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html

[crb]

If the liberal position is really that we're not in an emergency yet, why not pass a contingency law stating if oil reaches say $200 a barrel drilling is allowed, or $250, or $300. Put your line in the sand somewhere.

Otherwise I don't buy that argument in the least, I think it is just an excuse to not do it now, when in reality, in your heart of hearts, you would never be okay with it, no matter what the circumstances.

[Ashliana]

That is not the "liberal position." Whose campaign just came out and said "we're not yet in a recession, this is a nation of whiners"? McCain's campaign.

The course of action should be dictated when confronted with the situation. It makes no sense to set the policy now when there could be other factors to consider when oil actually HITS $200, $250, $300 a barrel.

Yes, the hope is that we'd have the technology to never have to drill, period. Sometimes I think people forget that that is a good goal.

[Clove]

I mean the growth of demand versus the slowing growth of production. Given the two, at current rates, predictions state the demand will outstrip supply in 2037, according to our Dept. of Energy. When that happens, we'll see the true skyrocketing of oil, if a viable alternative hasn't been developed.

http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.htmlTrue enough, which is why we want to take control of the situation today. Naturally we can't predict if additional supplies won't enter the market in the next 30 years (but we can't say they will either). Which is why the smart thing to do is to implement planning to reduce our consumption today; but that doesn't mean we can't increase our domestic oil and gasoline production at the same time. Particularly if we use tax revenue from gasoline today to fund alternative solutions for today and tomorrow. It may sound like a commercial slogan, but it's the thing to do.

[crb]

That is not the "liberal position." Whose campaign just came out and said "we're not yet in a recession, this is a nation of whiners"? McCain's campaign.

The course of action should be dictated when confronted with the situation. It makes no sense to set the policy now when there could be other factors to consider when oil actually HITS $200, $250, $300 a barrel.

Yes, the hope is that we'd have the technology to never have to drill, period. Sometimes I think people forget that that is a good goal.
The country isn't in a recession noob. Some states are, such as Michigan, but the country isn't. Politicians though like to use fear to talk up economic uncertainly, see Obama (he is such a hypocrite, fear of terrorism is not the only fear politicians use Barack).

I love these out of left field no-bearing-on-the-topic asides you make though. I fully expect your next post to mention something about Jesse Jackson & Obama's ballsac.

Extrapolate current oil prices out the 5-10 years it'd take to get new supply online and tell me it won't be worse then if we do nothing.

Look forward, not back.

[Back]

This is some great proclamation? Does anyone else see this as not only a no-brainer but a pat-on-the-head platitude to the consumer?

I’m all for preservation but while the planet may seem small in these days of exponential information sharing there really is a pretty decent amount of wild terra firma out there. 3/4ths of our planet is also under water so a few oil rigs off the coast isn’t going to have any kind of huge impact.

What is having an impact is the fact that modern civilization is so dependent on oil for energy. Dudes, the plants have it right. Convert sunlight into energy. Its that fucking simple.

The atmosphere is pretty spacious as well. There is so much energy just flying around out there barely anyone is taking advantage of it. Tesla got it. The Dutch figured that out a long time ago. Actually, I can’t say that with any certainty. But you get the point.

So in summation... No shit Sherlock. Buy land 3 or 4 miles from the nearest beach. Quit being dumb.

I’m here all day.

[BigWorm]

Its optimistic to think this will decrease gas prices by even $0.05 per gallon.

The DoE projected that with drilling in the currently banned areas, the U.S. could increases its domestic consumption up to 7% by 2030 and the effects on prices would be "insignificant".

Populism much?

[Ashliana]

The country isn't in a recession noob.

I didn't say it was in a recession, idiot! I made the exact OPPOSITE point! "You suck at reading," to use your own words.


Politicians though like to use fear to talk up economic uncertainly, see Obama (he is such a hypocrite, fear of terrorism is not the only fear politicians use Barack).

I love these out of left field no-bearing-on-the-topic asides you make though. I fully expect your next post to mention something about Jesse Jackson & Obama's ballsac.

Right--because actually confronting the economic issues we're facing (confronted by both sides) is somehow scaremongering, while continually warning of impending, terrorist-induced doom, is not.

[Daniel]

1 bag of rice is better than no bags right?



Not if one bag of rice lulls you into complacency or otherwise causes you to not focus on the real problem you're facing.

[Stanley Burrell]

Fuck automotive C.E.O.s. Unbending dipshits. Etc.

[Back]

Why don’t we just take Iraq’s oil? How much worse could we fuck them over?

[RichardCranium]

Why don’t we just take Iraq’s oil? How much worse could we fuck them over?

Isn't that the point of the war?

[Tolwynn]

Fuck automotive C.E.O.s. Unbending dipshits. Etc.

Yeah, those unbending dipshits that strongarmed every single last person that bought a pickup, truck or SUV they really didn't need when there were other perfectly good choices available.

Businesses manufacturing what people actually wanted at the time, who would have ever imagined?

[Back]

Isn't that the point of the war?

If it was, somebody dropped the fucking ball. A long fucking time ago.

[Daniel]

Yeah, those unbending dipshits that strongarmed every single last person that bought a pickup, truck or SUV they really didn't need when there were other perfectly good choices available.

Businesses manufacturing what people actually wanted at the time, who would have ever imagined?

Keynes?

[Stanley Burrell]

Yeah, those unbending dipshits that strongarmed every single last person that bought a pickup, truck or SUV they really didn't need when there were other perfectly good choices available.

Businesses manufacturing what people actually wanted at the time, who would have ever imagined?

Hi. (http://dictionary.reference.com/browse/facetious)

You think I have any problem with a garage full of Jesus-fish Hummer owners' loss of money at the pump? I'm the one laughing at that. A lot.

[Sean of the Thread]

YAY maybe some new jobs in FLORIDA

[BigWorm]

And it might even reduce gas prices by 1%!

[Stanley Burrell]

I'm doing $3.00 a gallon after my next oil change. I get to trade this in for my next Chevy once I add a few more miles. It's not like the dealership can tell that I used mom and pops gasoline for the remaining mileage before the upgrade anyway.

[Sean of the Thread]

I actually just took my first EVER public bus ride today for $1.50 for about 7 miles.

That's a deal compared to the 13mpg my dodge ram gets plus I got to ride out with about 15 crazy Japanese tourists.

[Daniel]

Public Transpo FTW

[BigWorm]

Public Transpo FTW

You can thank Detroit for fucking that up too.

[Sean of the Thread]

It's smooth here just tedious for short distances. Shit load of stops and crazies and the bus drivers drive like my wife.

Today was fun tho I'll use it again. This low 20's fat bitch thought I was looking at her cleavage or something when I noticed her cords going up under her hair. It looked like the same mp3 player I had on so it just caught my attention.

Her next step was to take an empty grocery bag and cover her tits. I laughed out loud and changed seats so I was looking in the other direction. Bitch was lucky I even noticed her tits instead of just the mp3 player.

[crb]

Not if one bag of rice lulls you into complacency or otherwise causes you to not focus on the real problem you're facing.
So put a label on the bag that says "don't be complacent" and have the profits from the bag of rice sale fund investment in a rice replacement, crop, but don't for crying out loud restrict access to the rice.

[Back]

So put a label on the bag that says "don't be complacent" and have the profits from the bag of rice sale fund investment in a rice replacement, crop, but don't for crying out loud restrict access to the rice.

This person seems like they drop the ball. A lot. A huge empty waste of a grassy space unless you are tossing or hitting a ball around with a bunch of people.

[Daniel]

So put a label on the bag that says "don't be complacent" and have the profits from the bag of rice sale fund investment in a rice replacement, crop, but don't for crying out loud restrict access to the rice.

I have no problems with this. As soon as I see this espoused by those crying for oil drilling, I'll endorse it.

I suspect I'll be waiting a long time.

[Sean of the Thread]

I guess the economics in this thread reminded me but I wish I had my $80,000 for the money market at 3.75% currently. Walking and riding by 50 banks today might have something to do with it however. There is one every block.

[Kembal]

I'd like to see something done about speculators first before any major policy measures are done. Knocking off $20 to $30 a barrel would give some breathing room and let everyone sanely evaluate energy policy to come up with a comprehensive solution. (and it would also let price reflect the true supply-demand equilibrium)

[Sean of the Thread]

What if the speculators are the government?


:tinfoil hat:

[ClydeR]

The president is supposed to be in charge of international affairs anyway. Since all this oil is offshore, then the president shouldn't worry about what Congress thinks.

[Sean of the Thread]

Don't our fed powers extend (officially) only 12 miles offshore? Couldn't we do whatever the fuck we wanted to in the gulf if it wasn't for the treehuggers bitching?

[Kembal]

That's for territorial waters, which means waters under complete soveriegn control (except for innocent passage of foriegn ships). A nation's exclusive economic zone extends 200 miles past that.

[Latrinsorm]

So put a label on the bag that says "don't be complacent" and have the profits from the bag of rice sale fund investment in a rice replacement, crop, but don't for crying out loud restrict access to the rice.Because putting nutrition facts on food kept everyone from getting fat, right?

