Large Scale Central

Republicans and oil

General Discussion
#1

From the AP:
“Republicans blocked Democratic proposals to use the nation’s petroleum reserve, curb oil speculation and require oil companies to drill on already leased federal lands.”

  1. Blocked proposals to use the petroleum reserve…I agree with this. The reserve should only be used in a crisis.
  2. Curb oil speculation…Of course not. They and their buddies are making a pile of money.
  3. Require drilling on already leased land…All the hot air about increasing domestic drilling and they are not utilizing the leases they have. If the oil companies are not utilizing the leases, they should be required to relinquish the leases.

My 2 cents to Congress:
1.Curb oil speculation
2.Require drilling on already leased Federal land

After doing these two things…Then open up the off shore drilling.
Ralph

#2

Ralph, if there was oil on the already leased lands, don’t you think they’d already have wells there? They have to lease it to do any exploring and that takes a ton of money.

Democrats are also alleging that the oil companies are sitting on millions of acres of oil but are refusing to drill – presumably because oil company executives hate the American people and perversely don’t want to make money. Manifestly, those acres are being explored for oil or have already come up dry.

As for speculation, that works both ways. It’s already brought the price down.

“Since July 11, when oil peaked at a tad over $147 a barrel, prices have plunged to $113 a barrel — a 23% drop. The reason is simple: The market has finally been convinced the U.S. is so fed up with its growing oil dependence it will do something about it. Since President Bush on July 14 announced he wants to lift the moratorium on offshore drilling, futures prices for oil have fallen sharply in anticipation of a big boost in future supplies.”

“The Commodity Futures Trading Commission released a report in July, which found no evidence that institutional investors were driving up oil prices. Don’t believe the government? Both the New York Times editorial board and liberal columnist Paul Krugman have debunked the idea that restricting commodity markets will lower energy prices.”

#3
Ken Brunt said:
Ralph, if there was oil on the already leased lands, don't you think they'd already have wells there? They have to lease it to do any exploring and that takes a ton of money.

Democrats are also alleging that the oil companies are sitting on millions of acres of oil but are refusing to drill – presumably because oil company executives hate the American people and perversely don’t want to make money. Manifestly, those acres are being explored for oil or have already come up dry.

As for speculation, that works both ways. It’s already brought the price down.

“Since July 11, when oil peaked at a tad over $147 a barrel, prices have plunged to $113 a barrel — a 23% drop. The reason is simple: The market has finally been convinced the U.S. is so fed up with its growing oil dependence it will do something about it. Since President Bush on July 14 announced he wants to lift the moratorium on offshore drilling, futures prices for oil have fallen sharply in anticipation of a big boost in future supplies.”

“The Commodity Futures Trading Commission released a report in July, which found no evidence that institutional investors were driving up oil prices. Don’t believe the government? Both the New York Times editorial board and liberal columnist Paul Krugman have debunked the idea that restricting commodity markets will lower energy prices.”


Ken,
They may be sitting on oil, foregoing lower yielding wells for higher yielding wells. The oil companies are mostly multinational or wholly foreign companies. Why drill a low yield well here in the US when you can have a much higher yielding well in the Middle East ?
Oil was driven up by speculation. Dozens of energy and financial experts have gone on record as saying so. Nearly every Middle East oil nation leader has gone on record as saying so. They have all said the supply was ample and didn’t justify the steep price hikes. Saudi Arabia’s refusal to increase output was based on the fact speculation and not supply was causing the dramatic price increase.
As for the Commodity Futures Trading Commission…If it wasn’t institutional investors, it was somebody.
Restricting commodity markets may or may not lower energy prices. But it may stop rapid price increases in the future. We won’t know for sure until we try.
Ralph

#4
Ken Brunt said:
"The Commodity Futures Trading Commission released a report in July, which found no evidence that institutional investors were driving up oil prices. Don’t believe the government? Both the New York Times editorial board and liberal columnist Paul Krugman have debunked the idea that restricting commodity markets will lower energy prices."
Yesterday's newspaper business section has the following headline: "[b]Oil trader under Scrutiny[/b]" --and-- "[b]Commission probing oil market questions Swiss firm's holdings[/b]"

The article reports that a Swiss firm, Vitol Group, that federal regulators previously reported to be “. . . helping industrial firms get the oil they needed . . .” was and is actually working to control the price of oil by trading contracts to turn profits.

