What a $200/Barrel World Looks Like

Fucking classic, Boom. That may be your greatest post ever.

As a former colleague once said of another co-worker, "Ask Gord for a needle and thread and he'll knit you a sweater"

 

I like it when Boom and Ragu fight.
Makes for some quality posts.

I always thought that, as a rule, whenever America got serious talks going on oil conservation, alternate fuels, etc., that the Saudis and the other OPECians started sending out more oil to lower prices here.
Can anyone explain, and Rags I'm looking at you, if that is right and why it hasn't happened yet?

 

I'll take a stab at it ... because America hasn't gotten serious about conservation and alternative fuels.

 

Interesting. I don't know where I heard that, but it was one of those things that I always took as gospel.

 

I just question whether there is any kind of conspiracy on how much they're pumping, which is how I interpreted (perhaps incorrectly) your use of the word "limiting."

The way I see it, they're just pumping what they physically can--and hot damn how's this for luck--global demand pretty much allows them to charge whatever they want.

 

RE'S WHY US CONSUMERS ARE RUNNING OUT OF GAS

By JOHN CRUDELE

June 3, 2008 -- I'D like to share with you a note I received on May 22 from a reader, who observed that a spike in oil prices happened after T. Boone Pickens appeared on TV talking about oil soon hitting new heights.

"The fact is, Pickens is heavily invested in natural gas and unconventional crude sources, like oil sands, and has a direct stake in seeing conventional crude prices go as high as possible. This information is easily obtained," and yet reporters never stated that Pickens "has a direct and very substantial interest in seeing oil prices spike."

That e-mail came from Frank Gallagher, a reader in Maine who is also a spokesman for heating oil dealers throughout the east coast.

You will recall in a column I wrote last week, I described a conversation I had with Montana Gov. Brian Schweitzer, and his belief that his state has as much as 40 billion barrels of untapped oil - which, of course, is very good news.

Also good news is that the Commodity Futures Trading Commission last week announced that it was finally looking into manipulation of the energy markets.

In fact, the CFTC said the investigation began last December.

I've been screaming about manipulation of the energy markets for a long time.

Traders on Wall Street have been pushing up the price of so-called "paper barrels" of oil in order to reap the big profits that can no longer be gotten by speculating in stocks or real estate.

But in their greed, oil speculators have caused the world's energy costs to soar, have goosed inflation in all segments of the economy, and have caused financial conditions to deteriorate so badly that consumers are in their glummest mood since the Great Depression.

This is a game that professional speculators play all the time until someone stops them.

Wall Street convinced Americans in the late 1990s that stocks would never go down in price.

The stock market, of course, did. Next it was real estate's turn. A house was a great investment that could never lose value. That, too, was a lie.

Now it's oil's turn.

But why start this column with a complaint against the media?

Because the manipulation of the oil market - any market - wouldn't be happening if the media were more diligent, careful and smarter about what it presents to the public as truth.

There are at least two sides to every investment story.

Bubbles are exciting and it's easy for the press to get caught up in them. But the media hasn't been doing its job and people are getting hurt.

Pickens, as Gallagher correctly explained, isn't an objective observer of the oil markets.

He's always been a profiteer, and a good one at that.

Back in the 1980s Pickens' tiny Mesa Petroleum successfully staged raids on a number of America's foremost energy companies.

And Pickens, before he attained guru status, made many journalists (me included) believe that he really wanted to purchase Gulf Oil, and Phillips Petroleum and Unocal.

But it turns out Pickens was just as happy earning a hefty profit when these oil companies wiggled away.

To be fair, Pickens isn't the only one who has been successfully pushing oil higher.

Goldman Sachs, with its ex-chairman now in charge of the US Treasury, along with a number of other influential Wall Street firms are constantly forecasting higher energy prices, oblivious to the fact that demand for gasoline and oil is dropping because of the poor economy.

So what's the real truth?

According to the US Energy Information Administration, the price of gas has risen 73 cents a gallon over the past year even though there is currently 2.5 percent more gasoline in storage.

And there's just 2.5 percent more gasoline available because producers - whose profit margins are being squeezed because of Wall Street speculation - are only using refineries at 87.9 percent of their capacity.

Normally, refineries would be working at well over 90 percent capacity at this time of year.

Crude stockpiles are down 10 percent but that's because there was too much oil being stored this time last year, according to the EIA.

Today's crude stockpiles are at historical averages.

Now let me ask you, when was the last time you heard any media outlet tell you that there's too much gasoline and that prices ought to be coming down?

 

I've never suggested that OPEC is hording oil. The hording is taken place after OPEC pumps the oil out of the ground. It sits on ships in the gulf as price goes up.

You are the one who has suggested that OPEC is limiting supply when the actual numbers show that you are not accurate.



Did you notice what Crudele wrote about Goldman?