[Stanley Burrell]

Because putting nutrition facts on food kept everyone from getting fat, right?

It was to seperate the tarr'rists from the zero transfat patriots, hippy.

[Ashliana]

Transfat labelling actually helps me avoid it. Believe it or not, some people do religiously follow these things.

[Sean of the Thread]

Transfat labelling actually helps me avoid it. Believe it or not, some people do religiously follow these things.

Because you're a fat douchbag.

[Warriorbird]

Should you really be calling anybody fat?

[Sean]

Public transportation is terrible in New Jersey if you're going anywhere but a mall, Penn Station Newark, or New York City. For me to take public transportation for work I'd essentially have to take a bus/train into NYC for $6 then take the bus to my office for another $3 each way.. and it'd take me about 2 hours each way. Or I can drive each way spend less on gas and have a combined 50 minute commute. But if there were a way to take public transportation I would, it's nice being able to read and relax on your way to work.

So I'm going to throw my hat in the ring for improving the public transportation infrastructure

[Sean of the Thread]

Should you really be calling anybody fat?

I'd certainly bet that I'm more in shape than you any day ticket taker.

[Sean of the Thread]

But if there were a way to take public transportation I would, it's nice being able to read and relax on your way to work.


There is no relaxing on our pub trans. He drove like a maniac and I had to grab onto bars at least 10 times to keep from sliding or falling off my seat.

[crb]

I'd like to see something done about speculators first before any major policy measures are done. Knocking off $20 to $30 a barrel would give some breathing room and let everyone sanely evaluate energy policy to come up with a comprehensive solution. (and it would also let price reflect the true supply-demand equilibrium)
I believe every serious investigation has shown that speculators are not driving up the price.

Agree with that or not, that is what they've found.

[Sean of the Thread]

I believe they are. Just my personal opinion.

[Sean of the Thread]

Seriously... why do the Democrats bitch and moan about offshore drilling or any domestic drilling for that matter?

[Clove]

I believe every serious investigation has shown that speculators are not driving up the price.

Agree with that or not, that is what they've found.You think so hmm?

http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080520_524455.htm?chan=top+news_top+news+index _top+story

But I'll bite, when supply and demand are close to even, how DO you account for 30% rise in price in 90 days?

By the way oil isn't the only commodity that has risen sharply this year due to speculative demand. Gold went over 1,000 an ounce this January for the first time ever and its value nearly tripled from the last quarter of 2007.

[Sean of the Thread]

I wish I didn't sell my gold back in 2002.

That being said... c'mon it's speculators causing this shit mostly. The demand is just not there. The supply IS there. The rest is speculation.


That being said x2 .... C'MON paying a couple bucks more a fill up isn't that big a deal. SACK UP.

[crb]

I have no problems with this. As soon as I see this espoused by those crying for oil drilling, I'll endorse it.

I suspect I'll be waiting a long time.
Deal.

Write your congressman, I'll write mine. We need a good compromise like this. Ask them to open up drilling, not just off shore, but the oil shale places out west as well, and ask that all leasing royalties paid to the gov go to fund alternative energy research & subsidies.

[Ashliana]

Because you're a fat douchbag.

Thank you--you couldn't even spell your insult correctly. But in any case, transfat isn't something you avoid in order to not become fat, idiot. It's bad for your heart.

[Sean of the Thread]

Add some E to your diet and my post is true. Fat douchenozzle.

[Ashliana]

Key difference between your insults and mine? You're making a baseless assumption about my weight, whereas I can very clearly see that you're a dumbass.

[Latrinsorm]

Transfat labelling actually helps me avoid it. Believe it or not, some people do religiously follow these things.Just like some (few) people own hybrids, or bikes. :yes:

[Daniel]

You think so hmm?

http://www.businessweek.com/bwdaily/dnflash/content/may2008/db20080520_524455.htm?chan=top+news_top+news+index _top+story

But I'll bite, when supply and demand are close to even, how DO you account for 30% rise in price in 90 days?

By the way oil isn't the only commodity that has risen sharply this year due to speculative demand. Gold went over 1,000 an ounce this January for the first time ever and its value nearly tripled from the last quarter of 2007.

Notice he said "Serious" study, which is a euphanism for anything that validates his prospective.

[Clove]

Notice he said "Serious" study, which is a euphanism for anything that validates his prospective.Touche.

[Seran]

Let's see, overzealous lending and large investment funds buying up shaky mortgage securities made possible by the Gramm-Leech-Bliley Act invoke a mortgage melt-down of unprecedented proportions. So while, literally the housing market atomizes, the same funds who were bailed out by the Fed are looking for new ways to make a cheap buck--namely the poorly regulated commodity futures market. Here, they find a relatively steady market open to manipulation thanks to some shady Enron rulings and NOW we have an oil futures market where total daily transactions in paper 'barrels' of oil exceed the daily consumption of the US by several times.

Speculation is the very real reason why we're seeing oil over fifty dollars a barrel, and is exactly the reason why there has not been a protracted decline in the price per barrel in oil; namely investors leaping at every possible news release like a pack of rabid dogs in order to drive the price higher and protect their poorly hedged trades.

[Seran]

As a clarification--Why were investment funds so eager to spend the money entrusted to them?

They new ultimately a freshly IPO'd Fannie May and Freddie Mac just teeming with taxpayer dollars would be there to bail them out. Which is exactly what we're seeing here.

[crb]

Notice he said "Serious" study, which is a euphanism for anything that validates his prospective.
No by serious I mean investigations undertaken by the government. SEC, etc. There have been investigations, they found no wrong doing.

The oil futures market is poorly understood by most people, and I'm not going to bother explaining it here, its too complex. Suffice it to say, not everyone who buys a futures contract for oil is an individual profiteering speculator. And it is these long term futures contracts that would indeed be affected by a lift of the drilling ban.... because they're futures, by definition. The largest purchases of oil are in fact... companies that use the oil to do things.

What is your solution? Tell people they can't buy a commodity in the US (they'll do it overseas anyways), price controls, anything else out of the Marx playbook?

If you want people to stop investing in oil futures contracts, do three things.

1. Give them a shock to get them to take a loss, make future oil prices go down. Opening up drilling is one way.

2. Strengthen the fucking dollar already. A big chunk of oil prices is dollar weakness.

3. Make other investments look better. People are investing in commodities because nothing else works right now. We need some regulations to stop banks from marking to market their mortgage backed securities before they have actually realized a loss. Do that, maybe lower rates a little more (for a very brief period of time, then raise them). There are other things.

[Seran]

The largest purchases of oil are in fact... companies that use the oil to do things.

Is this an informed statement that you're making, because if it is I would greatly like to see your sources for information on crude oil purchases.

I however am willing to bet you're making an assumption here. Considering the CFTC which regularly publishes it's data on commercial vs. non-commercial contract purchasers only oversees a portion of the market; while ICE largely deals with non-producers, but does not publically report on trading activities but represents several very large contracts.

Please support your argument.

[crb]

You think a trader has a couple million gallon tank of oil in his backyard?

Futures contracts may go around and around and around, but in the end, they're bought by people who need the oil, because people who don't need oil don't want it. This is how big companies who need oil lock in or hedge against rising fuel costs.

I could spend a couple hours Google to find all the articles I've read on this topic in the past few months. And maybe start TIVOing CNBC 24/7, then pulling clips into my PC and posting them on YouTube, but I rather don't have the time, do your own homework.

I will leave you with one article, from the NYT so you know it just some conservative shill.

http://www.nytimes.com/2008/07/13/business/13view.html?em&ex=1216180800&en=285756f6d4990321&ei=5087%0A



With the stunning rise in oil prices, both presidential candidates have been tempted to demonize market participants. Senator McCain has complained about the “obscene profits” of oil companies and called for a “thorough and complete investigation of speculators.” By contrast, most economists see nothing more sinister than the forces of global supply and demand at work. There is little benefit, and potentially much harm, in the candidates’ populist finger-pointing.

[Daniel]

You think a trader has a couple million gallon tank of oil in his backyard?

Futures contracts may go around and around and around, but in the end, they're bought by people who need the oil, because people who don't need oil don't want it. This is how big companies who need oil lock in or hedge against rising fuel costs.

I could spend a couple hours Google to find all the articles I've read on this topic in the past few months. And maybe start TIVOing CNBC 24/7, then pulling clips into my PC and posting them on YouTube, but I rather don't have the time, do your own homework.

I will leave you with one article, from the NYT so you know it just some conservative shill.

http://www.nytimes.com/2008/07/13/business/13view.html?em&ex=1216180800&en=285756f6d4990321&ei=5087%0A


Lol @ pointing to someone's opinion as fact.

Anyway, I liked this one: TAX THE USE OF ENERGY Senator Obama wins a point by opposing a summer gas tax holiday, a McCain proposal that economists greeted with derision. Most economists advocate increased taxes on energy products. The recent response of consumers to higher gas prices — including the increased use of mass transit and greater purchases of small cars, scooters, and even bicycles — demonstrates that the price mechanism is the most reliable way to reduce energy consumption and to curtail a variety of driving-related problems.

