Crude Oil Futures Speculator Crooks Drive Up Oil Prices and Cause Financial Crisis

[Guest Follow the Money]

Ever ask yourself why gas is so exspensive?

 

Appearently, few have heard the Vitol news yet. A Swiss company named Vitol manipulated 11% of the oil futures market during June 5 and June 11th of this year when the price of Oil was near it's highest level. They are said to have made over 100 billion dollars revenue this year. I have included the link to the article on the Washington Post site below. This is why gas prices are so high., not because of the Hurrican or Russia invading Georgia or China consumption or violence in Nigeria or supply and demand, a low dollar or any of the other BS you read. It's because big companies manipulate the oil price on the commodities exchange. The more that people hear about the Vitol scandal the more chance some action will be taken to deal with this mess. Consumers were ripped of at the pumps and it couls have been much worse if certain people had looked the other way. Vitol, Goldman Sachs, Morgan Stanley and the rest of the scoundrals have an obligation to make it right again and the CFTC should be disbanded and punishment handed down to the ones that covered up this massive mistake.

 

See the article on the Washington Post website.

 

Read the full story "A Few Speculators Dominate Vast Market for Oil Trading"

[Guest Nick Choate]

U.S. Congressman Bart Stupak (D-Menominee), chairman of the House Energy and Commerce Subcommittee on Oversight and Investigations, joined House and Senate colleagues today in releasing a new report about the vast size and influence of speculators in the oil futures market. Stupak continued his charge to stop excessive oil speculation through federal legislation.

 

Michael Masters of Masters Capital Management, who testified before Stupak's subcommittee on June 23, and Adam White of White Knight Research & Trading were on hand to discuss the findings of their independent report. The report outlines how speculators drove oil prices to record levels this summer, and then suddenly switched their position and “began a mass stampede for the exits” starting on July 15.

 

"The Masters report shows in the clearest possible manner that it is not the fundamental supply and demand of oil driving up prices," Stupak said. "The only supply and demand this report shows is the supply and demand of money. As speculators pour more money into the energy market, prices go up. As they pull their money out, prices go down."

 

Stupak first introduced legislation to rein in excessive speculation in April 2006. As chairman of the Oversight and Investigations Subcommittee, he has held two hearings on excessive energy speculation and in June introduced H.R. 6330, a more comprehensive version of his Prevent Unfair Manipulation of Prices (PUMP) Act.

 

“Excessive speculation in the energy and agricultural commodity markets is driving prices to all-time highs and squeezing the budget of every American family,” Stupak said. “Congress must take action to place limits on speculators and force the Commodity Futures Trading Commission (CFTC) to do its job of overseeing these markets. I will continue to work with my colleagues and House leadership to pass comprehensive energy speculation legislation to bring sanity back to the markets and relief to consumers.

 

[Guest Justin Kitsch]

U.S. Senator Byron Dorgan (D-ND) today renewed his effort to crack down on irresponsible oil speculators, raising questions about speculators’ outsized influence over the energy futures market, the cost of energy, and perhaps even the federal agency responsible for regulating them. The Senators said hearings will be held starting next week to address volatile oil speculation.

 

Dorgan pointed to a new independent report issued today that outlines how speculators drove oil prices to record levels this summer, and then suddenly switched their position and “began a mass stampede for the exits” starting on July 15. Issued by Michael W. Masters of Masters Capital Management and Adam K. White of White Knight Research & Trading, the report uses data from the Commodities Futures Trading Commission (CFTC), the Energy Information Administration, and investment sources to show how speculators, not supply and demand or a weak dollar, was the leading cause for record energy prices.

 

“While these speculators make enormous profits on both sides of the trade, it was the American people stuck with the bill every time they filled up their gas tank this summer,” said Dorgan, who introduced legislation to crack down on energy speculators earlier this year. “This report is another example of how oil speculators can control the market while the federal agency, which should be protecting American consumers, has been dead from the neck up.”

 

Senator Dorgan says this report is yet another reason to renew the charge to hold hearings, examine specific trading patterns of large energy speculators, and press the CFTC for answers to why the agency repeatedly said no speculation was occurring despite growing evidence to the contrary.

