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

[Guest HUMAN]

I'm waiting for real posts in here. It was like when Obama came out for drilling in Alaska.

 

Now why did he all of a sudden come out for drilling? Shell oil told this administration to go to he**.

 

Now why would they do that? Because the Obama administration told shell oil that the 27 Billion Barrel Oil find that they found, that they could NOT Drill for it. This Administration would NOT give them an air quality permit.

 

Shell oil sank 4 billion dollars for the right to drill. Shell oil said that they would keep current operations in Alaska going, but for the rest? EXPLATIVE, EXPLATIVE.

[Guest LAW]

Shell never stated go to hell??? They are hoping to get a permit.

 

Today, EPA released two additional draft air quality permits for Shell Oil Company and ConocoPhillips Company exploratory oil drilling operations in the Alaska Arctic Outer Continental Shelf. This process will allow the public and other key stakeholders to provide important input and feedback on air permits needed for the drill rigs and supporting fleets of icebreakers, oil spill response vessels, and supply ships operations in the Chukchi and Beaufort Seas beginning in the 2012 and 2013 drilling seasons.

 

Shell and ConocoPhillips have proposed exploration drilling operations that would emit more than 100 tons of air pollutants a year and therefore, must have federal Clean Air Act Title V Permits. Both operations would emit less than 250 tons per year and therefore, do not need Prevention of Significant Deterioration (PSD) permits. These permits limit air pollution from the drill rigs and supporting fleet of vessels and will ensure the operations meet national ambient air quality standards.

 

Shell plans to begin exploration drilling with the vessel Kulluk in the Beaufort Sea beginning in the 2012 drilling season. ConocoPhillips plans to begin exploration drilling in the Chukchi Sea beginning in 2013.

 

Under its proposed Title V permit, Shell can operate only one vessel in the Beaufort Sea in any drilling season – either the Kulluk or the Discoverer, not both. The Discoverer and its support fleet are the subject of a separate EPA draft air quality permit currently undergoing public review and comment.

 

The Kulluk drilling rig arrived in Seattle’s Elliott Bay this week where its emissions reduction equipment will be retrofitted in order to comply with the draft Title V permit.

 

The draft Title V permits are subject to 45-day public comment periods as well as public hearings before EPA issues final permits.

 

EPA will accept public comments on the revised draft permits through September 6 and at public hearings in Barrow, Alaska on August 23 and 24, and in Anchorage on August 26. Final permits will be issued after public comments are reviewed and considered.

 

Comments must be postmarked or emailed to EPA Region 10 by September 6, 2011. The draft permits and supporting information as well as details about the public hearings are available on the web at: http://yosemite.epa.gov/R10/AIRPAGE.NSF/Permits/ocsap/.

[Guest LAW]

Back to the topic of speculating. Transparency saves taxpayers money and better protects the economy from shadow transactions backed with little to now capital.

 

Opening Remarks, Conference on Commodity Markets

Chairman Gary Gensler

 

August 25, 2011

 

Good morning and welcome to the Commodity Futures Trading Commission (CFTC). It’s great to see economists from so many fine universities across the globe gathered here along with an impressive group of government experts. Thank you for graciously sharing your time to discuss the issues affecting commodity markets. Your insights should be helpful to our surveillance and enforcement efforts at this agency. I want to thank Andrei Kirilenko and the Office of the Chief Economist for putting this conference together and for their contributions to this agency. Before you get started, I’m going to give you an update about where we stand today with the CFTC’s response to the aftermath of the 2008 financial crisis.

 

2008 Crisis

 

Three years ago, our country’s largest financial institutions were trading swaps in the shadows and this marketplace contributed to and helped accelerate the financial system’s downward spiral. Though the crisis had many causes, it is clear that the swaps market played a central role. Swaps added leverage to the financial system – more risk was backed by less capital. There was a belief that certain financial institutions were not only too big to fail but too interconnected to fail. But when AIG, Lehman and others collapsed, it was the taxpayers who had to pick up the bill to prevent the economy from diving further into a depression. And it wasn’t just the financial system that failed. The regulatory system that was put in place to protect the public failed too.

The Dodd-Frank Act

 

Congress and the President came together and responded to this crisis by passing a historic law, the Dodd-Frank Wall Street Reform and Consumer Protection Act. The law includes many important provisions, but two overarching goals of reform include: bringing transparency to the swaps market and lowering the risks of this market to the overall economy. Both of these reforms protect taxpayers from again bearing the brunt of a crisis and lower costs for businesses and their customers.