[Clove]

Let's see, overzealous lending and large investment funds buying up shaky mortgage securities made possible by the Gramm-Leech-Bliley Act invoke a mortgage melt-down of unprecedented proportions. So while, literally the housing market atomizes, the same funds who were bailed out by the Fed are looking for new ways to make a cheap buck--namely the poorly regulated commodity futures market. Here, they find a relatively steady market open to manipulation thanks to some shady Enron rulings and NOW we have an oil futures market where total daily transactions in paper 'barrels' of oil exceed the daily consumption of the US by several times.

Speculation is the very real reason why we're seeing oil over fifty dollars a barrel, and is exactly the reason why there has not been a protracted decline in the price per barrel in oil; namely investors leaping at every possible news release like a pack of rabid dogs in order to drive the price higher and protect their poorly hedged trades.Yeah, when I said this months ago it was called a "conspiracy theory" (but I still <3 Longshot).

Additional pressures are a weak dollar driving shifts of currency to commodities and the ordinary shift to commodities following a boom cycle.

Many commodities have been soaring this year.

[Clove]

No by serious I mean investigations undertaken by the government. SEC, etc. There have been investigations, they found no wrong doing.The SEC doesn't oversee commodity trading the CFEC does and their experts have already testified before Congress that flaws in the market legislation are, among other things allowing institutional traders to exploit a "cash short" loophole and it is having the effect of inflating the price of oil artificially.

Economists may disagree, but it has by NO MEANS been proven that the recent spikes are a result of fundemental pressures. Supply is nearly dead even with demand (are you reading about oil shortages anywhere in the world), and that simple fact alone indicates that a price increase is coming from somewhere else.

http://gravity.dnsprotect.com/~gsplayer/forum/showpost.php?p=732069&postcount=65

[Daniel]

To be fair, this is the same guy who said that the bulk of the current recession is attributible to the fact that people think Obama will win the election.

[Fallen]

Hah, Daniel.

[Gan]

Let's see, overzealous lending and large investment funds buying up shaky mortgage securities made possible by the Gramm-Leech-Bliley Act invoke a mortgage melt-down of unprecedented proportions. So while, literally the housing market atomizes, the same funds who were bailed out by the Fed are looking for new ways to make a cheap buck--namely the poorly regulated commodity futures market. Here, they find a relatively steady market open to manipulation thanks to some shady Enron rulings and NOW we have an oil futures market where total daily transactions in paper 'barrels' of oil exceed the daily consumption of the US by several times.

Speculation is the very real reason why we're seeing oil over fifty dollars a barrel, and is exactly the reason why there has not been a protracted decline in the price per barrel in oil; namely investors leaping at every possible news release like a pack of rabid dogs in order to drive the price higher and protect their poorly hedged trades.

/Agreed

[crb]

Lol @ pointing to someone's opinion as fact.

Anyway, I liked this one: TAX THE USE OF ENERGY Senator Obama wins a point by opposing a summer gas tax holiday, a McCain proposal that economists greeted with derision. Most economists advocate increased taxes on energy products. The recent response of consumers to higher gas prices — including the increased use of mass transit and greater purchases of small cars, scooters, and even bicycles — demonstrates that the price mechanism is the most reliable way to reduce energy consumption and to curtail a variety of driving-related problems.
What, are you going to pick one point from the article and laud it but ignore the others? I'll never dispute that the gas tax holiday was purely political. I think it was a brilliant political move, but it was purely political.



To be fair, this is the same guy who said that the bulk of the current recession is attributible to the fact that people think Obama will win the election.

This coming from the loser who said all black people are dumb?

(see... I can make up shit you didn't say as well).

[crb]

The SEC doesn't oversee commodity trading the CFEC does and their experts have already testified before Congress that flaws in the market legislation are, among other things allowing institutional traders to exploit a "cash short" loophole and it is having the effect of inflating the price of oil artificially.

Economists may disagree, but it has by NO MEANS been proven that the recent spikes are a result of fundemental pressures. Supply is nearly dead even with demand (are you reading about oil shortages anywhere in the world), and that simple fact alone indicates that a price increase is coming from somewhere else.

http://gravity.dnsprotect.com/~gsplayer/forum/showpost.php?p=732069&postcount=65
http://www.reportonbusiness.com/servlet/story/RTGAM.20080710.wcftc0710/BNStory/Business

Do your own fucking homework next time.



CFTC says speculators not to blame for record oil prices



The other agencies in the task force include the Treasury Department, the Securities and Exchange Commission, the New York Federal Reserve, the Federal Energy Regulatory Commission and the Energy Information Administration.

[Clove]

http://www.reportonbusiness.com/servlet/story/RTGAM.20080710.wcftc0710/BNStory/Business

Do your own fucking homework next time.Thanks for quoting the headline, which is disengenuous. Now let's look at the actual article, dipshit.


“We have no evidence that people are hoarding oil,” CFTC Chairman Walter Lukken told a House Appropriations subcommittee.

He also said the CFTC doesn't “see systemically in the current market” that traders are “working together” to drive up prices. No evidence that speculators are working together to drive up the prices. That's not the same as speculation is not driving up the prices- only that it isn't part of a combined strategy.


“We haven't evidence that speculators are broadly driving these prices,” Mr. Lukken said.We haven't evidence, is NOT the same as "we've proven that speculators aren't driving the price of oil up"

[crb]

NEWSFLASH

In testimony to congress 4 seconds ago, which I watch because again, I like to keep abreast of these things. Fed Chairman Ben Bernanke said that oil speculation is not a significant contributor to the rise in oil prices.

Shall I save the recording and upload it to youtube or will you believe me?

[crb]

Thanks for quoting the headline, which is disengenuous. Now let's look at the actual article, dipshit.

No evidence that speculators are working together to drive up the prices. That's not the same as speculation is not driving up the prices- only that it isn't part of a combined strategy.

We haven't evidence, is NOT the same as "we've proven that speculators aren't driving the price of oil up"
Oh... so they're guilty until proven innocent I didn't know.

[Clove]

I hate to say that prevailing experts disagree but...


"Recently, spot prices have risen far above the marginal cost of production and far-out, forward contracts have risen much faster than spot prices. Price charts have taken on a parabolic shape which is characteristic of bubbles in the making," said George Soros. Testimony before Senate Commerce Committee 6/3/08

"What is clear is that the vast majority of Index Speculators do not trade based on the underlying supply and demand fundamentals of the individual physical commodities. Therefore, their trading decisions damage the price discovery function of the commodities futures markets. Testimony of Michael G. Masters, Managing Member and Portfolio Manager, Masters Capital Management, L.L.C. 6/23/08

"We...note quite simply that there has been a long-term trending flow of buying into this market that has greatly expanded open interest and trading volume...we only see higher prices as undermining the fundamentals...making it that more difficult to pin the record prices on a fundamental cause," said Tim Evans, Citi Futures Perspective, "PM Energy News & Views" 6/5/08

"Commodities futures prices are the benchmark for the prices of actual physical commodities, so when index speculators drive futures prices higher, the effects are felt immediately in spot prices and the real economy. So there is a direct link between commodities futures prices and the prices your constituents are paying for essential goods." - Michael Masters, Managing Member and Portfolio Manager, Masters Capital Management, L.L.C., The Hill 6/17/08

"I firmly believe that major investment banks, commodity index funds, and other financial speculators have played a key role in the current crude oil price bubble." Testimony of Fadel Gheit, Managing Director and Senior Oil Analyst, Oppenheimer Equity Research 6/23/08

"Our conclusion from this study is that we are seeing the classic ingredients of an asset bubble." Lehman Brothers, "Energy Special Report" 5/29/08

"As oil prices reach another all-time high, industry and policymakers must take decisive action to address the volatility and unrelenting rise in fuel prices. Reform and transparency in the energy commodity futures market represents a necessary step toward bringing the price of oil in line with supply and demand." - Glenn Tilton, Chairman, President and CEO, United Airlines. CNN Money 6/17/08

"There may now be upwards of $25-$30 of speculation in the price of crude, which continue to soar despite growing stockpiles in the U.S." MF Global Energy Risk Management Group, "We're in Shipped Shape" 5/9/08

"I do not believe the current record crude oil price is justified by market fundamentals of supply and demand. I believe the surge in crude oil price, which more than doubled in the last 12 months, was mainly due to excessive speculation and not due to an unexpected shift in market fundamentals." Testimony of Fadel Gheit, Managing Director and Senior Oil Analyst, Oppenheimer Equity Research 6/23/08

"The increasing prevalence of futures contracts has transformed the nature of oil markets. It is no longer only about the value of oil as an energy commodity, but also... oil as a financial asset." Goldman Sachs, "Energy Roundup: Oil Bulls Take Charge" 10/19/07

"Commodities futures markets exist solely for the benefit of bona fide physical hedgers, the producers and consumers of actual physical commodities. These markets do not exist for the purpose of speculation." Testimony of Michael G. Masters, Managing Member and Portfolio Manager, Masters Capital Management, L.L.C. 6/23/08