 

“There are a lot more questions than answers out there about how oil speculators were able to drive prices up and down, while the CFTC was asleep at the switch. But, what we do know from all of this is that energy speculation exists, it has hurt consumers, and the Congress needs to pass legislation immediately to stop oil speculation,” said Dorgan.

[Guest WayneinVA]

WAIT A MINUTE!! When we poor uneducated masses said this same thing back in July we were told by the press that we were idiots, that the speculators had absolutely nothing to do with the price of oil going up. Republicans are DOOMED!!!!! DOOMED I say!!!! MUahAHAHAHAHA!!!!!!!!!

[Guest straightfoward]

As your president, I will order all my oil buddy speculators to be rounded up and incacerated to await special prosecution due to their incessant reaming of the general US citizen sheep that just goes along with everything and taking no action to those speculators that pickpocketed all your wallets and pcketbooks all this year.

 

Furthermore, I would tell my Little Chimp, but he is at his goat ranch tending to his brush clearing.

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Signed, from your friend and leader - - - - President Cheney.

[Guest Mike44]

We might as well elect Obama or McCain King, because Congress can't do squat. They have no real power.

[Guest Ianthe Zabel]

The U.S. Commodity Futures Trading Commission (CFTC) today filed and simultaneously settled charges against Sempra Energy Trading LLC (Sempra) for trading card violations involving natural gas futures trades on the New York Mercantile Exchange (NYMEX) and ordered Sempra to pay a $175,000 civil penalty.

 

The CFTC order issued on September 4, 2008, finds that on certain trading days between August and November 2004, Sempra’s floor brokers violated a CFTC regulation by failing to properly and accurately prepare trading cards in order to process trades that were made after the contract was no longer trading. According to the order, the trades were “EFS” trades, which involve an exchange of futures for, or in connection with, a swap. Collectively these trades involved positions of several hundred lots. However, on each of the trading dates at issue, the trades took place outside of the permitted time period. The trading cards, therefore, did not accurately reflect the actual trade dates or listed trades entered out of exact chronological order in violation of CFTC regulations applicable to trading cards.

 

The order concluded that because the Sempra floor brokers undertook their actions within the scope of their employment; Sempra is liable for its floor brokers’ violations.

 

The CFTC appreciates the assistance provided by NYMEX staff during the investigation of this matter.

 

The following Division of Enforcement staff was responsible for this case: Nathan Ploener, David Oakland, Manal Sultan, Michael Penick, David MacGregor, Lenel Hickson, Jr., Vincent A. McGonagle, and Stephen J. Obie.

[Guest Enron Ex]

We might as well elect Obama or McCain King, because Congress can't do squat. They have no real power.

 

JPMorgan Chase and Co., Goldman Sachs Group Inc., Barclays Plc and Morgan Stanley declined to comment on the report. This group controls 70 percent of the commodities swaps positions, and swaps dealers are the largest holders of Nymex crude oil futures contracts. They hold the real power.

[BlingBling]

We might as well elect Obama or McCain King, because Congress can't do squat. They have no real power.

 

The real power is in your vote. Obama will change everything.

[Guest Randle]

1/3 of the oil being traded is being done on regulated markets. 2/3 of oil is being traded on unregulated black markets, whether that is in other countries with different laws, or on the black market. Here's a question: if regulations are tightened or more rigorously enforced, do you think that the percentage of oil traded on regulated markets will INCREASE or DECREASE? America will lose everything is we tighten the grip on the CTFC. That is just the way the world works. It sucks, but consumers have to live with it.

[Guest Ebb]

1/3 of the oil being traded is being done on regulated markets. 2/3 of oil is being traded on unregulated black markets, whether that is in other countries with different laws, or on the black market. Here's a question: if regulations are tightened or more rigorously enforced, do you think that the percentage of oil traded on regulated markets will INCREASE or DECREASE? America will lose everything is we tighten the grip on the CTFC. That is just the way the world works. It sucks, but consumers have to live with it.

 

Everyone should read “Perfectly Legal” and “Free Lunch” by David Cay Johnston to learn how big business and the wealthy manipulate government regulators and the tax code to their advantage. Regulators are appointed and hired by the executive branch of government, which has been the Republican Party for the last 7 years. The lack of regulation may be technically ‘legal’ in the sense that the lack of regulation allows them. But remember that because corporations and the wealthy lobbied to prevent regulation. Saying something is ‘legal’ doesn’t mean that it’s right. To fire the regulators, people must change the Republican Party in the executive branch of government.

