Stopping Oil Manipulation

Apparently Speaker Pelossi is willing to take the chance Democrats will be seen as favoring high gasoline prices while betting that Republicans will be blamed for prices at the pump. But in the Senate, the bill to stop oil manipulation was filibustered by Republicans on grounds they want more oil drilling. What a mess!

Alexis, I'm very pleased to learn you are covering this subject of concern for the failure of effective regulatory oversight, as you are in the case of naked short selling of corporate securities. As you stated you are studying this problem further, may I suggest that an excellent way to do that is to view the video of the House Energy and Commerce Subcommittee hearing held June 23, which is linked here: http://energycommerce.house.gov/cmte_mtgs/110-oi-hrg.062308.EnergySpec.shtml Statements and questions by subcommittee members are informative, but the testimony of the witnesses on the first panel (experts in the energy and futures markets) is extremely informative. The second panel includes representatives of industries using fuel, including airlines and trucking, as well as home heating oil. The other two panels include the acting chairman of the CFTC and the president of the NYMEX, as well as a London representative of the Intercontinental Exchange, the dark market for oil futures trading (based in Atlanta). The latter two panels are most helpful in identifying who the culprits are in the outrageous abuse of the financial markets and the American people. HR 6330 is the House bill to correct the problem, and it is being held in committee until its release is approved by Speaker Pelossi.

Business's on windmill electric power can not tack off if the democrats keep trying to topple the republicans Weill they are in power the country of America needs power RgHT NoW>

Alexis, To learn about the oil supply problem, please read two books. "Twilight in the Desert" The Coming Saudi Oil Shock and The World Economy by Mathew R. Simmons. "Hubbert's Peak" The Impending World Oil Shortage by Kenneth Defeyes. After you have read these two books, you will know more about the oil supply problem then 99% of the people you interview. Then have both of these authors on you show. Please take the time to read these books. This is the second biggest problem facing our country after security. Keep up the good work, I enjoy your show. Jim Hanneke Hattiesburg, MS

lexis; Simple Solution, maybe too simple... Anyone can buy oil futures. If you can't prove that you can take physical delivery of this commodity; then you cannot buy it. One may lease storage tanks or a portion thereof but that will only increase supply as a rush to build more (despite the incredible permit process) will occur. The first candidate to suggest it, under emergency executive order will win hands down. George could win a third term...

STOP that manipulation. You should be ashamed of yourself

The indifference is that the Republicans are picking up all the democrats loses as they tripped up with out containing a safe net barrier to trip up with from ,!So republicans say to democrats cry all you wants still not gonna do you no good That's right the republicans have it all the spoils that demos could not contain You are Looking at the Republicans most wealthy presidency in world history And I have a stock Yet to start Plastic transportable liner units to be sold to the world shipping Steel plastic core lining's for ship stores!!!

The Dutch company Optiver is the fall guy. the CFTC had to make it look good so they charged Opiver to take the heat off themselves. I am suprised the airlines, Trucking companies etc are not organizing a class action lawsuit against the CFTC for poor management of commodities trading. After all they are supposed to control what goes on and have done little or next to nothing up till now to protect the consumer. BEven Billionair George Soros says there needs to be better regulation in commodities trading.

Jim, Follow the trail of money ... special interest and the politically correct crowd are destroying the marketplace. Supply and demand on it's own can no longer determine the price. If you just take your example of the refineries, look at the regulation involved in building one. You have the environmental lobby saying ' Global Warming ' with no real proof we are having any affect on the planet. Politicians looking to cover their butts by making sure they are 'Green' so they can get re-elected and get more handouts, and finally the local officials saying 'Not in my backyard' when it comes to finding somewhere to build one .... so you tell me who's to blame? The way I see it Oil companies are at the bottom of the list. If I were an oil company, why go through that mess, just keep cashing the check and let the public suffer. They are not out to make our lives better, they are businesses out to make a profit. Blame the tree huggers and every other group that put their cause above the greater good. It takes leadership to solve these problems and I haven't seen one of them in a very long time.