"What has driven the market so far, in our view, is that such a high percentage of the speculative trade has become aligned in one direction." Citi Futures Perspective 6/12/08

John Hofmeister, President, Shell Oil Co...pegged the proper range [of oil] "somewhere between $35 and $65 a barrel." Bloomberg 5/22/08

"...we are seeing the classic ingredients of an asset bubble...Larger allocations by institutional investors...desiring to increase their commodity exposure, play a role." Lehman Brothers, "Energy Special Report" 5/29/08

"Unfortunately, Wall Street is not good at foreseeing the long-term consequences of the instruments that they create. We have to look no further than the recent subprime debacle, which has now grown into a worldwide financial crisis, to see where unbridled financial innovation can lead." Testimony of Michael G. Masters, Managing Member and Portfolio Manager, Masters Capital Management, L.L.C. 6/23/08

"Large investment banks keep fanning the fire by making exaggerated oil price predictions that they believe they can help achieve, given the government's inability or unwillingness to hold them accountable." Testimony of Fadel Gheit, Managing Director and Senior Oil Analyst, Oppenheimer Equity Research 6/23/08

"Now that oil has in effect become a new asset class, we should make sure to have the right regulatory framework, and make sure that we do not give incentives to invest in one asset class over the others, be it through regulatory loopholes or a lower transaction costs such as margin calls." Testimony of Roger Diwan, Partner and Head of Financial Advisory, PFC Energy 6/23/08

"There is a loophole in American energy regulation that permits oil speculators to use foreign commodities exchanges to drive prices far above what they should be in a normal, free-market situation," said Gerry Ramm. Inland Oil Co. Washington Oil Marketers Association (WOMA) Press Release 5/29/08

"Excessive speculation on energy-trading facilities is the fuel that is driving this runaway train in crude oil prices." - Gerry Ramm, President of Inland Oil. Money and Markets 6/6/08

"[C]ombined crude oil futures volume...reached a new record...about 22 times the level of global daily demand. With the futures market this much larger than the underlying physical market, we think the potential for a speculative bubble to form is certainly expanded," said Tim Evans, Citi Futures Perspective, "PM Energy News & Views" 6/12/08

"...let me say that many of the people who are profiting from the practices outlined in my testimony will try to scare you into believing that futures trading in U.S. commodities will simply move offshore. This is an empty threat." Testimony of Michael G. Masters, Managing Member and Portfolio Manager, Masters Capital Management, L.L.C. 6/23/08

"Prices are going to $150 a barrel "because a couple of economists at Goldman Sachs and Morgan Stanley said so." - Stephen Schork, The Schork Report 6/11/08

[Daniel]

This coming from the loser who said all black people are dumb?

(see... I can make up shit you didn't say as well).

You know, you should really stop calling people on things that are readily refutable.


A big chunk of the stock market decline right now is already from speculation of Obama winning, ever since he started doing well it has been falling.

Unless of course you want to suggest that the stock market has nothing to do with the recession and vice versa.

[crb]

Here is bernanke's testimoy, I rewound the TIVO to type it out.

Congressman says we think speculation is a big chunk of oil prices (one of three major factors), what say you?

Bernanke:

Well I think uh as I said uh based on the evidence that is available I would not estimate that speculation or particularly manipulation is a significant part in the rise in oil prices. uh that said um the cftc and others are looking at the data and trying to evaluate that. These are very difficult matters and we don't want to that will uh stop the futures markets from having their legitimate functions serving their legitimate functions providing liquidity and hedging. um so my advice would be to go slow and carefully and um take the um insights you would get from the cftc and others who are directly associated directly overseeing these activities. Despite the concerns and I understand the concerns with gas prices. I don't think its likely that you can have a big affect on gas prices with short term moves in the futures market and I would urge careful deliberate action in this area.


So, I suppose he also doesn't know what he is talking about?

NExt question asked him more about speculation, why he doesn't see it as aproblem2

Bernanke: There are a number of pieces of evidence against the view that speculation is a primary force. I mentioned in my testimony the absense of hoarding or inventories that you would expect to see if speculation was driving prices above the supply and demand equilibrium. Uh there are a number of studies which show there is little or no connection between the open interest taken by commercial traders in futures markets and the subsequent movement in prices. Its also um interesting to note there are many commodities or atleast some commodities that are not traded on futures markets, such as iron ore for example which have had very large increases in prices. So um I think the evidence is fairly weak um that said. I I I think that uh transparency in futures markets um information available to the overseer the cftc is uh a positive thing and uh I expect the cftc will come forward with some suggestions in that regard. But I just don't think that it will be uh a magic bullet to address this very difficult problem of high oil and commodity prices.

Congressman: In other words it may be helpful to provide more transparency but in the end the supply demand equillibrium will only be affected by more supply or less demand:

Bernanke: I believe that to be true, yes.

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Speculation is an excuse used by politicians and pundits because it makes a convenient scapegoat. But the experts don't agree. You can call me a douche who doesn't understand what he's talking about but I've now provided 3 sources. The CFTC and their task force which does include the SEC. Ben Bernanke, and an economist writing for the NYT. :club:

[crb]

You know, you should really stop calling people on things that are readily refutable.



Unless of course you want to suggest that the stock market has nothing to do with the recession and vice versa.
I explained to you in the other thread how uncertainty about capital gains taxes encourage investors to sell. That is a verifiable fact. If you think capgains is going up, you will sell before it, to save yourself 10 or 15% in taxes. Furthermore you will think that other people think like you, and so you will want to sell ahead of the curve, as if you wait to long others will start selling first and then prices will go down, hurting you even more. Go read the other thread.

[crb]

I hate to say that prevailing experts disagree but...
You quoted George Soros... roflmao. I'm not sure who most of the others are by name, but if they're as unbiased as George Soros it doesn't bold well.

I quoted Ben Bernanke.

Maybe we both have experts backing up our positions, hmm? Maybe you can admit that talk of speculation is possibly overblown, or that it is at the very least the jury is still out. Rather than blaming all our ills on it.

[Stanley Burrell]

GO GO R-TEAM QUOTE FEATURE:


In physical chemistry, the van der Waals force is the attractive or repulsive forces between molecules (or between parts of the same molecule) other than those due to covalent bonds or to the electrostatic interaction of ions with one another or with neutral molecules.[1] The term includes:

dipole–dipole forces
hydrogen bonding
London (instantaneous dipole–induced dipole) forces
induced-dipole induced-dipole (dispersion forces)
It is also sometimes used loosely as a synonym for the totality of intermolecular forces. Van der Waals forces are relatively weak compared to normal chemical bonds, but play a fundamental role in fields as diverse as supramolecular chemistry, structural biology, polymer science, nanotechnology, surface science, and condensed matter physics. It is named after the Dutch scientist Johannes Diderik van der Waals. Van der Waals forces define the chemical character of many organic compounds. They also define the solubility of organic substances in polar and non-polar media. In low alcohols, the properties of the polar hydroxyl group dominate the weak intermolecular forces of Van der Waals. In higher alcohols, the properties of the unpolar alkyl rest (R) dominate and define the solubility. Van der Waals forces grow with the length of the non polar part of the substance.

Van der Waals forces include attractions between atoms, molecules, and surfaces. They differ from covalent and ionic bonding in that they are caused by correlations in the fluctuating polarizations of nearby particles (a consequence of quantum dynamics).

Intermolecular forces have four major contributions. In general an intermolecular potential has a repulsive part, prohibiting the collapse of molecular complexes, and an attractive part. The attractive part, in turn, consists of three distinct contributions:

The electrostatic interactions between charges (in the case of molecular ions), dipoles (in the case of molecules without inversion center), quadrupoles (all molecules with symmetry lower than cubic), and in general between permanent multipoles. The electrostatic interaction is sometimes called Keesom interaction or Keesom force after Willem Hendrik Keesom.
The second source of attraction is induction (also known as polarization), which is the interaction between a permanent multipole on one molecule with an induced multipole on another. This interaction is sometimes measured in debyes after Peter J.W. Debye.
The third attraction is usually named after Fritz London who himself called it dispersion. This is the only attraction experienced by noble gas atoms, but it is operative between any pair of molecules, irrespective of their symmetry.
Returning to nomenclature: some texts mean by the van der Waals force the totality of forces (including repulsion), others mean all the attractive forces (and then sometimes distinguish van der Waals-Keesom, van der Waals-Debye, and van der Waals-London), and, finally some use the term "van der Waals force" solely as a synonym for the London/dispersion force. So, if you come across the term "van der Waals force", it is important to ascertain to which school of thought the author belongs.