This “Group” held 11 percent of all oil contracts on the New York Mercantile Exchange at the time of the largest price run up. At the same time, the Interagency Task Force on Commodity Markets was reporting that the record prices for oil were the result of “fundamental supply and demand factors.” An absolute lie.

One wonders which wing of the White House this misinformation comes from?

And how does a Swiss company come to control ~60 million barrels of oil destined for the U.S. at exactly the same moment that the price goes up $11.00 / barrel in a single day? How is it that “. . . four swap dealers (read “speculators”) held one-third of all NYMEX oil contracts that bet prices would increase at the end of July?”

To any one who still believes that oil prices are not being manipulated by speculators, I can sell you a controlling interest in the large orange bridge structure on the edge of San Francisco!

BTW, the companies and swap dealers mentioned above have nothing to do with exploration, drilling, producing, transporting, refining, or otherwise actually providing oil or oil products to consumers, and everything to do with lining their owner’s pockets.

Happy RRing,

Jerry

#5
Jerry Bowers said:
...........

BTW, the companies and swap dealers mentioned above have nothing to do with drilling for, producing, transporting, refining, or otherwise actually providing oil or oil products to consumers, and everything to do with lining their owner’s pockets.

Happy RRing,

Jerry


Quite right! Mind you, they believe that they’re just making really smart commodity trading deals. BTW it isn’t just oil, same routine applies to food and raw materials of all kinds.

Some real jokers refer to it as the very basics of the “knowledge economy” i.e. you know which of your buddies will be bidding things up and which of your buddies are selling short.

There have never been as many making piles of money by doing nothing at all other than pushing buttons and clicking mice. Now who was it that mentioned “the basics are sound”???

#6
Hans-Joerg Mueller said:
Jerry Bowers said:
...........

BTW, the companies and swap dealers mentioned above have nothing to do with drilling for, producing, transporting, refining, or otherwise actually providing oil or oil products to consumers, and everything to do with lining their owner’s pockets.

Happy RRing,

Jerry


Quite right! Mind you, they believe that they’re just making really smart commodity trading deals. BTW it isn’t just oil, same routine applies to food and raw materials of all kinds.

Some real jokers refer to it as the very basics of the “knowledge economy” i.e. you know which of your buddies will be bidding things up and which of your buddies are selling short.

There have never been as many making piles of money by doing nothing at all other than pushing buttons and clicking mice. Now who was it that mentioned “the basics are sound”???


Leaches sucking off the top and providing nothing in return but a way for the very wealthy to “get a piece” of everything.
Ralph

#7
Ralph Berg said:
.................

Leaches sucking off the top and providing nothing in return but a way for the very wealthy to “get a piece” of everything.
Ralph


Yeah, what we need is a revolution. :slight_smile: :wink:

#8

Battery power and R/C. Solves all the world’s problems! :lol:

#9
Hans-Joerg Mueller said:
Mind you, they believe that they're just making really smart commodity trading deals. BTW it isn't just oil, same routine applies to food and raw materials of all kinds.
What the they are really doing is [b]stealing[/b] from those of us who work for a living.

I’ve spent my life working in executive positions with either small or startup technology firms, so I’m well versed in attracting investors who usually do not participate directly in the company operations, but will profit if the company succeeds. I consider this to be one of the bedrocks of capitalism and really believe that it can and has been a driving force in our country’s success and mankind’s advancement.

