tag:blogger.com,1999:blog-7515713317068251331.post5060587023228724555..comments2024-02-02T00:21:02.687+13:00Comments on stargazer: oil speculationstargazerhttp://www.blogger.com/profile/00430290445762377335noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-7515713317068251331.post-19846157594676573942008-06-06T23:43:00.000+12:002008-06-06T23:43:00.000+12:00oh, and i suggest you read some of the comments on...oh, and i suggest you read some of the comments on the economist article you linked to. like this one:<BR/><BR/>In a question put to him (by me) on the London Times homepage, Shell's CEO makes quite clear that the impact that psychological factors are playing in the present oil spikes. He says:<BR/><BR/>"There are a great many psychological factors in the current price. The reality is that there are no hold-ups in the supply chain: refineries do not have to wait for tankers, trucks are not held up at the refinery and consumers do not have to wait at the filling station. The physical logistics are working well."<BR/><BR/>This ties in with OPEC statements that they are fulfilling all orders lodged with them. The price spike then is coming from elsewhere and the only place it can come from is the trading floor. The question then is, is the rise coming out of genuine concern for the future, or is it being driven by an appetite for price increases to increase profits. Considering that the same people driving up the price are by and large also earning good money on that same price increase it is hard to believe that all traders genuinely believe what they are claiming to fervently believe.<BR/>(http://www.economist.com/members/persona.cfm?econUId=2976052)stargazerhttps://www.blogger.com/profile/00430290445762377335noreply@blogger.comtag:blogger.com,1999:blog-7515713317068251331.post-67906021777115474372008-06-06T23:23:00.000+12:002008-06-06T23:23:00.000+12:00if that's the case, it's very strange that the com...if that's the case, it's very strange that the commodity futures trading commission would be carrying out an investigation in relation to this issue. also, "bankers" would be some of the people involved in speculating, so i wouldn't be too taken by what they say. they aren't a disinterested third party.<BR/><BR/>since you can't hear the interview, i'll give you a link to the pdf file containing mr slocum's submission to a US house of representatives subcommittee: http://www.citizen.org/documents/House08.pdf<BR/><BR/>i'll quote from page 11:<BR/>Contrary to some public opinion, oil prices are not set by the Organization of Petroleum<BR/>Exporting Countries (OPEC); rather, they are determined by the actions of energy traders in markets. Historically, most crude oil has been purchased through either fixed-term contracts or on the “spot” market. There have been long-standing futures markets for<BR/>crude oil, led by the New York Mercantile Exchange (NYMEX) and London’s International Petroleum Exchange (which was acquired in 2001 by an Atlanta-based unregulated electronic exchange, ICE). NYMEX is a floor exchange regulated by the U.S Commodity Futures Trading Commission (CFTC). The futures market has historically<BR/>served to hedge risks against price volatility and for price discovery. Only a tiny fraction<BR/>of futures trades result in the physical delivery of crude oil.<BR/><BR/>The CFTC enforces the Commodity Exchange Act, which gives the Commission authority to investigate and prosecute market manipulation.33 But after a series of deregulation moves by the CFTC and Congress, the futures markets have been increasingly driven by the unregulated over-the-counter (OTC) market over the last few<BR/>years. These electronic OTC markets have been serving more as pure speculative markets, rather than traditional volatility hedging or price discovery. And, importantly, this new speculative activity is occurring outside the regulatory jurisdiction of the CFTC.<BR/><BR/>keep reading from that point onwards. you'll find that "the american empire" is pretty good at destroying itself, without any outside help, by doing things like this:<BR/><BR/>Congress followed Wendy Gramm’s lead in deregulating energy trading contracts and moved to deregulate energy trading exchanges by exempting electronic exchanges, like those quickly set up by Enron, from regulatory oversight (as opposed to a traditional trading floor like NYMEX that remained regulated). Congress took this action during last-minute legislative maneuvering on behalf of Enron by former Texas GOP Senator Phil Gramm in the lame-duck Congress two days after the Supreme Court ruled in Bush v Gore, buried in 712 pages of unrelated legislation. As Public Citizen pointed out back in 2001, this law deregulated OTC derivatives energy trading by “exempting” them from the Commodity Exchange Act, removing anti-fraud and anti-manipulation regulation over these derivatives markets and exempting “electronic” exchanges from CFTC regulatory oversight.<BR/><BR/>This deregulation law was passed against the explicit recommendations of a multi-agency<BR/>review of derivatives markets. The November 1999 release of a report by the President’s Working Group on Financial Markets—a multi-agency policy group with permanent<BR/>standing composed at the time of Lawrence Summers, Secretary of the Treasury; Alan Greenspan, Chairman of the Federal Reserve; Arthur Levitt, Chairman of the Securities and Exchange Commission; and William Rainer, Chairman of the CFTC—concluded that energy trading must not be deregulated. The Group reasoned that “due to the characteristics of markets for nonfinancial commodities with finite supplies … the Working Group is unanimously recommending that the [regulatory] exclusion not be extended to agreements involving such commodities.”stargazerhttps://www.blogger.com/profile/00430290445762377335noreply@blogger.comtag:blogger.com,1999:blog-7515713317068251331.post-20692696293948456192008-06-06T21:19:00.000+12:002008-06-06T21:19:00.000+12:00Unfortunately I have not been able to listen to th...Unfortunately I have not been able to listen to the interview with tyscon slocum on Radio NZ since the sound on my computer has problems and presently is mute and although after much effort on my part I have had no success in restoring its vocal chords. Although I have been deaf to that interview, the unquestionable thrust of your article in placing the rapid rise in oil prices on market speculation is at variance with the explanation in the Economist (http://www.economist.com/finance/displaystory.cfm?story_id=11413334) where they indicate that Shokri Ghanem, Libya’s oil minister, has claimed that oil may soon hit $200 a barrel and along with others is blaming speculators, who are investing ever more enthusiastically in oil futures. While the Libyan minister propagates this view few bankers agree that speculation has much to do with these price rises for a number of very sound reasons outlined in the Economist’s article. <BR/><BR/>In addition to the Economist’s presentation, the Wall Street Journal http://online.wsj.com/article/SB121139527250011387.html outlines that world's premier energy monitor, the Paris-based International Energy Agency (IEA) and counterweight in the market to the views of the Organization of Petroleum Exporting Countries (OPEC), is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought and not for the reasons put about by alarmists who claim that “peak oil” has now been reached.<BR/>In this IEA assessment it has been anticipated that the cooperation by Venezuela, Iran and China, and others like Saudi Arabia typically treat the detailed production data of individual fields as closely guarded state secrets, so it's not clear how specific their contributions will be. Plainly, many OPEC countries do not have helpful interests in mind. To understand this, one need look no further than Iranian president Mahmoud Ahmadinejad or Venezuela’s Hugo Chávez, who famously boasted in his opening address at an OPEC conference in 2006 that “the American empire will be destroyed”<BR/><BR/>These articles referenced from over at “Inquiring Mind” are well worth reading and may go someway to giving you food for thought.Anonymousnoreply@blogger.com