 

Promoting Transparency

 

The first overarching goal of reform will resonate well with the economists in this room. The law brings critical transparency to the derivatives marketplace. As you know, the more transparent a marketplace is, the more liquid it is, the more competitive it is and the lower the costs for hedgers, borrowers and their customers. In short, when markets are open and transparent, they are safer and sounder and, again, costs will be lower for companies and the people who buy their products.

 

The Dodd-Frank Act promotes both pre-trade and post-trade transparency. It moves certain standardized swaps transactions to exchanges or swap-execution facilities. This will allow buyers and sellers to meet in an open marketplace where prices are publicly available. It also requires real-time reporting of the price and volume of transactions, which ensures that everyone has this information. By minimizing what economists call “information asymmetry,” we reduce the advantages that Wall Street has over Main Street.

Lowering Risk

 

The second overarching goal of reform is equally as important. The law lowers risk to the overall economy by directly regulating dealers for their swaps activities and moving standardized swaps into central clearing, which will reduce interconnectedness in the swaps markets. Clearinghouses, which guarantee the obligations of both parties, have lowered risk for the public in the futures markets since the late-19th Century, and it’s time that we modernize the swaps market and provide the same protections for taxpayers.

 

Turning the Corner

 

This summer, we turned an important corner at the CFTC. We have now completed 11 final Dodd-Frank rules, and we have a robust schedule this fall to consider more final rules. We substantially completed the proposal phase this past spring. Starting next month, we are likely to take up rules relating to position limits, clearinghouse core principles, business conduct, entity definitions, trading, data reporting and the end-user exemption. It is important to point out that each of our final rules includes a careful consideration of costs and benefits completed with the involvement of the CFTC’s Office of the Chief Economist.

We’ve also reached out broadly on what we call “phasing of implementation,” which is the timeline that our rules will take effect for various market participants. This is critically important so that market participants can take the time now to plan for new oversight of this industry.

 

Next month, it is my hope that we vote on two proposed rulemakings seeking additional public comment on the implementation phasing of swap transaction compliance that would affect the broad array of market participants. The proposed rulemakings would provide the public an opportunity to comment on compliance schedules applying to core areas of Dodd-Frank reform, including the swap clearing and trading mandates, and the internal business conduct documentation requirements and margin rules for uncleared swaps. These proposed rules are designed to smooth the transition from an unregulated market structure to a safer market structure.

 

When all of our Dodd-Frank rules are completed, I believe that it is appropriate that the Commission take a step back at the right time in the future and carefully evaluate the new regulatory landscape as a whole – and how it is actually working. This is another example of our efforts to thoughtfully implement the reforms in the Dodd-Frank Act.

 

Conclusion

 

A year after the Dodd-Frank Act became law, there are those who would like to roll back its provisions and even return to the environment that led to the 2008 crisis. But as you know, economists have agreed for decades that transparency actually reduces costs. This law and our corresponding rules are about transparency.

 

In addition, until we complete our reforms, the public remains at risk. That’s why the CFTC is working so hard to think through the Dodd-Frank law’s swap-market reforms and implement them in a way that promotes more open and transparent markets, lowers costs for companies and their customers, and protects taxpayers.

[Guest Fedup]

Goldman Sachs is a snake. They are disguising their employees to work with elected officials from Congress to do their bidding.

 

http://crooksandliars.com/susie-madrak/goldman-sachs-vp-changes-his-name-goe

 

Peter Haller, a staffer hired this year to work for Issa on the Oversight Committee.Issa’s demand to regulators is exactly what banks have been wishing for.

 

Goldman Sachs has spent millions this year trying to slow down the implementation of the new rules. In the letter, Issa explicitly mentions that the new derivative regulations might hurt brokers “such as Goldman Sachs.”Haller, as he is now known, went by the name Peter Simonyi until three years ago. Simonyi adopted his mother’s maiden name Haller in 2008 shortly after leaving Goldman Sachs as a vice president of the bank’s commodity compliance group. In a few short years, Haller went from being in charge of dealing with regulators for Goldman Sachs to working for Congress in a position where he made official demands from regulators overseeing his old firm.

[Guest Average Joe]

I’m still wondering why Peter Simonyi had to change his name to work for Congressman Issa when Secretary Geithner didn’t have to change his to work for Obama! We need to expunge corruption (symbolic and real) from government from both parties.

[Guest AG]

Many circles are realizing that whoever is in power in Washington is run by the bankers. I am lucky that I have a great boss. Jesus is all knowing and above all.