 

http://www.perfectlylegalthebook.com/author.htm

[Guest Enron Ex]

Oil has dropped $7 to $94 as Wall Street speculators begin to drop. Goodbye Lehman Brothers. Golman Sachs this Wednesday.

[Guest Rami]

Corruption is the cancer of every society that will result in a melt down of all social and legal services. I would not want to live in such society.

[Guest LAW_*]

H.R. 6604 – Commodity Markets Transparency and Accountability Act of 2008 (Rep. Peterson – Agriculture): Pursuant to the rule, debate on the bill will be managed by Agriculture Committee Chairman Rep. Collin Peterson, or his designee, and will proceed as follows:

One hour of debate on the bill.

Possible debate and vote on a Republican motion to recommit the bill. Democrats are urged to vote no.

Vote on final passage of the bill. Democrats are urged to vote yes.

[Guest Emily Barocas]

LARSON GIVES LOCAL CITIZEN CREDIT FOR SPECULATION BILL

 

Bill to lower oil prices and restore the market passes the House.

 

Washington, DC - Today, the House of Representatives passed legislation that will restore integrity to our energy futures markets. It restores the fundamentals of supply and demand in a market that has been struck by rampant speculation.

 

Congressman John B. La rson (CT-01), Vice Chair of the Democratic Caucus, said:

 

"The best ideas in Washington often come from outside of Washington. Today, we see the result of one of those ideas. In January John Mitchell, the former Mayor of South Windsor and an oil dealer, came to me with a problem. The cost of a barrel of petroleum was skyrocketing and local senior citizens were being forced to turn over their entire Social Security checks to fill their home heating oil tanks. He told me that these prices weren't the result of supply and demand, but rather speculators in the energy futures market who were unfairly driving up the cost. So we worked together to solve this problem. And today, we take the first major step towards remedying that situation.

 

"I commend all of my colleagues who have worked hard to bring this legislation to the floor, including Colin Peterson, Chairman of the Agriculture Committee, Bart Stupak, Rosa DeLauro and Chris Van Hollen.

 

"In the past few weeks we have seen the price of a barrel of oil suddenly drop from about $150 to below $100. This drop wasn't because of any increase in supply or decrease in demand. It was because speculators got nervous. They saw Congress beginning to take a harder line against them and they saw innovative Americans finding ways to reduce their consumption of oil.

 

"This is just the beginning. The market manipulation that the Bush Administration has turned a blind eye to for years will be stopped. In so many sectors of our economy - banking, mortgages, energy - Bush and the Republicans took the referee off the field and the American people are suffering because of it. They allowed a few greedy investors to run away with our markets. Well, this legislation puts the referee back on the field.

 

"This is real reform for the real people. It puts Main Street - not Wall Street - first."

[Guest House Republican Whip Roy Blunt]

Two days after ramming through an energy bill with no chance of becoming law – but a very real chance of worsening our current energy crisis if it ever did – Democrats once again spent valuable floor time today going through the motions on energy, but never approaching the level of seriousness needed to actually do something about it.

 

In going after so-called ‘speculators’ this afternoon, Congress selected a familiar target to blame for historically high energy costs. In reality, much of that blame belongs to members of this Congress who continue to deny reasonable energy access to millions of American families struggling under $100 oil – and soon to struggle under prohibitively high electricity, propane and home heating fuel costs as well.

 

Republicans, on the other hand, support an ‘all of the above’ approach to delivering the affordable energy Americans expect and deserve. It’s an approach that takes meaningful steps to add additional energy to the pipeline, while encouraging and rewarding Americans for using that energy more efficiently. The bill we saw on the floor today doesn’t attempt to do either of these things – and that’s part of the reason it will proceed no further.”

[Guest American for Progress]

Yeah! Don't forget about Republican Senator Ted Stevens of Alaska. He was indicted on Tuesday on seven felony counts of failing to disclose gifts that he received from an oil services company.

 

Mitch McConnell appeared alone before reporters at a regular briefing usually attended by most of the GOP leadership. He appeared grim and spoke briefly on Stevens. "The Republican conference, like you, just heard of this news," McConnell said. "No doubt we'll have more to say about this later." He turned from reporters' shouted questions and walked away.

