Why The Huge Spike in Oil Prices? "Peak Oil" or Wall Street Speculation?

Price is sky-high because vampire oil companies are allowed to by Obama, complicit congress who all get their "cut;" they know public is getting hip to bogus rip-off, gas only $1.87 U.S. to make, up from 5 cents; world awash in oil and they are completing looting of international public before bottom drops out of fake pricing scheme

Global Research

By F. William Engdahl

03/16/2012

Since around October last year,  the price of crude oil on world futures markets has exploded. Different people have different explanations. The most common one is the belief in financial markets that a war between either Israel and Iran or the USA and Iran or all three is imminent. Another camp argues that the price is rising unavoidably because the world has passed what they call “Peak Oil”—the point on an imaginary Gaussian Bell Curve (see graph above) at which half of all world known oil reserves have been depleted and the remaining oil will decline in quantity at an accelerating pace with rising price. 

Both the war danger and peak oil explanations are off base. As in the astronomic price run-up in the Summer of 2008 when oil in futures markets briefly hit $147 a barrel, oil today is rising because of the speculative pressure on oil futures markets from hedge funds and major banks such as Citigroup, JP Morgan Chase and most notably, Goldman Sachs, the bank always present when there are big bucks to be won for little effort betting on a sure thing. They’re getting a generous assist from the US Government agency entrusted with regulating financial derivatives, the Commodity Futures Trading Corporation (CFTC).

Aftermath of BP's Gulf oil spill

Since the beginning of October 2011, some six months ago, the price of Brent Crude Oil Futures on the ICE Futures exchange has risen from just below $100 a barrel to over $126 per barrel, a rise of more than 25%. Back in 2009 oil was $30.

Yet demand for crude oil worldwide is not rising, but rather is declining in the same period. The International Energy Agency (IEA) reports that the world oil supply rose by 1.3 million barrels a day in the last three months of 2011 while world demand increased by just over half that during that same time period.Gasoline usage is down in the US by 8%, Europe by 22% and even in China. Recession across much of the European Union, a deepening recession/depression in the United States and slowdown in Japan have reduced global oil demand while new discoveries are coming online daily and countries like Iraq are increasing supply after years of war. A brief spike in China’s oil purchases in January and February had to do with a decision last December to build their Strategic Petroleum Reserve and is expected to return to more normal import levels by the end of this month.

Why then the huge spike in oil prices?

Playing with ‘paper oil’

A brief look at how today’s “paper oil” markets function is useful. Since Goldman Sachs bought J. Aron & Co., a savvy commodities trader in the 1980’s, trading in crude oil has gone from a domain of buyers and sellers of spot or physical oil to a market where unregulated speculation in oil futures, bets on a price of a given crude on a specific future date, usually in 30 or 60 or 90 days, and not actual supply-demand of physical oil determine daily oil prices.

Criminal oil companies hiding fact that Earth drowning in oil

In recent years, a Wall Street-friendly (and Wall Street financed) US Congress has passed several laws to help the banks that were interested in trading oil futures, among them one that allowed the bankrupt Enron to get away with a financial ponzi scheme worth billions in 2001 before it went bankrupt.

The Commodity Futures Modernization Act of 2000 (CFMA) was drafted by the man who today is President Obama’s Treasury Secretary, Tim Geithner. The CFMA in effect gave over-the-counter (between financial institutions) derivatives trading in energy futures free reign, absent any US Government supervision, as a result of the financially influential lobbying pressure of the Wall Street banks. Oil and other energy products were exempt under what came to be called the “Enron Loophole.”

In 2008 during a popular outrage against Wall Street banks for causing the financial crisis, Congress finally passed a law over the veto of President George Bush to “close the Enron Loophole.” And as of January 2011, under the Dodd-Frank Wall Street Reform act, the CFTC was given authority to impose position caps on oil traders beginning in January 2011.

This mentally retarded criminal responsible

Curiously, these limits have not yet been implemented by the CFTC. In a recent interview Senator Bernie Sanders of Vermont stated that the CFTC doesn't "have the will" to enact these limits and "needs to obey the law.” He adds, "What we need to do is…limit the amount of oil any one company can control on the oil futures market. The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell."1 While he has made noises of trying to close the loopholes, CFTC Chairman Gary Gensler has yet to do so. Notably,Gensler is a former executive of, you guessed, Goldman Sachs. The enforcement by the CFTC remains non-existent.

