Your Gas Pain Is Caused By "PURE SPECULATION"

[omega minimo]

When will we quit letting Speculators run the planet and ruin our lives (ruin the planet and run our lives)?


REP. NANCY PELOSI (D-CA), House Minority Leader
displays her red, white and blue balls

“We have TWO OIL MEN IN THE WHITE HOUSE. The logical conclusion from that is $3.00 a gallon gasoline.
This energy bill that was passed in the course of last year was -- the policy was negotiated in private with lobbyists from the energy industry. Even the Department of Energy, the Bush administration Department of Energy, said that it would increase the price at the pump, and it did."

In a 4-27 discussion on the Jim Lehrer News Hour, the finger is pointed directly at “PURE SPECULATION.” (Can you say, “Housing Bubble”?)

TYSON SLOCUM (research director for the energy program at Public Citizen, a consumer advocacy organization.): “Well, a lot of it does have to do with problems in the speculative market where prices are set. Many people don't know that the price of oil is not set by OPEC; it is set by energy traders, a lot of whom are in New York.”
<>
“And that's not a responsible use of these futures markets. They need to be used for traditional hedging activities, not for wild speculation. So you've got a small group of financial players that is reaping hundreds of millions or billions of dollars in profits, and American consumers are paying the price.”



RAY SUAREZ: Well, Tyson Slocum, you heard Rayola Dougher. Oil companies are just passing on their higher costs to consumers. Is that the way the math adds up for you?

TYSON SLOCUM, Public Citizen Organization: Well, we definitely respectfully disagree. I mean, first of all, on average, it costs a company like Exxon-Mobil about $20 to produce a barrel of oil, whether that's in Nigeria, Azerbaijan, Alaska, or Texas. They're then selling that oil to the American public at $70. So they're clearing, on average, about $50 profit for a barrel of oil.

So we have to remember that it's not just the Saudi royal princes that are getting wealthy when the price of oil shoots above $70 a barrel; it's all oil producers. And a company like Exxon-Mobil is a giant producer. Exxon-Mobil alone produces more oil than the entire kingdom of Kuwait.

And then, when you look at the profits, the oil industry has been emphasizing to the general public and to lawmakers that they actually do not make that much money. They say that, on average, other industries make more.

But when you look at the rhetoric that the oil industry uses with investors and in its annual reports, they boast about their huge profit margins; they use a radically different measurement of profit when they talk to investors; they measure profits as a share of capital investment.

RAY SUAREZ: Tyson Slocum, same question. If oil inventories are at an eight-year high, why does it cost so much more to buy a gallon of gas?

TYSON SLOCUM: Well, a lot of it does have to do with problems in the speculative market where prices are set. Many people don't know that the price of oil is not set by OPEC; it is set by energy traders, a lot of whom are in New York.

RAY SUAREZ: But what are they responding to, to raise the price?

TYSON SLOCUM: Well, they're responding to pure speculation. I mean, a lot of it -- the Wall Street Journal recently reported that new players, like hedge funds and other investment vehicles, are pouring hundreds of billions of dollars and they are treating these crude oil futures markets like it's a Las Vegas casino.

And that's not a responsible use of these futures markets. They need to be used for traditional hedging activities, not for wild speculation. So you've got a small group of financial players that is reaping hundreds of millions or billions of dollars in profits, and American consumers are paying the price.

:patriot:

WHEN IS ENOUGH ENOUGH?

 

 

[OregonBlue]

1. Again, is EXXon buying up their own stock and obscuring true profits?

I keep reading that Exxon is only making 7% profit but I heard
one energy expert the other day say that the reason their
profits are not much higher is because they are buying back
their own stock and that is allowed as a
"write-off". So basically they are reaping much
higher profits but pooring the money into buyback. Bet
they're all doing it. If that's true, we must make Congress
look at the books and tell us how much they are really making
and how much they are getting in royalties for pumping our oil
off of our lands, how much they're investing in refining, and how much they are paying to politicians to keep quiet about it!!

[omega minimo]

5. & if they own it at the well head, they are paying themselves for the oil!

Passing the speculator-invented costs on to the consumer.

More on how they downplay/boast about profits:

And then, when you look at the profits, the oil industry has been emphasizing to the general public and to lawmakers that they actually do not make that much money. They say that, on average, other industries make more.

But when you look at the rhetoric that the oil industry uses with investors and in its annual reports, they boast about their huge profit margins; they use a radically different measurement of profit when they talk to investors; they measure profits as a share of capital investment.

And so, for example, in 2005, Exxon-Mobil had a 46 percent rate of return on its U.S. oil production on profits as a share of capital investment. It had a 59 percent rate of return on its refining operations in the United States as a share of capital investment.

That's why, when the price of oil goes up and the price of gasoline goes up, oil companies reap huge profits. There's a direct relationship between the record profits that the industry is making and the record prices that customers are paying.

And that's why we at Public Citizen are calling for a windfall profits tax on the industry, not to end their ability to profit -- no doubt that they're working hard to deliver a product to the American people -- but this type of windfall profit is harming the U.S. economy; it's hurting hardworking Americans. And a windfall profits tax, the proceeds could be used to finance alternative energy.
 