All intermolecular/van der Waals forces are anisotropic (except those between two noble gas atoms), which means that they depend on the relative orientation of the molecules. The induction and dispersion interactions are always attractive, irrespective of orientation, but the electrostatic interaction changes sign upon rotation of the molecules. That is, the electrostatic force can be attractive or repulsive, depending on the mutual orientation of the molecules. When molecules are in thermal motion, as they are in the gas and liquid phase, the electrostatic force is averaged out to a large extent, because the molecules thermally rotate and thus probe both repulsive and attractive parts of the electrostatic force. Sometimes this effect is expressed by the statement that "random thermal motion around room temperature can usually overcome or disrupt them" (which refers to the electrostatic component of the van der Waals force). Clearly, the thermal averaging effect is much less pronounced for the attractive induction and dispersion forces.

The Lennard-Jones potential is often used as an approximate model for the isotropic part of a total (repulsion plus attraction) van der Waals force as a function of distance.

Van der Waals forces are responsible for certain cases of pressure broadening (van der Waals broadening) of spectral lines and the formation of van der Waals molecules.

See this URL for an introductory description of the van der Waals force (as a sum of attractive components only).

London dispersion forces, named after the German-American physicist Fritz London, are weak intermolecular forces that arise from the interactive forces between temporary multipoles in molecules without permanent multipole moments. London dispersion forces are also known as dispersion forces, London forces, or induced dipole–dipole forces.

London forces can be exhibited by nonpolar molecules because electron density moves about a molecule probabilistically (see quantum mechanical theory of dispersion forces). There is a high chance that the electron density will not be evenly distributed throughout a nonpolar molecule. When electrons are unevenly distributed, a temporary multipole exists. This multipole will interact with other nearby multipoles and induce similar temporary polarity in nearby molecules. London forces are also present in polar molecules, but they are only a small part of the total interaction force.[citation needed]

Electron density in a molecule may be redistributed by proximity to another multipole. Electrons will gather on the side of a molecule that faces a positive charge and will retreat from a negative charge. Hence, a transient multipole can be produced by a nearby polar molecule, or even by a transient multipole in another nonpolar molecule.

In vacuum, London forces are weaker than other intermolecular forces such as ionic interactions, hydrogen bonding, or permanent dipole-dipole interactions.[citation needed]

This phenomenon is the only attractive intermolecular force at large distances present between neutral atoms (e.g. a noble gas), and is the major attractive force between non-polar molecules, (e.g. nitrogen or methane). Without London forces, there would be no attractive force between noble gas atoms, and they wouldn't exist in liquid form.

London forces become stronger as the atom or molecule in question becomes larger. This is due to the increased polarizability of molecules with larger, more dispersed electron clouds. This trend is exemplified by the halogens (from smallest to largest: F2, Cl2, Br2, I2). Fluorine and chlorine are gases at room temperature, bromine is a liquid, and iodine is a solid. The London forces also become stronger with larger amounts of surface contact. Greater surface area means closer interaction between different molecules.

The London-van der Waals forces is related to the Casimir effect for dielectric media, the former the microscopic description of the latter bulk property. The first detailed calculations of this were done in 1955 by E. M. Lifshitz.[2]

For further investigation, one may consult the University of St. Andrews' levitation work in a popular article: Science Journal: New way to levitate objects discovered, and in a more scholarly version: New Journal of Physics: Quantum levitation by left-handed metamaterials, which relate the Casimir effect to the gecko and how the reversal of the Casimir effect can result in physical levitation of tiny objects.

The ability of geckos to climb on sheer surfaces has been attributed to van der Waals force.[3] A recent study suggests that water molecules of roughly monolayer thickness (present on all surfaces) also play a role.[4] Nevertheless, a gecko can hang on a glass surface using only one toe. Efforts continue to create a synthetic "gecko tape" that exploits this knowledge. So far, research has produced some promising results - early research yielded an adhesive tape[5] product, which only obtains a fraction of the forces measured from the natural material, and new research[6] is being developed with the goal of featuring 200 times the adhesive forces of the natural material. Researchers at Rensselaer Polytechnic Institute and the University of Akron announced in a paper published in the June 18–22, 2007 issue of the Proceedings of the National Academy of Sciences that they have created a synthetic “gecko tape” with four times the sticking power of a natural gecko foot.[7]

Researchers at Stanford University and Carnegie Mellon University recently developed a gecko-like robot which uses synthetic setae to climb walls.

Notice how I bolded the important fact you dirty liberals failed to miss and made a one-liner to prove my point of being 110% spot-on? I mean, that's obviously why we need a Republican front-runner.

Gecko-like robots are what most of these Obamaniacs are failing to notice.

[Clove]

Yeah Bernanke has been saying that for a while. And he's essentially saying there isn't a conspiracy to raise prices- there doesn't need to be. Need some more (I'll try and keep away from politicians and pundits)? Fine.


"There is probably nowhere in the five-year history of the current rally with a comparable move that is not associated with an event...there is little doubt of the speculative value of a strategically vital commodity like oil." MF Global Energy Overview, "The Daze of Our Lives" 6/9/08

"How much fluff is in the market because of speculation is anyone's guess." - Robert Mann, R.W. Mann & Company, Inc. Forbes 6/16/08

"Today's crude oil prices are the result of a perfect storm: demand pressures on supply in both physical and financial markets, very inelastic supply and demand in the physical markets, and rapid increases in demand (relative to supply) in the financial markets." Testimony of Edward N. Krapels, Director, Energy Security Analysis, Inc. 6/23/08

"The bad guy is the deregulation of oil and energy commodities. There's a huge quantity of trading that takes place without any regulation. That started in 2000, the famous ‘Enron Loophole,' which created all kinds of problems in electricity, now in energies." - Mark Cooper, Consumer Federation of America. CBS News 6/10/08

"These...geopolitical events, sometimes, are almost fabricated. Someone who buys paper...[a]nd by speculating on it they can push up the price," said Michael J. Ferrante, Executive Director and President, Massachusetts Oilheat Council. Worchester Telegram & Gazette News 6/9/08

"I find it ironical that we constantly require more data transparency from the OPEC producers be it on their production or reserve data but we cannot manage to do the same in our own backyard on one of the most crucial if not the key determinant of oil price formation." Testimony of Roger Diwan, Partner and Head of Financial Advisory, PFC Energy 6/23/08

"Beleaguered airlines are slashing capacity...While there is little doubt of the speculative value of a strategically vital commodity like oil, it can easily become overvalued from time to time. We think this is such a time." MF Global Energy Overview 6/9/08

"...the hyperbolic rise in oil prices witnessed thus far in 2008 suggests to us that speculators now dominate the oil markets," said Michael Jones, Riverfront Investment Group. AFP 6/16/08

As these fundamentals unfolded, another key shift occurred, what I call the financialization of oil market: as the OPEC threat of ramping up production has been removed as a significant factor in oil markets, a whole set of new actors have been drawn into the futures markets, and started looking at the fundamentals of supply and demand in a new way...." Testimony of Roger Diwan, Partner and Head of Financial Advisory, PFC Energy 6/23/08

"The bubble is superimposed on an upward trend in oil prices that has a strong foundation in reality," said George Soros. Bloomberg 6/3/08

"In my opinion, crude oil prices have become decoupled from any reality except the reality of money flow." - Tom Kloza, OPIS. Opisnet.com 6/5/08

"The data conclusively shows that the dramatic escalation in oil prices has more to do with speculators than physical supply and demand issues," said Gerry Ramm, Inland Oil Co. Washington Oil Marketers Association (WOMA) Press Release 5/29/08

"More and more senators are questioning the adequacy of the [Commodity Futures Trading Commission's (CFTC)] regulatory oversight, and more and more are bothered by the role that speculation and non-commercial, institutional investors are having in preventing energy markets from functioning properly," said Bill Wicker, a spokesman for the Energy and Natural Resources Committee. The Hill 6/9/08

"There is some not-so-wonderful symmetry- - - the crude price on this day a year ago was $61.47 bbl, so we have now seen an increase of more than two-fold. I continue to believe that this is largely the result of speculative excess..." - Tom Kloza, OPIS. Opisnet.com 6/25/08

"In our view, 2007 may well have been the top, the peak in terms of U.S. gasoline demand. There is much talk about peak oil supply these days, however, we think something else is at hand, peak demand." - Daniel Yergin, Chairman, Cambridge Energy Research Associates. Bloomberg 6/25/08

"Curbing the speculative element might cause prices to fall..." - Mark Pervan, Senior Commodity Strategist, Australia and New Zealand Banking Ltd. Bloomberg 6/27/08

"You've got speculation in a lot of commodities and that seems [to be] driving up the price," said Robert Aliber, Professor of Economics at the University of Chicago Graduate School of Business. Bloomberg 6/15/08

There are fundamental reasons why oil will stay high. It's my feeling that the move from $60 to $130 in the past 12 months is maybe 55 percent fundamentals and 45 percent speculation," said Trevor Hanger, head trader at Brookline Avenue Partners. The Herald Bulletin 6/12/08

"Absolutely it's a bubble...Crude oil prices have risen steadily from November 2001 until September 2007. Prices rose $60 - from $20 a barrel to $80 a barrel," said oil industry analyst Stephen Schork. San Jose Mercury News
6/10/08

"Demand and supply fundamentals argue for oil priced well below $100 per barrel; yet financial speculators and ...investors are bidding up...oil." Economy.com Chief Economist Mark Zandi 6/10/08

"The... market is not driven by...demand and supply but entirely by price expectations...There are futures contracts being bought and sold for 2016 at $138 - only astrologers pretend that they can forecast that far ahead" Financial Times OpEd by Lord Desai, emeritus professor of economics at the London School of Economics 6/5/08

"The amount of money going into oil speculation is driving the price" - Judy Dugan, research director at Consumer Watchdog. CNN Money 6/5/08

[crb]

anotherquestion,

Bernanke: With almost no exceptions speculators in commodities never take delivery, they have to sell their position when it comes do. um they are not in anyway using up a physical resource that underlines the contract.