The role of key banks along with oil majors such as BP in manipulating a new oil price bubble since last Autumn, one detached from the physical reality of supply-demand calculations of real oil barrels, is being noted by a number of sources.

A ‘gambling casino…’

Current estimates are that speculators, that is futures traders such as banks and hedge funds who have no intent of taking physical delivery but only of turning a paper profit, today control some 80 percent of the energy futures market, up from 30 percent a decade ago. CFTC Chair Gary Gensler, perhaps to maintain a patina of credibility while his agency ignored the legal mandate of Congress, declared last year in reference to oil markets that "huge inflows of speculative money create a self-fulfilling prophecy that drives up commodity prices." 2 In early March, Kuwaiti Oil Minister Minister Hani Hussein said in an interview broadcast on state television, "Under the supply and demand theory, oil prices today are not justified."3

Please click to enlarge graph

Michael Greenberger, professor at the University of Maryland School of Law and a former CFTC regulator who has tried to draw public attention to the consequences of the US Government’s decisions to allow unbridled speculation and manipulation of energy prices by big banks and funds, recently noted, "There are 50 studies showing that speculation adds an incredible premium to the price of oil, but somehow that hasn't seeped into the conventional wisdom," Greenberger said. "Once you have the market dominated by speculators, what you really have is a gambling casino." 4

Criminal oil company theft largest in history; need to be starved out

The result of a permissive US Government regulation of oil markets has created the ideal conditions whereby a handful of strategic banks and financial institutions, interestingly the same ones dominating world trade in oil derivatives and the same ones who own the shares of the major oil trading exchange in London, ICE Futures, are able to manipulate huge short-term swings in the price we pay for oil or gasoline or countless other petroleum-based products.

We are in the midst of one of those swings now, one made worse by the Israeli saber-rattling rhetoric over Iran’s nuclear program. Let me go on record stating categorically my firm conviction that Israel will not engage in a direct war against Iran nor will Washington. But the effect of the war rhetoric is to create the ideal backdrop for a massive speculative spike in oil. Some analysts speak of oil at $150 by summer.

Big oil company whore:  Hillary "the Hag" Clinton saving for grampers

Hillary Clinton just insured that the oil price will continue to ride high for months on fears of a war with Iran by delivering a new ultimatum to Iran on the nuclear issue in talks with Russian Foreign Minister Lavrov, “by year’s end or else…” 5

Curiously, one of the real drivers of the current oil price bubble is the Obama Administration’s economic sanctions recently imposed on oil transactions of the Central Bank of Iran. By pressuring Japan, South Korea and the EU not to import Iranian oil or face punitive actions, Washington has reportedly forced a huge drop in oil supply from Iran to the world market in recent weeks, giving a turbo boost to the Wall Street derivatives play on oil. In a recent OpEd in the London Financial Times, Ian Bremmer and David Gordon of the Eurasia Group wrote, “… removing too much Iranian oil from the world's energy supply could cause an oil price spike that would halt the recovery even as it does some financial damage to Iran. For perhaps the first time, sanctions have the potential to be ‘too successful,' hurting the sanctioners as much as the sanctioned.”

BP's Deepwater Horizon destroyed the Gulf of Mexico

Iran is shipping 300,000 to 400,000 a barrels a day less than its usual 2.5 million barrels a day, according to Bloomberg. Last week, the US Energy Information Administration said in a report that much of that Iranian oil isn't being exported because insurers won't issue policies for the shipments.6

The issue of unbridled and unregulated oil derivatives speculation by a handful of big banks is not a new issue. A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”

Like Exxon Valdez Alaska spill, Gulf will never recover

The report pointed out that the Commodity Futures Trading Trading Commission had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.” Further, the CEA directs the CFTC to establish such trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.”7

Where is the CFTC now that we need such limits? As Senator Sanders correctly noted, the CFTC appears to ignore the law to the benefit of Goldman Sachs and Wall Street friends who dominate the trade in oil futures.

Public becoming wise to ripoff, going solar

The moment that it becomes clear that the Obama Administration has acted to prevent any war with Iran by opening various diplomatic back-channels and that Netanyahu is merely trying to use the war threats to enhance his tactical position to horse trade with an Obama Administration he despises, the price of oil is poised to drop like a stone within days. Until then, the key oil derivatives insiders are laughing all the way to the bank. The effect of the soaring oil prices on fragile world economic growth, especially in countries like China is very negative as well.