 

It just a matter of time before this scam starts imploding. Several other past and present Republican members of Congress are under investigation by the Justice Department anti-corruption lawyers.

 

Sen. Ted Stevens (R-AK) "admitted during his corruption trial that he used his Senate staff for personal duties, a possible violation of ethics rules according to experts." Stevens and his wife Catherine said that one of his aides "coordinated the couple's finances, paid their bills and helped monitor the home remodeling project central to the charges against him."

[Guest Extagen]

Great Blog!

[Guest Hawkins]

When OPEC countries raised oil prices last Summer, there was a decrease in investment in the means of production, factories, buildings etc., because these could no longer produce sufficient profit this caused the World Markets to spiral downward.

[Guest DC Government Worker]

The new SEC disclosure requirements include provisions that permit the use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead

to reliable conclusions about reserves volumes. The new requirements also will allow companies to disclose their probable and possible reserves to investors. Currently, the Commission’s rules limit disclosure to only proved reserves.

 

The new disclosure requirements also require companies to report the independence and qualifications of a reserves preparer or auditor; file reports when a third party is relied upon to prepare reserves estimates or conducts a reserves audit; and report oil and gas reserves using an average price based upon the prior 12-month period rather than year-end prices. The use of the average price will maximize the comparability of reserves estimates among companies and mitigate the distortion of the estimates that arises when using a single pricing date.

[Guest Harold]

A major purpose of futures contracts traded on commodity exchanges is to provide a way for hedgers to insure themselves against unfavourable movements in the future values of spot prices.

 

To serve this purpose, speculators who take positions opposite to those of hedgers must collect information on thelikely future movements of spot prices, so that the value of the futures contract is an unbiased estimate of the value of the spot price on the delivery date specified in the futures contract. Policymakers, especially central bankers, commonly base part of their decisions on this feature, as they use the price of commodity futures contracts as a proxy for the market’s expectations of future commodity spot prices (Svensson, 2005; Greenspan, 2004).

[Guest Cyberian]

The Commodity Futures Modernization Act (CFMA) of 2000 created the so-called “Enron Loophole” by exempting over-the-counter energy trading undertaken on electronic exchanges from CFTC oversight and regulation.

 

CFMA stimulated the commodity price boom through mid-2008, as well as the subsequent sharp decline in commodity prices. financial investors have accelerated and amplified price movements. The financialization of commodity trading causes futures market quotations to be driven more by the speculative activities of financial investors and less by fundamental supply and demand factors.

 

The Enron loophole was addressed by legislation that entered into force on 18 June 2008.

 

This legislation provides for the previously exempt electronic exchanges to become selfregulatory organizations. It also gives the CFTC greater authority to require data reporting on trading and on the positions of hedgers and speculators, and to suspend or revoke “the operations or regulatory status of an electronic trading facility that fails to comply with the core principles, fails to enforce its own rules, or violates applicable CFTC regulations” (Jickling, 2008: 5).

 

However, some observers argue that this legislation has not gone far enough, because it covers only electronic trading but does not extend to bilateral swaps, and because it does not place energy commodities on the same regulatory footing as agricultural commodities that must be traded on the CFTC-regulated exchanges (Jickling, 2008; Greenberger, 2008).

[Guest JT Allen]

Remember: There IS NO SHORTAGE OF OIL in 2009-2010, so if you're paying $4.00+ a gallon like last summer (2008) you know you are being SCAMMED by big oil! Call you leaders and raise a stink!

Power to the people!

[Guest Human]

NO JT, your group "The Democrats" are in charge. I Would LOVE to read your explanation as to why your group can't bring down the price of gas.

 

Please make it good though. Your group has played with this economy "just to get the power back".

 

Your group HAS enabled Iran to develop the bomb by arguing that they have the RIGHT to nuclear power.

 

I will tell you this though; Your Group "The democrats" have made the world a whole heck of alot more dangerous than my group could EVER have.

 

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Remember: There IS NO SHORTAGE OF OIL in 2009-2010, so if you're paying $4.00+ a gallon like last summer (2008) you know you are being SCAMMED by big oil! Call you leaders and raise a stink!

Power to the people!

[Guest JT Allen]

And here I thought all this time, last summer, the President was from the Republican party ...