Congressman: The liquidity we're talking about, for those who are not actual users of petroleum, this liquidity is primarily coming from pension funds, is that not correct?

Bernanke: well it depends what side of the transaction you're on. You have people on both sides who are trying to make a bet essentially that oil prices go up or down. but clearly one of the major economic functions of the futures market is to allow those who want to lay off their risk, like an airline for example, the opportunity to sell or to buy forward their fuel so they will not be subject to the risk of price fluctuations. And it is the activities of speculators in those markets that provide the other side of that transaction and makes those markets liquid and allows them to server that function.

Congressman: The airlines are a good example, many airline ceos have been blaming speculators.

Bernanke: well as I've indicated, we I you its worthwhile that there is sufficient transparency and that we're doing all we can to make sure these markets are as efficient as possible. CFTC has the primary responsibility for that, we're happy to work with them and try to support that so, I'm not saying there can't be improvements made in these markets but my best guess as I've indicated a few times now is that I don't think speculative activity perse and specifically not manipulation um is uh the principle cause in the increase in energy and other commodity prices that we have been seeing.

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Hmm... did Ben Bernanke read the PC forums this morning and see my post (http://forum.gsplayers.com/showpost.php?p=762678&postcount=69) or what? Great minds and all that. :p

[Latrinsorm]

Maybe you can admit that talk of speculation is possibly overblown, or that it is at the very least the jury is still out.Hmmmm....
I believe every serious investigation has shown that speculators are not driving up the price.

Agree with that or not, that is what they've found.Hmmmm.....

[crb]

Clove, you have to define speculation vs per malicious manipulation and profiteering. Technically, anyone who buys an investment in anything is speculation. Technically, when an airline hedges fuel costs they're speculating. Speculation such as this is vital to the functioning of the market, it IS the market.

What is your solution? Something from the communist manifesto, disallowing people to buy commodities? Price controls? None of these things would affect ANY international prices because we do not rule the world. And disallowing people from buying commodities or investing in them would take liquidity from those markets which would, as Bernanke said today, make it harder for actual petroleum users to use said markets.

Bitch about normal commodity investing (read: speculation) all you want, if you don't like it, what is your solution?

I'll also point out that your example of supply being equal to demand doesn't mean prices are stable. When things are so tight like that, prices go up, not stay the same. Why? Because small issues (strikes in Brazil, unrest in Nigeria -- yes, two things from the past week or so hurting production), can then make shortages which drastically increase prices. Without the futures market and speculation in a situation where we get a small decrease in supply when demand and supply were equal we could get, overnight, a 40 or 50 or more dollar per barrel jump in oil. The speculation and futures trading moderates that risk by anticipating future demand and supply (speculating). Ie, it provides stability.

Which is why Bernanke differentiates speculation (investing) from malicious manipulation. Speculation (investing) is what makes the markets function. You can't get rid of it.

[crb]

I'll also point out clove that my source was testifying to congress, which is probably a weightier source than an investment bank analyst giving an interview when in the end he (or his firm) may or may not have positions or have clients that may or may not have positions that would or would not benefit from congress coming down on speculators. The point being I think that you should no so readily dismiss the words of who is pretty much the chief US economist when he is testifying under oath to a congressional oversight committee.

[CrystalTears]

You better go call CNN because speculation comes up all the time in their news stories. Go school them.

[Clove]

I'll also point out clove that my source was testifying to congress, which is probably a weightier source than an investment bank analyst giving an interview when in the end he (or his firm) may or may not have positions or have clients that may or may not have positions that would or would not benefit from congress coming down on speculators. The point being I think that you should no so readily dismiss the words of who is pretty much the chief US economist when he is testifying under oath to a congressional oversight committee.Soros was testifying before Congress too. And there have been others who have testified before Congress that a speculation bubble is what is occuring and have outlined specific legislation (spearheaded by Enron) as its source. What about an Economics professor from London, or any of the other several, reliable sources I listed?

[Clove]

The CFTC defines a speculator as a person who “does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.”

Better?

[crb]

The CFTC defines a speculator as a person who “does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.”

Better?
So someone who invests in commodities... and you want to just make that practice illegal? Or did you have another solution?

[crb]

You better go call CNN because speculation comes up all the time in their news stories. Go school them.
Send Ben Bernanke a letter if you disagree with him. I'm not his representative. I happen to value his opinion on the matter, call me crazy.

[Clove]

So someone who invests in commodities... and you want to just make that practice illegal? Or did you have another solution?Gid rid of ICE for starters and re-regulate futures trading so that per CEA mandate the CFTC can monitor “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.” and establish trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.”

[CrystalTears]

Congress Urges Oil Speculation Crackdown (http://www.cbsnews.com/stories/2008/06/23/national/main4203863.shtml?source=RSS&attr=_4203863)


Lawmakers continue to blame large investors for their role in propping up oil prices, pointing out Monday that speculation in crude futures has nearly doubled since 2000.

Pension funds, Wall Street banks and other large investors that have no intention of taking delivery of fuel have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.

After more than a half dozen hearings in Congress on the issue, Democratic House lawmakers said they intend to tighten restrictions on pension funds, investment banks and other large investors that they blame for driving up fuel prices.

[Clove]

Next?

[crb]

Congress Urges Oil Speculation Crackdown (http://www.cbsnews.com/stories/2008/06/23/national/main4203863.shtml?source=RSS&attr=_4203863)
Politicians pandering to the public. I already said that.

When John McCain said he wanted to have a gas tax holiday its public pandering. When congressmen rattle the saber about speculators, still pandering. Both sides do it. You need to be able to recognize what it is.

I'll also point out that that is from 6/23, whereas Bernanke's testimony to congress was today. Maybe they'll change their minds now?

[Daniel]

At least he's tacitly admitting that there is undue speculation in the market.

[CrystalTears]

You can't completely rule it out though. It may still be up to debate, but it's not a closed case as much as you'd like to say it is.

Is a week current enough?

Investors Fight Speculation Charges (http://www.politico.com/news/stories/0708/11572.html)


“One of the themes from the testimonies on Capitol Hill is that people don’t really have a good grasp on to what degree commodities investment is a factor in the rise of oil prices,” said a financial services lobbyist who represents pension funds. Even so, investors in the commodities market have been targeted in at least eight hearings and a dozen bills.

“We were in the market when oil was $30 a barrel and no one was suggesting then that our investment strategy was manipulative or driving up costs,” said Richard Baker, head of the Managed Funds Association.

Speculation is not illegal. But the Organization of the Petroleum Exporting Countries, the International Monetary Fund, Democratic congressional leaders, the presidential candidates and some economists say speculation is having negative effects on the economy. They argue that because the investors do not actually use the oil, their influx into the market is artificially inflating normal supply-and-demand pricing.

“The steady upward climb of the cost of food and energy in recent months is not simply the result of natural market forces at work,” said Sen. Joseph I. Lieberman (I-Conn.). “Our government must step in as soon as possible to protect our consumers and our economy because, against the forces of the speculative markets, the average person simply cannot protect himself or herself.”

[Clove]

More on the real reason behind high oil prices
By F. William Engdahl
Online Journal Contributing Writer

http://onlinejournal.com/artman/publish/article_3325.shtml

Jun 3, 2008, 00:24

As detailed in an earlier article, a conservative calculation is that at least 60 percent of today’s $128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny.

US margin rules of the government’s Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the NYMEX by having to pay only 6 percent of the value of the contract. At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population.

The hoax of Peak Oil -- namely the argument that the oil production has hit the point where more than half all reserves have been used and the world is on the downslope of oil at a cheap price and abundant quantity -- has enabled this costly fraud to continue since the invasion of Iraq in 2003 with the help of key banks, oil traders and big oil majors. Washington is trying to shift blame, as always, to Arab OPEC producers. The problem is not a lack of crude oil supply. In fact the world is in oversupply now. Yet the price climbs relentlessly higher. Why? The answer lies in what are clearly deliberate US government policies that permit the unbridled oil price manipulations.

World oil demand flat, prices boom . . .

The chief market strategist for one of the world’s leading oil industry banks, David Kelly of J.P. Morgan Funds, recently admitted something telling to the Washington Post, “One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong."

One of the stories used to support the oil futures speculators is the allegation that China’s oil import thirst is exploding out of control, driving shortages in the supply-demand equilibrium. The facts do not support the China demand thesis however.