Notes:

1 Morgan Korn, Oil Speculators Must Be Stopped and the CFTC “Needs to Obey the Law”: Sen. Bernie Sanders, Daily Ticker, March 7, 2012, accessed in http://finance.yahoo.com/blogs/daily-ticker/oil-speculators-must-stopped-ctfc-needs-obey-law-182903332.html

2 Ibid.

3 UpstreamOnline, Kuwait's oil minister believes current world oil prices are not justified, adding that the Gulf state's current production rate will not affect its level of strategic reserves, 12 March 2012, accessed in http://www.upstreamonline.com/live/article1236944.ece

4 Peter S. Goodman, Behind Gas Price Increases, Obama's Failure To Crack Down On Speculators,  The Huffington Post, March 15, 2012, accessed in http://www.huffingtonpost.com/peter-s-goodman/gas-price-increase_b_1346035.html

5 Tom Parfitt,  US 'tells Russia to warn Iran of last chance' , The Telegraph, 14 March 2012, accessed in
http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9142688/US-tells-Russia-to-warn-Iran-of-last-chance.html

6 Steve Levine, Obama administration brushes off oil price impact of Iran sanctions, Foreign Policy, March 8, 2012, accessed in http://oilandglory.foreignpolicy.com/posts/2012/03/08/obama_administration_brushes_off_oil_price_impact_of_iran_sanctions

7 F. William Engdahl, ‘Perhaps 60% of today’s oil price is pure speculation’, Global Research, May 2, 2008, accessed in http://www.globalresearch.ca/index.php?context=va&aid=8878.

F. William Engdahl is a frequent contributor to Global Research.  Global Research Articles by F. William Engdahl

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JFK Assassination : The Sixth Floor's Message to History: Just Hush Now

It would be nice to be able to close this case out once and for all; Nixon knew whole story, should be exhumed and waterboarded by Cheney


Dallas Observer
By Jim Schultz
03/15/2012

Someone with a lot of clout in this town thinks Dallas should clamp down on free speech at Dealey Plaza for the 50th anniversary of the JFK assassination coming up next year. There's only one right way for free Americans to deal with that kind of thinking. Clamp down on Dallas.

In talking to assassination experts around the country for the past week or so, the phrase that pops up is "Occupy Dealey Plaza." I not only agree, I'd like to see what can be done to help make that happen.

So this column, in part, is an invitation. If anybody out there agrees with me, I will tell you how to get in touch. Let's do this thing.

Two weeks ago The Dallas Morning News published a story by Scott Parks quoting Nicola Longford, curator of the "Sixth Floor," the official Dallas assassination museum. She told Parks there should be no discussion of the shooting itself or the controversy, only a "moment of silence," which Longford apparently thinks should endure for an entire week.

That's a lot of silence. But maybe she thinks she can pull it off. The city has violated its own longstanding policies on access to Dealey Plaza by granting Longford a permit for a full week of exclusive control over the site of the assassination. The exclusivity of the permit, barring others from the plaza, is a first, according to people who have been involved in previous observances.

They have been told no one else can be given an equivalent permit that entire week, a fact confirmed for me last week by the city official in charge. Jill Beam of the city's special events office also confirmed she is directing all groups with questions about the 50th to call Longford, effectively making her the de facto commissar of all 50th-anniversary observances, even though she is the employee of a nonprofit that is not supposed to be a part of city government.

Longford does not come across as a commissar, more as a curator who has been put in a tough position, by whom we do not know. I can't help suspecting the same brilliant leadership that wants to build a highway in the flood zone along the Trinity River — aging affluent persons who may have tossed back too many toddies over the years.

Longford said: "This is something that Dallas has not embraced ever. We know the whole world is going to be watching in 2013."

Dallas Mayor Mike Rawlings is supposed to be putting together some sort of JFK 50th "task force." I asked him if he thinks diverse groups should have free access to Dealey Plaza. He said in an email that any events must be "solemn" and "respectful."

"Rest assured," Rawlings said, "that Dealey Plaza, in particular, will be closely monitored to assure that that space will be in keeping with the above tone and message."

I believe I am going to take that, perhaps unfairly, as a no to my question about free public access. Rawlings doesn't come across as a commissar, either, but somewhere in this is some kind of very concerted push. Perhaps it is from the Commissar of Too Many Toddies — the one whose face we cannot see.

The words "solemn" and "respectful" do seem to crop up. In the recent Morning News story, Longford was quoted saying any event should be both solemn and respectful and should "put his death into context without reliving the details of what happened."