[Guest HUMAN]

Funny!! I have friends who own banks, and you could not get them to live anywhere near washington d.c..

 

They view this town as being nuts.

 

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Many circles are realizing that whoever is in power in Washington is run by the bankers. I am lucky that I have a great boss. Jesus is all knowing and above all.

[Guest HUMAN]

Your own group Law.

 

http://www.huffingtonpost.com/2011/02/04/shell-no-beaufort-sea-dri_n_818319.html

 

Next time you want to play bull? Do it with a smile.

 

 

 

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Shell never stated go to hell??? They are hoping to get a permit.

[Luke_Wilbur]

This is the person that has the inside scoop on the Beaufort Sea drilling

 

John Pavitt

P: (907) 271-3688

F: (907) 271-3424

Pavitt.John@epa.gov

 

Here is a good article by the New York Times.

 

The Department of the Interior on Thursday granted Royal Dutch Shell conditional approval of its plan to begin drilling exploratory wells in the Arctic Ocean next summer, a strong sign that the Obama administration is easing a regulatory clampdown on offshore oil drilling that it imposed after last year’s deadly accident in the Gulf of Mexico.

 

http://www.nytimes.com/2011/08/05/us/05shell.html

 

From reading these articles I do not understand what this has to do with oil speculation.

 

But, I have read that both airlines and oil companies do not like speculators. Sometimes people get confused and blame the oil producers for the high prices when it really is the excessive market speculation that is to blame.

[JT Allen]

Tell me how this doesn't describe 99 percent of heavy-weight Fortune 1000 CEO's: (From the film "Limitless")

 

"Your power ... you flaunt it and you throw it around like a brat with his trust fund; you haven’t had to climb up all the greasy little rungs, you haven’t been bored blind at the fundraisers, you haven’t done the time in that first marriage to the girl with the right father, you think you can leap over all in a single bound, you haven’t had to bribe or charm or threaten your way to a seat at that table ...".

[Guest HUMAN]

Reliance on other countries other than ourselves. <~~~ This is my main point.

 

There are other points like the internet and human nature.

 

I can post international business links in here that would have everyone in here with eyes wide open but it would detract people from investing with in this country.

 

Leaving it to some one else gets REAL TIRING.

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This is the person that has the inside scoop on the Beaufort Sea drilling

 

John Pavitt

P: (907) 271-3688

F: (907) 271-3424

Pavitt.John@epa.gov

 

Here is a good article by the New York Times.

 

 

 

From reading these articles I do not understand what this has to do with oil speculation.

 

But, I have read that both airlines and oil companies do not like speculators. Sometimes people get confused and blame the oil producers for the high prices when it really is the excessive market speculation that is to blame.

[Luke_Wilbur]

Reliance on other countries other than ourselves. <~~~ This is my main point.

 

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That has been my point from the get go. We need to have more of our oil drilled and used for USA consumption only. The bidding process should be for American companies until our country gets back on its feet again. Then we can open the market more. The Chinese restrict their rare earth metals, why should we not do the same with our oil and natural gas?

 

I am now at fault for deviating from the topic here

 

So here is a good link for your collection Human.

 

The Securities and Exchange Commission today voted unanimously to seek public comment on a wide range of issues raised by the use of derivatives by mutual funds and other investment companies regulated under the Investment Company Act.

 

http://www.sec.gov/news/press/2011/2011-175.htm

 

I hope people speak out on this issue. There should be real penalties for the individuals that are playing with our economy for profit. They will continue this until the governors of the country say no.

 

[Guest LAW]

Federal regulators should adopt a rule with real teeth to limit oil speculators, not a watered-down measure set for a vote on Tuesday, Sen. Bernie Sanders said. The Commodity Futures Trading Commission is slated to consider a rule that Sanders said "will do little or nothing" to limit traders who artificially drive up gasoline and home heating oil prices. "At a time when the American people are experiencing extremely high oil and gas prices, this would be simply unacceptable," Sanders wrote in a letter to Chairman Gary Gensler.

 

Sanders said the weak proposal before the commission falls short of what Congress intended in last year's Wall Street reform law. The Dodd-Frank Act required the commission to finalize rules on speculators by last Jan. 17. "If the CFTC had done its job and obeyed the law, consumers would have received real relief at the gas pump during the past nine months, particularly during the summer driving season. Unfortunately, this did not happen."