Alexis, Goldman may or may not have inside information but even if they do not, the ignominious thing that has received little if any attention is their arbitrary "price targets" their "analysts" have proclaimed in recent weeks. They have a serious conflict of interest as I explained in my column on June 20th: Speculation: Good for America but Manipulative Analysis = Crime against Humanity Goldman Sachs is at it again. As we all know, oil was pulling back yesterday on news that China was going to stop subsidizing oil, which would require citizens to pay more out of pocket. The common interpretation of that news was that it would assuage demand in China, which is often used by Goldman analysts to justify any arbitrary price target they conjure up. Goldman didn’t waste any time today coming out with a “glass is half empty” proclamation saying “China price hike unlikely to curb demand”. Frankly, with essential commodities, the firm should not be allowed to offer ANY analyst coverage if they have any type of position in a commodity, directly or indirectly – EVEN IF they disclose it (as they always do with stocks). What they really need to do is treat people found guilty of market manipulation by knowingly disseminating false information for financial gain (or to avert losses) as those who commit treason against their country. The same should apply to analysts or firms who disseminate subjective information that cannot be proven false but clearly benefits the firm’s investment position. If the consequences are more severe than the typical short term vacation at Club Fed, I believe it would have a more viable effect than more government red tape. For example, if it were to be found that analysts at investment firms were making outlandish, seemingly arbitrary price targets for oil; going to $200 per barrel while they or any subsidiary or hedge fund had a long position in oil at the time, they should be charged with treason, defined as “the betrayal of a trust or confidence; breach of faith; treachery.” I suspect there are firms doing this and the timing of Goldman’s public proclamations seem a bit suspicious. Whatever the case, it should be considered a crime against humanity as it has literally led to rioting and starvation in some countries. Senators like Joe Lieberman and John McCain are calling for investigation of speculators. Speculation is good. Without it we would still be in the stone ages. Speculators alone have not caused the run up in oil to today’s levels. If it were speculation alone, this would have happened long ago. I believe it is the –ANALYSTS- who feed the frenzy of excessive speculation who are to blame and I think it would be naive to think they don’t have a vested interest somewhere along the line to make these ridiculous predictions while knowing they would become self-fulfilling prophecies – just like in the Tech/Internet bubble of the 90’s. This bubble is much more harmful to the public because when analysts like Henry Blodget made outrageous recommendations and predictions for the valuation of Yahoo, the only people hurt were those who participated in the stock market – by choice. No matter how absurd the market cap of YHOO was at $200 BILLION – the consumer didn’t pay more for Yahoo’s services (free), the same with AOL or GE appliances. The consumer prices were not affected. The analysts at these firms who are throwing gasoline on the fire (no pun intended) in the commodities market are destroying the financial well being of hundreds of millions of consumers. They have a constitutional right to express their beliefs regarding the future price of oil; however, if their firms are profiting from the upward direction of those oil prices by any means other than paid subscriptions to their analysis – they should be charged with crimes against humanity. Legislate THAT and you will see a much more circumspect approach to their analysis. I promise you.

Jim cool point.. I can tell you down here in Mississippi when a numbered of us filed DOE complaints on price fixing the Vicksburg Ms market those complaints I believe weren't acted on. Having followed the oil commidities like I did I can tell you the State AG just turned the other way. Didn't care. Also what right does a private jobber who has no webiste,doesn't publicly trade on the NYSE have to tell two corporations like Kroger and Super Walmart that they can't put in gas pumps? That has been happening down here. The good news is Kroger stood up went to the city council and force the gas pump issue on them and won. Now the jobber Waring threatened both Kroger and Super Walmart that he wouldn't supply gas to both of them if they put in gas pumps. Interesting monopoly game eh?

Chuck: You're really close on the jobber issue. Here in Wisconsin, I remember when I was a kid, my stepDad took a trip with the local farmer's co-op to Minneapolis and was astonished to see tankers from all the Major brands of oil companies loading fuel from the same storage tanks- Standard Oil, Shell, Marathon, etc. In spite of that, there was competition between the different companies' gas stations; sometime as much as $.15 a gallon difference. Where I live now, central WI, in Mauston, WI there are eight different station, all with the exact same price! What happened to competition? Granted, WI has an archaic law requiring a mininum markup of 6%(which is trying to be repealed), but everybody the same? Seems awfully fishy to me! I have been told by some station personnel that the haulers who deliver the fuel tell the stations what price to set. You guessed it. the jobbers. Go to any city, any state, and you'll see the same situation, identical prices. To me, that's price fixing, but you won't see any state govt looking into it. While speculators share the greater blame, with jobbers next, it's also the oil companies who share a big portion. Why no new refineries since 1976, or upgrades to existing ones? So they can better manipulate prices by claiming refining shortfalls. My two cents.