Yeah, but here's the problem. The context for Kennedy's death in Dallas was a violent public assassination. If he had come to Dealey Plaza on November 22, 1963, and died of a massive coronary, no one would remember that he died at Dealey Plaza. Or in Dallas.

They blew the top off his head and splattered his wife with brains and blood. That's the context, along with an enduring mystery and a great deal of honest skepticism in many people's minds about who did what and why. Saying that we should just be quiet and have a nice dignified event to make the city look good is not the sort of thing any historian would say, ever.

History simply is debate. No one knows what happened five minutes ago. All we can do is debate what happened. That's what history is for.

When I first wrote about this issue in the spring of 2011, I talked to Conover Hunt, one of the consultants who helped design The Sixth Floor before its opening in 1989. Hunt, who is in Virginia now, is a real historian and authority on historic places. Hunt gets what these places are for.

"Dealey Plaza doesn't really belong to Dallas," she told me. "It belongs to everyone. And not necessarily just the American people.

"There will always be in any of our tragic historic sites where major history was made," she said, "a sense of collective ownership. It's neutral ground.

"People will go there, they'll go to Gettysburg, they'll go to Mount Vernon, to the Washington Monument, to these battlefields, the good history and the bad, and they will ponder the meaning of life, the meaning of government, and they will talk about it.

"These places are like debate parks," she said, "where you can engage in the discussion and feel the power of history under your feet."

Scott Parks' story in the News was especially interesting in the interviews it offered with recognized presidential scholars and historians. They seemed to be of one mind — that the anti-Dallas epithets of the day, like "City of Hate" and "City that Killed Kennedy," have largely faded from memory and may even have a sort of funky anachronistic ring today. You know: Who cares about one little old city of hate, when now we have the entire state of South Carolina?

But beyond being stupid, the idea that Dallas has some right or prerogative to control free speech flies straight in the face of an over-arching global reality. Everyone alive on the planet today has grown up in an era of unconscionable official lies.

How can anyone be shocked that many young people think the 9-11 assault on the Twin Towers was an inside job, when everyone knows that Shock and Awe and the decimation of Iraq produced not a single WMD?

Young people would be idiots to believe what government tells them and fools not to question and debate every single thing they see and hear in the monopoly media. We should all be repelled and infuriated by what Dallas City Hall is trying to do, not simply with regard to the Kennedy assassination but for what it means to speech and freedom.

And I'm happy to say, based on the chats I have had so far, that people are already reacting appropriately. John Judge, an assassination historian in Washington, said to me last week: "A moment of silence that denies talking about his death on that day and certainly not talking about the historical truth behind it and the controversy is no longer a moment of silence. It's a perpetuation of silence."

Judge said it doesn't matter that we can't see exactly who is behind this push. We can see exactly what they want.

"We know the underlying theme. There is going to be a humungous crowd, and they want to catch it and capture the message and control it."

Judge was one of a few I spoke to who are already thinking in terms of what to do. "Maybe we have to do 'Occupy the Grassy Knoll 2013,'" he said.

What a terrific idea. In fact it would be the perfect marriage of physical occupation — the seizing of a place — with concepts of truth and freedom. And what a grand stage it could be, especially with all those cameras hovering.

I spoke to Robert Groden, the assassination author whom the city has arrested and jailed for expressing views and selling books in Dealey Plaza. His take on the assassination conflicts with Sixth Floor official dogma, which is, "We didn't do it; show's over; return to your homes."

Groden promised me he will be out there on November 22, 2013, and if the city wants to clap him in irons again and haul him off to a dungeon in front of Japanese news crews, he says he will be more than happy to play his part.

Judge had what I thought were very creative thoughts. Especially if the city goes really Super-Stalin and rings the place with cops, he thought perhaps it might be fun for counter-protesters to re-enact one of the theories about how the conspirators may have escaped.

"They could reverse the route," he said. "They could go down to the Trinity River bottoms, enter the storm sewer system, crawl uphill to Dealey Plaza and pop up out of the manhole covers."

Oh, wouldn't that be spectacular?

Look, I'm serious about organizing something, but only if anybody else wants to do it. My role would be only to put you together. Some sort of steering committee? Or not. The thing has to grow organically.

Do it without me. Just do it. Meaning them no disrespect, this cause should expand to include more than the community of people interested in JFK. Everybody with a speech issue should be welcome, even though I know that includes the birthers.