 

The commission still could act in time to substantially lower heating oil prices this winter. "This is more important now than ever," Sanders said. He cited new projections by the Energy Information Administration that heating oil prices in the Northeast will set a new record this winter and climb to more than $3.70 a gallon. Vermonters could pay up to $4 a gallon for heating oil this winter, he added. "If these projections are accurate, it will be harder than ever for Vermonters and nearly 7 million other Americans who heat their homes with fuel oil to stay warm this winter. We need the CFTC to be vigilant and make sure that this does not happen," Sanders said.

 

Sanders also cited mounting evidence that speculators - not supply and demand - have driven up prices. The latest study on the role of speculators came in a new report by Better Markets, a group favoring limits on speculative trading. The study looked at 25 years of index funds tied to the value of oil, wheat and other commodity contracts. It found a clear link between an uptick in futures market prices as contracts expire and roll into new deals.

 

"The bottom line is that we have a responsibility to ensure that the price of oil is no longer allowed to be driven up by the same Wall Street speculators who caused the devastating recession that working families are now experiencing," Sanders said. "That means that the CFTC must finally do what the law mandates and end excessive oil speculation once and for all."

[Guest Luke]

The oil speculators are raising up the prices of oil to get President Obama out the door. This phony crisis to manipulate to the American People is disgusting. Their goal is to raise gas to $5 dollars a gallon and break the economy. They should be thrown in jail for frauding us.

 

Read this article

 

http://www.cftc.gov/PressRoom/SpeechesTestimony/chiltonstatement022412

 

Speculators and Commodity Prices—Redux

Commissioner Bart Chilton

February 24, 2012

 

On March 16, 2011, I spoke to an industry group concerning the impact of speculative activity on commodity prices. Eleven months later, I’m still talking about it, and saying almost precisely the same thing. Speculators are necessary liquidity providers to our markets, and while they perhaps are not driving prices to uneconomic levels, they certainly have an effect on prices—above and beyond where they might otherwise go—and American consumers and taxpayers are shouldering that burden.

 

President Obama spoke about rising gas prices yesterday. You can’t turn on the television or the radio without hearing about record high gas prices, and yet the CFTC has not yet been able to implement Congressionally-mandated position limits to put the brakes on excessive speculation in oil and other commodity markets. Meanwhile, trade associations representing Wall Street interests have sued us in federal court in order to impede our imposition of position limits.

 

So, I find myself repeating—and repeating—the same message: it’s high time to kick it in gear and use the one tool we have to appropriately address high oil and gas prices.

 

In my remarks last year, I listed numerous academic studies, reports, and citations supporting the contention that speculators have some effect on commodity prices. I did so because some had expressed—with unwarranted confidence—that no evidence even existed. For example:

 

Agriculture and Food Policy Centre. The Effects of Ethanol on Texas Food and Feed. Texas A&M University. 10 Apr. 2008.

 

Aliber, R.Z. Interview by Michael Patterson and Elizabeth Stanton.“Oil Rally Topped Dot-Com Craze in Speculators’ Mania.” Bloomberg. 13 June 2008.

 

el-Badri, Abdalla. Interview by Maher Chmaytelli. “OPEC Calls for Curbing Oil Speculation, Blames Funds.” Bloomberg. 28 Jan. 2009.

 

Baffes, John and Tassos Haniotis. Placing the 2006/08 Commodity Price Boom into Perspective. The World Bank Development Prospects Group. July 2010.

 

Basu, Parantap and William T. Gavin. “What Explains the Growth in Commodity Derivatives?”. Federal Reserve Bank of St. Louis Review. Jan./Feb. 2011.

 

Berg, Ann. Agricultural Futures: Strengthening Market Signals for Global Price Discovery. United Nations Food and Agriculture Organization. 2010.

 

Branson, Richard., Michael Masters and David Frenk. Letter. The Economist. 29 July 2010. Print.

Braun, Joachim von. “Time to regulate volatile food markets.” Financial Times. 9 Aug. 2010.

Eckaus, R.S. The Oil Price Really is a Speculative Bubble. MIT. 13 June 2008.

 

Evans, Tim. Interview by David Gaffen. “The Official Demise of the Oil Bubble.” Wall Street Journal. 10 Oct. 2008.

 

Frenk, David. “Review of Irwin and Sanders 2010 OECD Report.” Better Markets Inc. 30 June 2010.

Gheit, Fadel and Daniel Katzenberg. Surviving Lower Oil Prices. Oppenheimer & Co. 2008.

Gilbert, Christopher L. “How to Understand High Food Prices.” Journal of Agricultural Economics. 23 Apr. 2010.