This idea of buying up world supplies of limited resources to control the prices and bleed our economies is truly criminal. Someone should deliver all 60 million barrels of the Vitol Group’s oil to their banks in downtown Zurich, immerse them in it, then light it on fire. After all, it’s ‘theirs!’

The other criminal acts here are the actions of our so-called trade commissions who publicly claim this is just free trade at work. They are either liars, or incredibly inept at the job they are pretending to do. Either way, our government is not to be trusted in these matters.

Happy RRing,

Jerry

#10
Jerry Bowers said:
This idea of buying up world supplies of limited resources to control the prices and bleed our economies is truly criminal. Someone should deliver all 60 million barrels of the Vitol Group's oil to their banks in downtown Zurich, immerse them in it, then light it on fire. After all, it's 'theirs!'

Happy RRing,

Jerry


Not the I’m agreeing with what they’re doing, but:

Wouldn’t that be the same as the guy who buys a bunch of train stuff and then resells it for more on eBay, trying to get a profit on it? Not quite the same scale, but still the same idea.

#11

Ralph Berg said:
Ken, They may be sitting on oil, foregoing lower yielding wells for higher yielding wells. The oil companies are mostly multinational or wholly foreign companies. Why drill a low yield well here in the US when you can have a much higher yielding well in the Middle East ? Oil was driven up by speculation. Dozens of energy and financial experts have gone on record as saying so. Nearly every Middle East oil nation leader has gone on record as saying so. They have all said the supply was ample and didn’t justify the steep price hikes. Saudi Arabia’s refusal to increase output was based on the fact speculation and not supply was causing the dramatic price increase. Ralph

All the more reason to open more of our country to drilling rather then relying on terrorist sponsors and unstable governments to provide oil. Want to bring the price down? Quit grasping at straws and pissin in the wind and open places in the US where there are ample supplies of oil. And why would they want to drill a low yield well if all that’s going to happen is a bunch of greenies filing lawsuits and doing everything they possibly can to stop it? The pertinent fact now is that Congress has stood in the way of developing America’s plentiful oil reserves since the 1970s. We began that decade with just 12% of our supply coming from foreign sources; today we get 70%. Put another way, we’re sending nearly $1 trillion overseas each year to buy oil so we can run our economy. Remember that the next time you hear someone bemoaning the trade deficit. "Bush said he wants to remove all barriers to extracting the oil thought to be trapped in shale rock formations in a swath of territory encompassing parts of Colorado, Wyoming and Utah. The quantity of oil to be found in this shale is almost unfathomable. The government conservatively puts it at 800 billion barrels. Other estimates say we have as much as 2 trillion barrels, though some of that wouldn’t be recoverable. As the chart shows, that could potentially give the U.S. oil reserves equal to three times those of Saudi Arabia. Indeed, it would be more oil than in Saudi Arabia, Iran, Russia, Venezuela, Iraq and Mexico combined.

(http://www.ibdeditorials.com/images/editimg/issues01072308.gif)

These reserves, if fully exploited, could ensure America’s energy needs for at least the next century, and possibly longer. As John Hinderaker of the popular Power Line blog notes, 1 trillion barrels of oil is roughly the amount of crude the world has used since oil was first found in Titusville, Pa., in 1859. “Once developed, U.S. oil shale resources will be similar in extent to energy potential to Alberta’s tar sand reserves. When oil shale and tar sands are considered together, the United States and Canada will be able to claim the largest oil reserves in the world.” Critics make a number of points in arguing why we shouldn’t do this. For one, they say shale oil, trapped in soft rock, is too hard to get at and very costly. And they have a point: At what used to be a normal price for a barrel of oil, say $30 to $40 a barrel, shale isn’t economical. But at today’s prices north of $120 a barrel, taking oil from shale is quite feasible, and could hold a major part of the answer to our dwindling output." http://www.ibdeditorials.com/IBDArticles.aspx?id=301619488450798 Or maybe we can all just sit around and point fingers and hope that solves the problem.