Everybody. Come on down. Send me an email at jim.schutze@dallasobserver.com. Don't use that little contact dealie on the web page. That may be a placebo. Send me a real email. If you want to anonymize, do so. We'll get it all figured out.

Dealey Plaza is already Ground Zero for the debate about the JFK assassination. Maybe it can grow to become Ground Zero for free speech in this country. What greater purpose could this homely rag of ground ever serve? Somehow those of us who do remember where we were that day must imagine that JFK looks down and is on our side.

If this actually does come off, then from the bottom of my heart I must also thank you, the Too Many Toaddies of Dallas. You may have been of greater service to your country than you ever dreamed.

Any opinions expressed here are those of the author and do not necessarily reflect those of The 5^th Estate.

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This news site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

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US Forces Raped Two Women in Kandahar Carnage: Probe Mission

Revelations surrounding massacre slowly continue to leak out; U.S. military, coward Mrs. Leon Panetta neck-deep in cover-up

PRESS TV
03/17/2012

The Afghan parliamentary mission investigating the recent massacre of 16 civilians by US forces in Afghanistan says two women were raped during the deadly incident, Press TV reports.

Panjwaii massacre bears strong resemblance to My Lai massacre

Two members of the fact-finding mission, Hamidzi Lali and Shakiba Hashemi, told the general meeting of Afghanistan’s parliament on Saturday that the American troopers raped two Afghan women before starting the massacre.

 
They said between 15 to 20 US soldiers were involved in the carnage.

This is while Washington claims that the 38-year-old Army Staff Sergeant Robert Bales, who has just arrived in the US, was the only American military personnel responsible for the massacre.

Earlier on Friday, Afghanistan’s President Hamid Karzai criticized the United States for not cooperating with the Afghan fact-finding team and said the killing of civilians by foreign forces in Afghanistan “has been going on for too long.”

On March 11, a group of US soldiers went from house to house in three villages in Kandahar’s Panjwaii district and gunned down Afghan civilians inside their homes, killing at least 16 people -- mostly women and children -- and injuring several others.

AZA/ASH/MYA

 

Any opinions expressed here are those of the author and do not necessarily reflect those of The 5^th Estate.

Images:  Google royalty free unless otherwise attributed.

This news site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

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Chevron Accused of Graft in Indonesian Green Project

This is no surprise Chevron and other oil company thieves, resource rapists, polluters need to be nationalized, held completely accountable for any spills, cleanup in Indonesia; offer Chevron execs choice - cleanup or jail

Agence France-Presse
03/17/2012

Indonesia on Saturday accused five Chevron employees of being involved in a scam to set up a fictitious green project that lost the state some $270 million, a charge denied by the US oil giant.

“The Attorney-General’s Office (AGO) has named seven suspects, five of whom are from Chevron,” the office said in a statement on its website.

“Provisional estimates show losses of around $270 million,” it said, adding the project appeared to be fictitious. But Chevron denied the allegations, saying that the land restoration project was “up and running.”

The attorney-general did not disclose the nationalities of the Chevron suspects.

The other two suspects were from government agency, the Indonesian Upstream Oil and Gas Agency, and had been questioned, said the AGO.

The case centres on a project on Sumatra island, in which Chevron’s Indonesian subsidiary was to clean up soil contaminated by its drilling activities.

Under a government programme, Chevron would be reimbursed for the work by the oil and gas agency.

According to Chevron, it paid two companies to carry out the project, but investigators said they believed the land restoration was never carried out.

Gas should be free in all oil producing countries - Chevron paying

The two companies — Green Planet Indonesia and Sumigita Jaya — did not meet technical classifications or hold the right certificates to engage in land restoration, according to the AGO statement.


“The two companies are listed as general companies or contractors. It seems that the project is fictitious, that no work has been done in the area,” the statement said.

Chevron Pacific Indonesia denied the allegations.

“What we know is that the two companies meet the regulations we’re aware of,” company spokesman Yanto Sianipar told AFP.

“We are working on eight small sites that are around 200 metres by 150 metres each, and we have been working on the project for years now.”

The company says it is the largest producer of crude oil in Indonesia, recording an average daily production of 477,000 barrels in 2010.

Chevron is facing enormous fines for environmental destruction in Latin America, where it is challenging a landmark court order in Ecuador and could face fines from the Brazilian state of Rio de Janeiro for a November oil spill.

Any opinions expressed here are those of the author and do not necessarily reflect those of The 5^th Estate.

Images:  Google royalty free unless otherwise attributed.

This news site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc.  We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

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