 

Ghosh, Jayati. Commodity Speculation and the Food Crisis. The World Development Movement. Oct. 2010.

 

Hernandez, Manuel and Maximo Torero. Examining the Dynamic Relationship between Spot and Future Prices of Agricultural Commodities. International Food Policy Research Institute. June 2010.

Institute for Agriculture and Trade Policy. Betting Against Food Security: Futures Market Speculation. Trade and Global Governance Program. Jan. 2009.

 

International Monetary Fund. Regional Economic Outlook: Middle East and Central Asia. Washington, D. C. May 2008.

 

Kemp, John. “Crisis Remakes the Commodity Business.” Reuters. 29 Oct. 2008.

Khan, Mohsin S. “The 2008 Oil Price “Bubble.” Policy Briefs PB09-19. Peterson Institute for International Economics. Aug. 2009.

 

Krugman, Paul. “Oil Speculation”. The Conscience of a Liberal. The New York Times Blog. 8 July 2009.

 

Lines, Thomas. Speculation in Food Commodity Markets. World Development Movement. Apr. 2010.

Masters, Michael W. Testimony of Michael W. Masters Managing Member/Portfolio Manager Master Capital Management, LLC before the Commodities Futures Trading Commission. 5 Aug. 2009.

Masters, Michael W. and Adam K. White. The Accidental Hunt Brothers: How Institutional Investors Are Driving up Food and Energy Prices. 31 July 2008.

 

Mayer, Jörg. The Growing Interdependence between Financial and Commodity Markets. United Nations Conference on Trade and Development. No. 195. Oct. 2009.

 

Medlock, Kenneth B. and Amy Myers Jaffe. Who is in the Oil Futures Market and How Has It Changed?. Rice University. 26 Aug. 2009.

 

Molen, M. van der. “Speculators Invading the Commodity Markets: a Case Study of Coffee.” Utrecht: Science Shop of Law, Economics and Governance. Utrecht University. 2009.

 

Morse, Edward and Michael Waldron. “Oil Dot-com.” Energy Special Report. Lehman Brothers. 29 May 2008.

 

Newell, J. “Commodity Speculation’s “Smoking Gun”.” Probalytics: Probability Analytics Research. 17 Nov. 2008.

 

Nissanke, Machiko. “Commodity Markets and Excess Volatility: Sources and Strategies to Reduce Adverse Development Impacts.” Common Fund for Commodities. University of London. Nov. 2010.

Phillips, Peter C.B. and Jun Yu. “Dating the Timeline of Financial Bubbles During the Subprime Crisis.” Cowles Foundation Discussion Paper No. 1770. Yale University. Singapore University. 13 Sept. 2010.

 

Ray, Daryll E. and Harwood D. Schaffer. “Index funds and the 2006-2008 run-up in agricultural commodity prices.:” Policy Pennings. Agricultural Policy Analysis Center. University of Tennessee. 7 Jan. 2011.

 

Roubini, Nouriel. “The Risk of a Double-dip Recession Is Rising.” Financial Times. 23 Aug. 2009.

Sachs, Jeffrey. Interview by Ian Katz and Ari Levy. “Corn Futures Spark Riots as Speculators Take Trading to Limit.” Bloomberg. 14 Dec. 2008.

 

Schulmeister, Stephan. “Trading Practices and Price Dynamics in Commodity Markets.” Syngenta & ELO Conference on Food & Environmental Security. Austrian Institute of Economic Research. Vienna University. 18 Mar. 2008.

 

Schutter, Olivier de. Food Commodities Speculation and Food Price Crises: Regulation to reduce the risks of price volatility. United Nations. Sept. 2010.

 

Shiller, Robert J. Interview by Clifford Krauss. “Commodity Prices Tumble.” The New York Times. 13 Oct. 2008.

 

Silvennoinen, Annastiina and Susan Thorp. Financialization, Crisis and Commodity Correlation Dynamics. Quantitative Finance Research Centre. University of Technology Sydney. Jan. 2010.

 

Singleton, Kenneth J. “Investor Flows and the 2008 Boom/Bust in Oil Prices.” Graduate School of Business, Stanford University. SSRN 1793449. 23 Mar. 2011.

 

Tanaka, Nobuo. Interview by Ayesha Rascoe and Roberta Rampton. “IEA says speculation amplifying oil prices moves.” Reuters. 30 June 2009.

 

Tang, Ke and Wei Xiong. “Index Investment and Financialization of Commodities.” NBER Working Paper no. w16385. Princeton University. Renmin University. Sept. 2010.