The US government’s Energy Information Administration (EIA) in its most recent monthly Short Term Energy Outlook report concluded that US oil demand is expected to decline by 190,000 b/d in 2008. That is mainly owing to the deepening economic recession. Chinese consumption, the EIA says, far from exploding, is expected to rise this year by only 400,000 barrels a day. That is hardly the "surging oil demand" blamed on China in the media. Last year, China imported 3.2 million barrels per day, and its estimated usage was around 7 million b/d total. The US, by contrast, consumes around 20.7 million b/d.

That means the key oil consuming nation, the USA, is experiencing a significant drop in demand. China, which consumes only a third of the oil the US does, will see a minor rise in import demand compared with the total daily world oil output of some 84 million barrels, less than half of a percent of the total demand.

The Organization of the Petroleum Exporting Countries (OPEC) has its 2008 global oil demand growth forecast unchanged at 1.2 mm bpd, as slowing economic growth in the industrialised world is offset by slightly growing consumption in developing nations. OPEC predicts global oil demand in 2008 will average 87 million bpd -- largely unchanged from its previous estimate. Demand from China, the Middle East, India, and Latin America is forecast to be stronger but the EU and North American demand will be lower.

So the world’s largest oil consumer faces a sharp decline in consumption, a decline that will worsen as the housing and related economic effects of the US securitization crisis in finance de-leverages. The price in normal open or transparent markets would presumably be falling not rising. No supply crisis justifies the way the world's oil is being priced today.

Big new oil fields coming online

Not only is there no supply crisis to justify such a price bubble. There are several giant new oil fields due to begin production over the course of 2008 to further add to supply.

The world’s single largest oil producer, Saudi Arabia is finalizing plans to boost drilling activity by a third and increase investments by 40 percent. Saudi Aramco's plan, which runs from 2009 to 2013, is expected to be approved by the company's board and the Oil Ministry this month. The Kingdom is in the midst of a $50 billion oil production expansion plan to meet growing demand in Asia and other emerging markets. The Kingdom is expected to boost its pumping capacity to a total of 12.5 mm bpd by next year, up about 11 percent from current capacity of 11.3 mm bpd.

In April this year, Saudi Arabia's Khursaniyah oilfield began pumping and will soon add another 500,000 bpd to world oil supply of high grade Arabian Light crude. As well, another Saudi expansion project, the Khurais oilfield development, is the largest of Saudi Aramco projects that will boost the production capacity of Saudi oilfields from 11.3 million bpd to 12.5 million bpd by 2009. Khurais is planned to add another 1.2 million bpd of high quality Arabian light crude to Saudi Arabia's export capacity.

Brazil’s Petrobras is in the early phase of exploiting what it estimates are newly confirmed oil reserves offshore in its Tupi field that could be as great or greater than the North Sea. Petrobras says the new ultra-deep Tupi field could hold as much as 8 billion barrels of recoverable light crude. When online in a few years, it is expected to put Brazil among the world's "top 10" oil producers, between those of Nigeria and those of Venezuela.

In the United States, aside from rumors that the big oil companies have been deliberately sitting on vast new reserves in Alaska for fear that the prices of recent years would plunge on oversupply, the US Geological Survey (USGS) recently issued a report that confirmed major new oil reserves in an area called the Bakken, which stretches across North Dakota, Montana and south-eastern Saskatchewan. The USGS estimates up to 3.65 billion barrels of oil in the Bakken.

These are just several confirmations of large new oil reserves to be exploited. Iraq, where the Anglo-American Big Four oil majors are salivating to get their hands on the unexplored fields, is believed to hold oil reserves second only to Saudi Arabia. Much of the world has yet to be explored for oil. At prices above $60 a barrel, huge new potentials become economic. The major problem faced by Big Oil is not finding replacement oil but keeping the lid on world oil finds in order to maintain present exorbitant prices. Here they have some help from Wall Street banks and the two major oil trade exchanges -- NYMEX and London-Atlanta’s ICE and ICE Futures.

Then why do prices still rise?

There is growing evidence that the recent speculative bubble in oil, which has gone asymptotic since January, is about to pop.

Late last month in Dallas Texas, according to one participant, the American Association of Petroleum Geologists held its annual conference where all the major oil executives and geologists were present. According to one participant, knowledgeable oil industry CEOs reached the consensus that "oil prices will likely soon drop dramatically and the long-term price increases will be in natural gas."

Just a few days earlier, Lehman Brothers, a Wall Street investment bank had said that the current oil price bubble was coming to an end. Michael Waldron, the bank's chief oil strategist, was quoted in Britain's Daily Telegraph on Apr. 24 saying, "Oil supply is outpacing demand growth. Inventories have been building since the beginning of the year.”

In the US, stockpiles of oil climbed by almost 12 million barrels in April according to the May 7 EIA monthly report on inventory, up by nearly 33 million barrels since January. At the same time, MasterCard's May 7 US gasoline report showed that gas demand has fallen by 5.8 percent. And refiners are reducing their refining rates dramatically to adjust to the falling gasoline demand. They are now running at 85 percent of capacity, down from 89 percent a year ago, in a season when production is normally 95 percent. The refiners today are clearly trying to draw down gasoline inventories to bid gasoline prices up. ‘It’s the economy, stupid,’ to paraphrase Bill Clinton’s infamous 1992 election quip to Daddy Bush. It’s called economic recession.

The May 8 report from Oil Movements, a British company that tracks oil shipments worldwide, shows that oil in transit on the high seas is also quite strong. Almost every category of shipment is running higher than it was a year ago. The report notes, "In the West, a big share of any oil stock building done this year has happened offshore, out of sight." Some industry insiders say the global oil industry from the activities and stocks of the Big Four to the true state of tanker and storage and liftings, is the most secretive industry in the world with the possible exception of the narcotics trade.

Goldman Sachs again in the middle

The oil price today, unlike 20 years ago, is determined behind closed doors in the trading rooms of giant financial institutions like Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Deutsche Bank or UBS. The key exchange in the game is the London ICE Futures Exchange (formerly the International Petroleum Exchange). ICE Futures is a wholly-owned subsidiary of the Atlanta Georgia International Commodities Exchange. ICE in Atlanta was founded in part by Goldman Sachs which also happens to run the world’s most widely used commodity price index, the GSCI, which is over-weighted to oil prices.

As I noted in my earlier article, (Perhaps 60 percent of today’s oil price is pure speculation), ICE was focus of a recent congressional investigation. It was named both in the Senate's Permanent Subcommittee on Investigations' June 27, 2006, Staff Report and in the House Committee on Energy & Commerce's hearing in December 2007 which looked into unregulated trading in energy futures. Both studies concluded that energy prices' climb to $128 and perhaps beyond is driven by billions of dollars' worth of oil and natural gas futures contracts being placed on the ICE. Through a convenient regulation exception granted by the Bush administration in January 2006, the ICE Futures trading of US energy futures is not regulated by the Commodities Futures Trading Commission, even though the ICE Futures US oil contracts are traded in ICE affiliates in the USA. And at Enron’s request, the CFTC exempted the Over-the-Counter oil futures trades in 2000.

So it is no surprise to see in a May 6 report from Reuters that Goldman Sachs announces oil could in fact be on the verge of another "super spike," possibly taking oil as high as $200 a barrel within the next six to 24 months. That headline, "$200 a barrel!" became the major news story on oil for the next two days. How many gullible lemmings followed behind with their money bets?

Arjun Murti, Goldman Sachs' energy strategist, blamed what he called "blistering" [sic] demand from China and the Middle East, combined with his assertion that the Middle East is nearing its maximum ability to produce more oil. Peak Oil mythology again helps Wall Street. The degree of unfounded hype reminds of the kind of self-serving Wall Street hype in 1999-2000 around dot-com stocks or Enron.

In 2001 just before the dot-com crash in the NASDAQ, some Wall Street firms were pushing sale to the gullible public of stocks that their companies were quietly dumping. Or they were pushing dubious stocks for companies where their affiliated banks had a financial interest. In short, as later came out in Congressional investigations, companies with a vested interest in a certain financial outcome used the media to line their pockets and that of their companies, leaving the public investor holding the bag. It would be interesting for Congress to subpoena the records of the futures positions of Goldman Sachs and a handful of other major energy futures players to see if they are invested to gain from a further rise in oil to $200 or not.

Margin rules feed the frenzy

Another added turbo-charger to present speculation in oil prices is the margin rule governing what percent of cash a buyer of a futures contract in oil has to put up to bet on a rising oil price (or falling for that matter). The current NYMEX regulation allows a speculator to put up only 6 percent of the total value of his oil futures contract. That means a risk-taking hedge fund or bank can buy oil futures with a leverage of 16 to 1.

We are hit with an endless series of plausible arguments for the high price of oil: A "terrorism risk premium;" “blistering” rise in demand of China and India; unrest in the Nigerian oil region; oil pipelines' blown up in Iraq; possible war with Iran . . . And above all the hype about Peak Oil. Oil speculator T. Boone Pickens has reportedly raked in a huge profit on oil futures and argues, conveniently, that the world is on the cusp of Peak Oil. So does the Houston investment banker and friend of Dick Cheney, Matt Simmons.