#12
Ken Brunt said:
Jerry Bowers said:
This idea of buying up world supplies of limited resources to control the prices and bleed our economies is truly criminal. Someone should deliver all 60 million barrels of the Vitol Group's oil to their banks in downtown Zurich, immerse them in it, then light it on fire. After all, it's 'theirs!'

Happy RRing,

Jerry


Not the I’m agreeing with what they’re doing, but:

Wouldn’t that be the same as the guy who buys a bunch of train stuff and then resells it for more on eBay, trying to get a profit on it? Not quite the same scale, but still the same idea.


No Ken,
It is not the same at all. They never take delivery of any oil. They don’t store the oil. They don’t ship the oil. They simply own the oil “on paper”. Sometimes for just a matter of minutes before it is flipped and sold again, driving up the price. The oil is still in the ground when this process begins.
As for the oil shale…an idea that needs to be explored. I think the fear is the landscape will be devastated much like strip mining for coal. I don’t know if this would be the case or not.
Ralph

#13

That’s what I thought. I’m just not all that familiar with how this speculation stuff works.

#14

Dear Ken,

http://www.imdb.com/title/tt0086465/

“Trading Places”… Murphy and Akroyd at their best. Jamie Lee Curtis in liederhosen and blond pigtails. But I digress…

Only one type of transaction in “spot market”: producer sells to consumer (or consuming industry) at current (spot) market price.

Three types of transactions in “futures” market:

  1. Producer (today) promises delivery at a future date for a set price, determined in (today’s) futures market.
    Producer is satisfied to get that much money, or believes that the price will be lower in the “spot market” on the expiration date of the contract (delivery date).
    The producer has locked in his price through this “futures contract”.

  2. Consumer (or consuming industry) (today) promises to accept delivery at a future date for a set price, determined in (today’s) futures market.
    Consumer is satisfied to pay that much money, or believes that the price will be higher in the “spot market” on the expiration date of the contract (delivery date).
    The consumer has locked in his price through this “futures contract”.

  3. The speculators take the risk of the fluctuating market (that the producers and consumers have eliminated by “locking in their price”) by buying, selling and trading the contracts in the futures market until the expiration date of the contract.
    The speculators are the “liquidity” (or “lifeblood”) of the market. They buy contracts when they think the price will go up, sell when they think it will go down.

You are not guarenteed to make money in the speculator (guessing) game. It is almost a guarantee that you will loose money, as the brokers (who make you broker) take a huge commission on every trade. (“The Bookies”… E. Murphy) Other traders have more knowledge of the market than you do. (eg weather or crop forecasts in Brazil…)

Hope this helps.

Sincerely,

Joe Satnik

#15
Ken Brunt said:
Wouldn't that be the same as the guy who buys a bunch of train stuff and then resells it for more on eBay, trying to get a profit on it? Not quite the same scale, but still the same idea.
Not at all. First, trains, along with most common commercial trade items, are not a limited natural resource and are not critical to keep our national and global economies going.

Next, the guy would have to pay for the trains and probably take possession of them. He would be paying for them, storing them and taking a risk on whether and when he could sell them and at what price.

What you describe is just one version of a wholesaler ordering large quantities of a product in order to get the best price from the manufacturer and hoping he will sell them at a good price in the future. Note that there would still be plenty of trains available for those who don’t like that particular dealer or price.

Ken Brunt said:
All the more reason to open more of our country to drilling rather then relying on terrorist sponsors and unstable governments to provide oil. Want to bring the price down? Quit grasping at straws and pissin in the wind and open places in the US where there are ample supplies of oil. And why would they want to drill a low yield well if all that's going to happen is a bunch of greenies filing lawsuits and doing everything they possibly can to stop it?

The pertinent fact now is that Congress has stood in the way of developing America’s plentiful oil reserves since the 1970s. We began that decade with just 12% of our supply coming from foreign sources; today we get 70%. Put another way, we’re sending nearly $1 trillion overseas each year to buy oil so we can run our economy.