 

Trostle, Ronald. Global Agricultural Supply and Demand: Factors Contributing to the Recent Increase in Food Commodity Prices. United States Department of Agriculture Economic Research Service. July 2008.

 

Tudor Jones, Paul. “Price Limits: A Return to Patience and Rationality in U.S. Markets.” Speech presented at the CME Global Financial Leadership Conference, Naples, FL. 18 Oct. 2010.

 

Turbeville, Wallace C. “Consumers, the Food Crisis, and Index Funds.” New Deal 2.0: A Project of the Franklin and Eleanor Roosevelt Institute. 18 Aug. 2010.

 

United Nations Conference on Trade and Development. The Global Economic Crisis: Systemic Failures and Multilateral Remedies. Report by the UNCTAD Secretariat Task Force on Systemic Issues and Economic Cooperation. 2009.

 

United Nations Conference on Trade and Development Geneva. Trade and Development Report, 2009: Chapter II, The Financialization of Commodity Markets. 2009.

 

United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development. Report of the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System. 24-26 June 2009.

United Nations Food and Agricultural Organization. Extraordinary Joint Intersessional meeting of the Intergovernmental Group (IGG) on Grains and the Intergovernmental Group on Rice. Committee on Commodity Problems. 24 Sept. 2010.

 

United Nations High Level Task Force. The High Level Task Force on the Global Food Security Crisis Progress Report. 2008.

 

United States Senate Permanent Subcommittee on Investigations. Excessive Speculation in the Natural Gas Market. 25 June 2007.

 

United States Senate Permanent Subcommittee on Investigations. Excessive Speculation in the Wheat Market. 24 June 2009.

 

Wray, L. Randall. “The Commodities Market Bubble: Money Manager Capitalism and the Financialization of Commodities.” Public Policy Brief No. 96. The Levy Economics Institute of Bard College. 2008.

 

Those are just some examples, and here’s another one: a Goldman Sachs study last year stated that each million barrels of net speculative length in the markets adds as much as 8 to 10 cents to the price of a barrel of crude oil. As of February 23, 2012, the CFTC Commitment of Traders Report showed that “managed money” held net positions in NYMEX crude oil contracts equivalent to 233.9 million barrels. Using the Goldman Sachs research figure, and multiplying 10 cents times 233.9 million would mean that, theoretically, there’s a “speculative premium” of as much as $23.39 a barrel in the price of NYMEX crude oil.

 

Information Handlings Services (HIS), a global information company, has estimated that a $10 rise in the price of a barrel of crude oil translates into a 24 cent rise in the price of gas. Accordingly, the “speculative premium” of $23.39 a barrel translates into a 56 cent a gallon increase at the pump. In other words, each dollar increase in a barrel of oil equals a $.024 cent increase, $.24/10 = $.024), and $.024 x $23.39 per barrel equals $.56 per barrel.

 

If you drive a Honda Civic with a gas tank capacity of 13.2 gallons, that means the “speculative premium” costs you $7.39 every time you fill up (13.2 x $.56= $7.39).

 

If you drive a Ford Explorer with an 18.6 gas tank capacity, the total is $10.41 (18.6 x $.56 = $10.41).

And, for the Ford F150, the most popular pick-up in America, with a gas tank capacity of 26 gallons, it’s $14.56 more per fill up (26 x $.56 = $14.56).

 

Multiplying each of these figures by 52 weeks in a year, if you fill up once a week, the Civic owner is putting out $384.28 more per year, the SUV owner $541.32 more, and the pickup owner $757.12 more.

 

These “speculative premium” figures are based on managed money positions reported in the CFTC’s Commitment of Trader reports. There are numerous ways of interpreting these numbers; some may think the speculative figures should indeed be higher (and here’s why—we didn’t include in these figures speculative activity of commercials), and some may argue that they are lower. In any event, given the breadth, depth, and overall trending of these figures, there can be no doubt that speculative activity does indeed have some effect on commodity pricing.

 

I sure hope I’m not saying the same thing this time next year.

[Guest Derek]

I knew there was something fishy going on. It does not make sense that gas prices are this high.

 

Indeed, Bloomberg News reported last week that “the U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency. ... Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal.” As a result, “the U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011.” This transformation could make the U.S. the world’s top energy producer by 2020, raise more tax revenue, free us from worrying about the Middle East, and, if we’re smart, build a bridge to a much cleaner energy future.

 

http://www.nytimes.c...d-question.html