Dogman
4th June 2011, 05:38 AM
This is in the local paper this morning- Posting for info only!
http://www.news-journal.com/opinion/saturday_forum/article_0051108c-a8ed-599c-b527-fa1b16bfdb61.html
Foster: Oil manipulation hits our pocket books
Posted: Saturday, June 4, 2011 4:00 am
Finally, motorists are getting some relief from soaring gasoline prices. At this writing, the price of regular unleaded has dropped locally about 40 cents a gallon, but still is more than a $1 per gallon more expensive than a year ago.
Maybe it’s a coincidence, but the drop started about the time the federal government announced legal action against two oil-traders for allegedly manipulating the oil markets three years ago. The Commodity Futures Trading Commission sued two traders and their firms accusing them of illegally profiting by $50 million in a scheme to create shortages in the oil market.
If convicted, the defendants face treble damages totaling $150 million. James Dyer of Oklahoma’s Parnon Energy and Nicholas Wildgoose of Swiss-based Arcadia Energy have denied the charges.
While the lawsuit represents the commission’s biggest ever oil manipulation case, it’s a mere pittance compared to the billions paid by motorists in higher fuel prices caused by the big run-up in oil prices in late 2007 through mid 2008. Similar to price increases earlier this year, gasoline jumped about 50 percent during that time span according to investigative reporter Brian Ross.
Regulators also are urged to investigate other potential oil market manipulations by a much bigger player in the energy industry, the Koch Brothers, who describe themselves and their companies as “among the world’s top five crude oil traders.”
The fourth-richest Americans, David and Charles Koch are noted for funding more than 80 right-wing and tea party organizations. It also was revealed recently that the Koch brothers are financing professors and “research” institutes at several major universities like Florida State.
The purpose of the brothers’ financing these organizations is to promote their anti-government and anti-regulation agenda, Ross said. Ironically, media exposure to such causes is helping focus the spotlight on their business practices.
Writing on his blog, Truth-2-Power.com, Ross connects the dots between the Koch brother’s lavish giving to ultra-conservative groups that ”turn a blind eye to the practices that they helped to invent that seem to jerry the competitive market to their advantage, where they reap hundreds of millions for their political involvement.”
Traders like the Koch Brothers’ firm can buy millions of barrels of oil that would normally head straight to refineries when the price of oil is low. Working with clients who they advise to do the same, or buying into index funds that track oil as a commodity, the traders developed a “contango strategy,” Ross explained.
“Take millions of barrels of oil out of the supply chain. Park it in storage tanks and even in multi-million super tankers that sit idly as storage,” Ross said.
“The supply side dries up artificially against the demand, driving the price of that oil up, sometimes as much as 50 percent as it did in 2008,” he added.
A Koch company spokesman confirmed the Koch Trading and Supply Co. leased a third oil-tanker this year, the Dubai Titan, with a 2 million barrel capacity, Ross said.
Maybe the Koch companies have a legitimate use for the tankers, but it should attract the attention of the U.S. Department of Justice that gasoline prices continued to rise this spring when consumption was dropping.
Will motorists continue to see fuel prices fall? The answer may lie in how actively oil market manipulations schemes are investigated. For those folks who decry the regulatory role of a strong federal government, another question to consider is who else has the power to reel in these manipulators to make sure our markets are free and fair?
— John D. Foster, a Carthage resident and former editor of the Panola Watchman, is a regular contributor to the Saturday Forum.
http://www.news-journal.com/opinion/saturday_forum/article_0051108c-a8ed-599c-b527-fa1b16bfdb61.html
Foster: Oil manipulation hits our pocket books
Posted: Saturday, June 4, 2011 4:00 am
Finally, motorists are getting some relief from soaring gasoline prices. At this writing, the price of regular unleaded has dropped locally about 40 cents a gallon, but still is more than a $1 per gallon more expensive than a year ago.
Maybe it’s a coincidence, but the drop started about the time the federal government announced legal action against two oil-traders for allegedly manipulating the oil markets three years ago. The Commodity Futures Trading Commission sued two traders and their firms accusing them of illegally profiting by $50 million in a scheme to create shortages in the oil market.
If convicted, the defendants face treble damages totaling $150 million. James Dyer of Oklahoma’s Parnon Energy and Nicholas Wildgoose of Swiss-based Arcadia Energy have denied the charges.
While the lawsuit represents the commission’s biggest ever oil manipulation case, it’s a mere pittance compared to the billions paid by motorists in higher fuel prices caused by the big run-up in oil prices in late 2007 through mid 2008. Similar to price increases earlier this year, gasoline jumped about 50 percent during that time span according to investigative reporter Brian Ross.
Regulators also are urged to investigate other potential oil market manipulations by a much bigger player in the energy industry, the Koch Brothers, who describe themselves and their companies as “among the world’s top five crude oil traders.”
The fourth-richest Americans, David and Charles Koch are noted for funding more than 80 right-wing and tea party organizations. It also was revealed recently that the Koch brothers are financing professors and “research” institutes at several major universities like Florida State.
The purpose of the brothers’ financing these organizations is to promote their anti-government and anti-regulation agenda, Ross said. Ironically, media exposure to such causes is helping focus the spotlight on their business practices.
Writing on his blog, Truth-2-Power.com, Ross connects the dots between the Koch brother’s lavish giving to ultra-conservative groups that ”turn a blind eye to the practices that they helped to invent that seem to jerry the competitive market to their advantage, where they reap hundreds of millions for their political involvement.”
Traders like the Koch Brothers’ firm can buy millions of barrels of oil that would normally head straight to refineries when the price of oil is low. Working with clients who they advise to do the same, or buying into index funds that track oil as a commodity, the traders developed a “contango strategy,” Ross explained.
“Take millions of barrels of oil out of the supply chain. Park it in storage tanks and even in multi-million super tankers that sit idly as storage,” Ross said.
“The supply side dries up artificially against the demand, driving the price of that oil up, sometimes as much as 50 percent as it did in 2008,” he added.
A Koch company spokesman confirmed the Koch Trading and Supply Co. leased a third oil-tanker this year, the Dubai Titan, with a 2 million barrel capacity, Ross said.
Maybe the Koch companies have a legitimate use for the tankers, but it should attract the attention of the U.S. Department of Justice that gasoline prices continued to rise this spring when consumption was dropping.
Will motorists continue to see fuel prices fall? The answer may lie in how actively oil market manipulations schemes are investigated. For those folks who decry the regulatory role of a strong federal government, another question to consider is who else has the power to reel in these manipulators to make sure our markets are free and fair?
— John D. Foster, a Carthage resident and former editor of the Panola Watchman, is a regular contributor to the Saturday Forum.