As the June 2006 US Senate report, The Role of Market Speculation in Rising Oil and Gas Prices, noted, "There's a few hedge fund managers out there who are masters at knowing how to exploit the peak oil theories and hot buttons of supply and demand, and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self-fulfilling prophecy."

Will a Democratic Congress act to change the carefully crafted opaque oil futures markets in an election year and risk bursting the bubble? On May 12, the House Energy & Commerce Committee stated it will look at this issue in June. The world will be watching.
F. William Engdahl is author of "A Century of War: Anglo-American Oil Politics and the New World Order" (PlutoPress), and "Seeds of Destruction: The Hidden Agenda of Genetic Manipulation" (Global Research). He may be reached at info@engdahl.oilgeopolitics.net.
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This is what gets me about Bernanke he doesn't see "hoarding" yet in May oil inventories were the highest they've been in 8 years- consistent with a bubble, but not supply shock.

The proof will be when the bubble bursts probably around the end of the 3rd quarter.

[Clove]

ICE, ICE, Baby, conclusion
"Too cold, too cold"
Special to the Star-Telegram

http://www.star-telegram.com/ed_wallace/story/659081.html

"What’s been happening since 2004 is very high prices without record-low [oil] stocks. The relationship between U.S. [oil] inventory levels and prices has been shredded and become irrelevant."

— Jan Stuart, Global Oil Economist, UBS Securities

"What you have on the financial side is a bunch of money being thrown at the energy futures market. It’s just pulling in more and more cash. That’s the side of the market where we have runaway demand, not on the physical side."

— Tim Evans, Senior Oil Analyst, IFR Energy Services [From testimony: U.S. Senate Permanent Subcommittee on Investigations’ report, "The Role of Market Speculation in Rising Oil and Gas Prices," June 27, 2006]

The Love of Money

Record high prices without record low oil inventories, analysts saying that so much money flows into oil commodities that it gives the impression of shortages, when in fact no shortage exists. That mirrors the situation in the commodities market for food, as Bloomberg pointed out in its April 28 article, "Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin": "Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies." That’s right; food, oil and gasoline have become an "asset class." No longer are you fighting a neighbor at the supermarket over the last box of Cheerios&#174;; now you’re fighting the futures traders, who are actually determining what you will pay for that cereal.

We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?

It wasn’t always this way.

In the past, the Commodities Futures Trading Commission acted as the cop on the beat, ensuring that buyers in the market were not distorting or manipulating prices beyond what supply and demand normally dictate. Certainly, if a hard frost hit Florida and cost growers an orange crop, then bidding up the price of the remaining oranges was both a wise investment and allowed under the trading rules. Right now investors know that if they borrow and invest huge amounts in commodities futures, they can create a shortage on paper – which drives prices up just like an actual shortage of any given product would. What kept traders from cornering the market that way in the past were the government’s anti-manipulation rules.

Lay, DeLay, Gramm, Gramm & Clinton

The late, infamous Enron head, Ken Lay, realized in the eighties that he could make more money bidding up energy in the futures market than by actually creating and selling energy. But, under then-current rules, how much you could make swapping paper was limited. Fortuitously, Lay had excellent Texas political connections; and in November of 1992, the head of the Commodities Futures Trading Commission moved to exempt energy-derivative contracts and related swaps from any government oversight.

A vote was hurriedly put together before the Clinton White House would take over, and so Lay could finally start "dark" – unregulated – futures trading. The head of the CFTC was Wendy Gramm, wife of Texas Senator Phil Gramm; five weeks after she left, she became a board member of Enron in Houston.

Fast-forward to late 2000 and H.R. 5660, the Commodity Futures Modernization Act of 2000, sponsored by Republican Congressman Thomas Ewing of Illinois. That bill went nowhere, even though Tom Delay’s wife Christine was then working for a Washington lobbying firm, Alexander Strategies – which Enron had paid $200,000 to push through legislation for permanent energy deregulation in these "dark" markets.

Six months later came Senate Bill 3283, also named the Commodity Futures Modernization Act of 2000. This time around the sponsor was Republican Sen. Richard Lugar of Indiana, and now Phil Gramm was listed as one of the bill’s co-sponsors. Like it had in the House, this bill was destined to go nowhere until, late one night, it was attached as a rider to an 11,000-page appropriations bill – which was signed into law by President Clinton.

Now traders had an officially deregulated market for energy futures. Worse, that bill also deregulated many financial instruments – including the collateralized debt obligations that are at the center of today’s mortgage crisis, which may well cost us more than $1 trillion before it’s over.

Everybody Was Warned!

As USA Today wrote of this fiasco in January of 2002, "But, as a power marketer, [Enron] could buy enough energy-futures contracts in a region to create a virtual monopoly." That’s right: As early as the winter of 2002, it was widely known that the 2000 Commodities Futures Modernization Act had created a monster, capable of running up energy prices outside of the normal law of supply and demand. Worse, our government had been warned this was going to happen. Representatives of the Federal Reserve, the Securities and Exchange Commission and the CFTC had already told Congress not to deregulate energy because "the market was ripe for manipulation." Everybody was warned; that’s why this deregulation bill was stealthily inserted into that appropriations bill without a floor debate.

Phil Gramm’s office denied that he had anything to do with writing the section of that bill that actually deregulated energy. And yet Prof. Michael Greenberger, formerly a CFTC board member himself, said that Gramm’s wife Wendy, along with a few lobbyists and Wall Street attorneys, had rewritten it. When Robert Manor of the Chicago Times wrote about this situation on January 18, 2002, neither Gramm could be reached for comment.

Kill It Before It Multiplies

When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of Morgan Stanley, Goldman Sachs, British Petroleum, Deutsche Bank, Dean Witter, Royal Dutch Shell, SG Investment Bank and Totalfina. In 2001 ICE purchased the International Petroleum Exchange in London; renamed ICE Futures, it now operates as an "exempt commercial market" under section 2(H)(3) of the Commodity Exchange Act. As the Senate hearings pointed out in the summer of 2006, "Both markets operate outside of any CFTC oversight."

If you reread the quotes at the start of this story again, you find that many officials in the government warned against what would happen in a deregulated energy market, because it was so easy to manipulate. We already know this to be true thanks to Enron’s California misdeeds. And, as we pointed out last week, British Petroleum was busted for manipulating the propane market and fined over $300 million; and Amaranth Partners was caught manipulating the natural gas market, unconscionably causing the futures price for natural gas to raise every Texan’s electric bills. (It took two years for Amaranth to be exposed.) And yes, the manipulation happened in the new "dark" and unregulated exchanges, making it almost impossible to uncover. So it’s not a question of "if" some "theoretically possible" manipulation and distortion of the market will result from this bill, championed by Phil Gramm, his wife Wendy and Christine Delay’s employer, Alexander Strategies. The reason it is not theoretical is because we keep catching well-known companies doing it on a regular basis.

No Conscience in Congress?

All you hear daily is that the world has a severe shortage of oil, or you can buy only 200 pounds of rice at one time, or we will have a gasoline crisis this summer, etc. But it takes only a minute to find hundreds of quotes from highly respected oil and economic analysts, (not to mention CEOs of the major oil companies), that completely dismiss the claim of oil, gas or food shortages that have been headlining the news.

Even more troubling is that within months of the CFMA’s going into effect, we knew it had enabled easy manipulation of any energy market, but nothing was done to fix it. Nor was anything done when the Senate held its hearings on this matter in 2006, or in the House hearings last December.

Today we call this situation the "Enron Loophole," but that’s untrue. It’s not a loophole: it was a new law passed in 2000 – and far more individuals than Ken Lay have used that law to line their pockets with hundreds of billions of American consumers’ hard-earned dollars. That’s not my opinion, that’s direct testimony by numerous experts before both the House and Senate.

Professor Greenberger warned about our "New American Economy" far better than I could:

"Should we have an economy that’s based on whether people make good or bad bets? Or should we have an economy where people build companies, create manufacturing, do inventions, advance the American society and make it more productive? We are rewarding people for sitting at their computers and punching in bets. That’s not the way our economy is going to be built, and India and China, with their focus on science and industry and building real businesses, are going to eat our lunch, unless the American public wakes up and puts an end to an economy that praises and makes heroes out of speculators."

Greenberger’s statement explains why Detroit and other American manufacturers suffer while Wall Street speculators make a fortune — and your rapidly shrinking checkbook pays for it, every time you buy food, fuel or feed.

All because there is no shortage of these goods, you’re just being told there is because it’s more profitable – for a few – that way.

&#169; 2008 Ed Wallace

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and is a member of the American Historical Society. He reviews new cars every Friday morning at 7:15 on Fox Four’s Good Day, contributes articles to BusinessWeek Online and hosts the talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF. E-mail: wheels570@sbcglobal.net

Everybody was warned; that’s probably why this deregulation bill was stealthily inserted into that appropriations bill without a floor debate.