 

[undergroundpanther]

2. The stock markets

Are not run by "invisible hands" it is a great big casino.
A great big ponzi scam.Right now alot of people are betting on oil.

[omega minimo]

3. Right in our faces! "Invisible hands"! They're smacking us silly!

:wtf:

[omega minimo]

4. And so glad Pelosi had the spine: "WE HAVE TWO OIL MEN IN THE WHITE HOUSE"

Which every citizen and every Democrat already knows and rarely says...................

[dipsydoodle]

6. Hopefully it won't get as farcical

as when the Bunker Bros. decided to manipulate the silver market :
http://www.buyandhold.com/bh/en/education/history/2000/hunt_bros.html

[sam sarrha]

7. I heard that 20% goes to Wall Street speculators using hedge funds..

[Viva_La_Revolution]

8. can we say ENRON REDUX girls and boys?

sounds like the same kind of trading practices. :mad:

[TahitiNut]

12. You got it. Enron TRADED energy and transmission 'rights' ...

... and didn't produce a megawatt of energy themselves. In leveraging unregulated entitlements (not 'rights'), Enron created contrived shortages and engaged in the equivalent of extortion - an extortion backed by the coercive force of a federal government which corruptly paved the way through the bastardization of FERC (under Wendy Gramm, Sen. Phil Gramm's wife) regulatory policies and willfully corrupt enforcement of interstate trade in energy. Never before in our history has the Federal government been so extensively and corruptly in collusion with a cabal of private corporations against the fundamental interests of the people of this nation.

[omega minimo]

14. and CA voters got duped into dumping Davis & getting the Governator

who is a Repug doing industry's bidding.

"Never before in our history has the Federal government been so extensively and corruptly in collusion with a cabal of private corporations against the fundamental interests of the people of this nation."

Collusion witha corrupt "cabal of private corporations" from TEXAS.

And they're doing it again.

[meow2u3]

9. Spitzer ought to go after the energy traders

and charge them with bilking the public for their personal gain.

[omega minimo]

10. Hey!

:bounce:

[MadHound]

11. While I admit some of the hike in gas prices is from speculation

The root cause of the rise in gas prices is A: a rise in demand and B: a decrease in supply.

In the past five years we have seen two countries with a population six times the US population suddenly start emulating the US and start developing an oil economy. India and China are consuming increasingly larger amounts of crude in a bid to become first rate economic engines. Thus we see the demand expand drastically, which drives up prices. India is another emerging oil economy with a thirst for oil, and thus there is even more demand.

Meanwhile, we're seeing the end of easily available cheap oil worldwide. The largest oil field in the world, Saudi Arabia's Ghawar oil field, is having to have twice the amount of seawater pumped into it as the volume of oil that is retrieved from it. The price has been driven up high enough that it is now economically feasible for Canada to start tapping into its stock of oil shale. The oil wells that were capped in the US during the eighties are still capped because the price to retrieve this hard to get to oil is still too high. The last large strike of oil in the world was forty plus years ago, now the news touts oil strikes like the recent one in Kuwait as the next big thing. Trouble is that new Kuwaiti strike only contains 13 billion barrels, less that two year's supply at US consumption rates.

Sure, energy companies and speculators are doing some gouging, and driving the price up a bit. But don't let that obscure the basic fact that the world is running out of cheap, easily obtainable oil. The price oi crude these days is still driven by basic market forces, a sky high demand coupled with a dwindling supply.

All the more reason why we need to switch to clean, renewable alternatives ASAP. Biodiesel, wind, solar and other alternatives can power our country and the world. It's time we started tapping into them before it's too late.

[omega minimo]

13. Spec on FUTURE supply and demand is still speculation driving share prices

artificially higher "like a Las Vegas Casino."

(Please picture yelly CAPS): "And that's not a responsible use of these futures markets. They need to be used for traditional hedging activities, not for wild speculation."

THAT is the bullshit that is driving up these prices, while the oil producers stay on their winter (suppressed) production schedules (artificially suppressing their OWN supply and pirating the needs of market DEMAND) and celebrating RECORD profits and RECORD obscene benefits for CEOs.

And they're doing it RIGHT IN OUR FACE. :evilfrown:


"...first of all, on average, it costs a company like Exxon-Mobil about $20 to produce a barrel of oil, whether that's in Nigeria, Azerbaijan, Alaska, or Texas. They're then selling that oil to the American public at $70. So they're clearing, on average, about $50 profit for a barrel of oil.
So we have to remember that it's not just the Saudi royal princes that are getting wealthy when the price of oil shoots above $70 a barrel; it's all oil producers. And a company like Exxon-Mobil is a giant producer. Exxon-Mobil alone produces more oil than the entire kingdom of Kuwait.
<>
"Well, they're responding to pure speculation. I mean, a lot of it -- the Wall Street Journal recently reported that new players, like hedge funds and other investment vehicles, are pouring hundreds of billions of dollars and they are treating these crude oil futures markets like it's a Las Vegas casino.

"And that's not a responsible use of these futures markets. They need to be used for traditional hedging activities, not for wild speculation. So you've got a small group of financial players that is reaping hundreds of millions or billions of dollars in profits, and American consumers are paying the price."