I don't get this case. A 2007 case, nothing recent or will it take till next year to get this years successfull traders? Yeah I think the oil speculators are jerks, but where are else could they put their money when stocks and real estate returns are forming falling knife chart patterns? Maybe optiver was involved when there were few orders going through and their orders moved the market- the last 5 minutes before settlement sounds like a illiquid time to me, who would want to trade that time frame if they can't unload the position? So when companies need to hedge their positions what kind of prices will they get when speculation has been criminalized? What specific rule did Optiver violate? They made money on the futures market, that's the only charge I've seen. So if we now short this market and make money will I get arrested for trading? Or will I be left alone cause I wasn't causing the public any harm?

Optiver is just the sacrificial lamb here. The CFTC has to find someone to sacrifice, so they pick the smallest company they can find, the one with the least political influence and connections. The CFTC must look busy after all, they must give the appearance of doing something for their salaries. In the US Government, as I'm sure you well know, appearances are everything. But Optiver isn't the only culprit, just the smallest, most easily run down member of the herd. The CFTC has too much to lose by going after the really big players, those with the most influence and connections. Heads would roll then, wouldn't they? Not at the biggest companies doing the speculating and manipulating, but at the CFTC. Giving the CFTC more authority now is like closing the barn door after the horse is long gone. And never forget, the CFTC is a political animal, subject to the whims of its owners, who are not the US taxpayers, despite the phony appearances to the contrary. Insider trading should already be against the law, but no one in Congress is talking about that now, are they? Certainly leaves little room for doubt as to where their loyalties truly lie.

It seems to me simpler to look at it this way. Five people are standing in a circle in the middle of nowhere. Each is hungry. I have five candy bars in my bag that cost me $1 each to buy. I put four of them up for sale to the highest bidder. The successful bidder pays me $2 each for four bars. He then puts three of them up for sale to the highest bidder. He receives a bid of $4 each for the 3 bars. The buyer then puts two of the bars up for bid and receives a bid of $6 each. That buyer sells one bar for $8. All this is legal. But this is what speculators do to the cost of oil when they buy "futures" contracts from each other and then sell them to the eventual consumers or users. If instead of "bundling" all the bars, I had prorated the bars, one to each person, each purchaser would have been able to buy a bar from me for $2, the same price I would have received from bundling them. Maybe it is time for the UN or OPEC or the world oil producing countries to begin pro-rating oil by using some means other than money to decide what is the fairest way to split up the "pot" of oil. We in the US consume the most oil, and might have the most money now, but that will not be the case in the near future. Now might be the appropriate time to devise another way to split the oil among consumer nations more fairly, so that each nation has to absorb the stress of shortages the best it can, rather than bankrupting nearly all of us and enriching the few producer nations.

ALexis I agree with u. Now that the Speculators are focused on. Look further down the food chain of retail price gas. Jobbers, no mattter what stripe, private and public should get the scrutiny next. Vicksburg Ms is good exaample of the perception of high gas prices and perception of price fixing and telling two publlic traded corporations such as Kroger and Super Walmart that they can't put in gas pumps in this marketplace. Kroger is going to be up and running in the fall. Now the harder questions should raised on companies like Waring Oil LLC who used intimidation to tell Kroger and Super Walmart that they can't put in gas pumps for fear it would make gas prices more competitive. Also companies like Pantry Inc which owns all the Kangeroos,ZIPS, etc through out the Southeast for they too exploited and benefited from high gas prices. People are asking the hard questions over the fact that how come Vicksburg Ms which also has a pipeline why aren't they cheaper? Like Clinton and parts of Metro Jackson are cheaper than Vicksburg Ms. It time nwo to see if other jobbers in smaller markets have been ordering companies like Kroger,Super Walmart and Cotsco preventing them from putting in gas pumps. By the way Pantry inc sued Costco in Alabama over the fact that Costco had cheaper retail gas prices. U should look into this one. The case happen over year ago and Pantry Inc lauched the legel suit against them. It's time to look beyond the speculators and down the retail gas food chain and see who else beneiftied from high prices and what monetary value they got out of it.