I couldn’t agree more. And that applies to developing every other available energy resource, including oil shale, coal, nuclear power, wind power, solar power, wave power and every other thing we can think of.

–but–

I am very opposed to government mandates that pretend to solve the energy problem. Just look what the alcohol mandate is doing and will continue to do to food prices. Meanwhile, Nancy Pelosi exhibits a “Let them eat cake” attitude and congress does nothing to reverse their awful mandate, said mandate having been ordered, bought and paid for by Archer Daniels Midland and a few midwestern corn dealers.

Joe Satnick said:
3. The speculators take the risk of the fluctuating market (that the producers and consumers have eliminated by "locking in their price") by buying, selling and trading the contracts in the futures market until the expiration date of the contract. The speculators are the "liquidity" (or "lifeblood") of the market. They buy contracts when they think the price will go up, sell when they think it will go down.

You are not guarenteed to make money in the speculator (guessing) game.


Unless the speculation involves a significant fraction of the available amounts of a very limited natural resource. One that is vital to our national and global economies. Then, a profit is actually guaranteed. Kind of like being able to capture the North American supply of air, or water. How much would we each pay for a breath or a drink?

Along with this blatant speculation by the Swiss traders and others, we have our government agencies’ complicity in these criminal acts by publicly announcing that this price run up is ‘just a result of natural market forces,’ and only admitting to the truth when they are caught out. I follow the news pretty closely, and had come to believe the lies these agencies were putting out. Still I had some nagging doubts, as there didn’t seem to be a shortage of gasoline: We just had to pay the price.

I no longer believe that, and now put much of the blame on our elected representatives who continue to stymy development of energy alternatives (unless you are ADM, and willing to pay for the privilege), and their hirelings who protect them by hiding the truth.

And if it’s only that our elected representatives and the people who inhabit these trade commissions are that dumb, they need replacing. But don’t hold your (currently free for the taking) breath waiting for some action.

Happy RRing,

Jerry

#16

Dear Jerry,

Speculators that hoard (buy) the contracts have to dump (sell) them when the expiration date comes. That can turn into a huge loss…

You said:
“there didn’t seem to be a shortage of gasoline: We just had to pay the price”.

That’s called “the market”…aka “supply and demand”. The price that people won’t pay seems to be just above $4/gallon.

No, you don’t “just have to pay the price”. We didn’t have a family vacation this year. I bicycle whenever I can. You can move closer to work. You can invent an electric car and buy electricity (from coal, nuclear, hydro, natural gas, wind, etc.) instead of gasoline (from oil).

Price controls of the 1970’s put the market out of whack… thus the shortages and long lines at the gas pumps.

The (economics of a free) oil market will work until the last cup of oil is pumped out of the ground, and if no controls are put on it, there will never be a shortage.

Why? What’s oil used for? Energy for transportation, lubrication, plastics and fabrics, etc. Someone will invent substitutes for those purposes (eg “synthetic oil” for lubrication) when the price of oil gets high enough to make use of the substitute cheaper.

Hope this helps.

Sincerely,

Joe Satnik

#17

Jerry “gets” it!!!

Too many bad guys with too much say in what goes on in the World.

Get rid of the crooks. ALL of them, and install honest people with some common sense and largely the problems of crap governance would be overcome.

#18

I agree. Jerry has a good grasp of what goes on.
Ralph

#19
Joe Satnik said:
...Jamie Lee Curtis in liederhosen and blond pigtails...
Oh, I'm sorry, where you guy's talking about something?
#20
TonyWalsham said:
Jerry [b]"gets"[/b] it!!!!!

Too many bad guys with too much say in what goes on in the World.

Get rid of the crooks. ALL of them, and install honest people with some common sense and largely the problems of crap governance would be overcome.


The only problem is: most of the crooks started out as honest people.