The Great Oil Swindle – How Much Did the Fed Really Know? « Operation Awakening — Now that a lot of attention is being paid to this fiasco the swindlers will be heading to the exits, shortly.
Index Speculators have now stockpiled, via the futures market, the equivalent of 1.1 billion barrels of petroleum, effectively adding eight times as much oil to their own stockpile as the United States has added to the Strategic Petroleum Reserve over the last five years.
Today, in many commodities futures markets, they are the single largest force. The huge growth in their demand has gone virtually undetected by classically-trained economists who almost never analyze demand in futures markets.
As money pours into the markets, two things happen concurrently: the markets expand and prices rise. One particularly troubling aspect of Index Speculator demand is that it actually increases the more prices increase.
Found by Kerry Lutz.
#29
I live in the oil rich province of Alberta. US refiners are planning to spend ~30 billion US$ to upgrade refineries for oilsands crude. However, the US congress, large city mayors, and Obama are all against this since the oil isn’t as clean as SA light sweet crude. They’re pushing ethanol (can you say CO2 ?).
Needless to say we’re already planning pipelines to the west coast.
In 1970 BEFORE the fake gas crisis,
gas by the barrel was $35
Gas at the pump was $0.35 per gallon.
By that idea/concept, why isnt gas $1.50 +0.70 tax..
#27 “or a single story wooden house would cost 1.5 million today. ”
They do where I live. Next.
Re: #29 ArianeB said,“MikeN is right (there I said it) it aint the speculators. #9 JimR is wrong. If you are holding a contract to buy, you have to take posession or sell the contract.
Are you MikeN’s clone? You are wrong as well. Just common sense would dictate otherwise… but all you have to do is Google “futures”. Non speculating investors can take delivery. Speculators simply have their investment accounts increased or deducted depending on how they fared.
Investopedia: (conclusion after a lengthy example)
“Now that you see that a futures contract is really more like a financial position, you can also see that the two parties in the wheat futures contract discussed above could be two speculators rather than a farmer and a bread maker. In such a case, the short speculator would simply have lost $5,000 while the long speculator would have gained that amount. In other words, neither would have to go to the cash market to buy or sell the commodity after the contract expires.”
QB, as much as I would like to see Alberta prosper, the oil sands operation is as disgusting an assault on this earth as can be imagined. Shame on Alberta.
I’m being serious. There is NO reason to cut back on consumption since there is plenty of energy available to a country with a responsible energy policy. Mass transit and moving back into the city is not “progress” and is unnacceptable.
#37 Of course not. Nuc is available and gives us s/g to do with all the weapons we don’t need.
JimR. Oh yeah, it’s absolutely disgusting – it’s on par with coal conversion. There needs to be about 15 billion spent to finish the upgrades and manage slurry ponds so they meet current guidelines. The money is available to do it, just not the political will on either side of the border.
The biggest problem is that the area is so huge – we’re talking something the size of Florida. All mining and drilling/refining are nasty but when you’re creating the biggest industrial zone on the planet then it’s unimaginable. Anything to with oil is ugly which explains why the US doesn’t want to drill on their own shores anymore.
All that said, when compared to Ethanol, it actually doesn’t look that bad. The real solution is to use less. The western Canadian basin (minus the oilsands) is a pretty good supply of light sweet crude. The problem is that US demand has outstripped all new production by a 3:1 margin.
JimR: “QB, as much as I would like to see Alberta prosper…”
P.S. We already have way too much money already, it would just mess the place up more. Personally, I’d be just happy to stop the growth now – especially since we wiped out our long term debt.
bobbo, JimR, referring to people who don’t have to take possession of oil, in order for this to be the case, and for their account to be credited, they would still have to sell the oil.
Someone who is buying a futures contract might sell at the current price and then buy the futures contract, in which case they pocket the difference. Or they might take possession of the oil. Or they might match it in the future with another sell. With the exception of taking possession of the oil(which speculators don’t do we are all agreed), then there is a sell that goes along with every buy for each trader. The speculators only move prices around in time, they don’t inflate the prices.
Regardless of what the chart shows (a lot of up and down during the Bush Jr. years), I still think the price oil didn’t take off until the subprime Home Morgages started failing, and the real estate “bubble” began to leak. So the speculators got out of that, and into oil and corn futures. Which is why they’ve climbed in price. Not their increased demand, or shorter supply. Following the Iranian missile test, the price of oil jumped $1.44 in one day. And has kept climbing since. This isn’t the result of a sudden summer time demand. Or supply shortage. Just speculation as usual.
Two homes in my neighborhood have been for sale for more than a year. But during that same time, three new Megahomes were built on lots that were either empty or razed older homes. I can’t be sure that any of these have sold either. Apparently the speculation goes on, regardless. These older homes had been bought by real estate speculators, hoping to improve them (or build bigger) and then flip them to the next buyer. Their unkept lawns tell me that nobody lives in them, or cares to. They’re all but abandoned.
This kind of wreakless speculation, for a short term profit, is exactly what’s happening with the oil futures. With little or no regard to how it’ll effect the economy in the long term. And our government makes excuses for it, and diverts blame. So no regulatory measures will be demanded, and spoil the fun of those speculating the most. Friends of the Trade Commission (FTC).
#43, Glen… Eggzactly! I think if you check, those megahome properties were probably bought for a fire sale song. Market demand for megahomes isn’t zero, it’s just greatly diminished. either those speculators are foolish gamblers, or they have determined that in your area there are still rich customers, probably with the cash, looking for homes that big.
MikeN, give it up man. You obviously don’t understand the intricacies of stock and futures investing. I’ve been doing it for 30 years. Speculation ALWAYS drives a price up or down depending on which side has more speculators.
I visibly move the market a little every time I but or sell stock. Multiply that by thousands every day.
When you buy stock, you are holding that stock off the market and driving up the price. THe futures market doesn’t work that way. Despite your thirty years of experience, you have failed to spell out the mechanism by which prices go up. You keep saying ‘up or down’ and that’s the point. Someone makes money on the futures contract, and someone loses.