Oil up to $138

[iwantout]

Thank God PK called back all those flight attendants just to turn around and lay them off again.

 

[sharktooth]

Thank God PK called back all those flight attendants just to turn around and lay them off again.

I already had a bet some time ago that Saudi sweet crude would reach $150 before the end of the year.

Get used to it. $6 dollars per gallon will be the new average and thanks to the greedy micro-brains in the witless house, America has no plan b.

 

[flyguy121]

Thank God PK called back all those flight attendants just to turn around and lay them off again.

I'm soooooooooooo tired of hearing this already! Here's a thought... let's try waiting and seeing what happens FIRST, before upsetting everyone that this may potentially affect. Not saying furloughs may not happen, but apparently so many claim to be interested in a Voluntary Furlough/Buyout. Maybe that would be enough to offset any Involuntary Furloughs? Either way, there is not a thing any of us can do about it. So why not take the wait and see approach... trust me, it's far less stressful.

 

[Travelpro72]

So are the airlines ready to raise the fares yet? What the hell already. EVERYTHING and I do mean EVERYTHING has gone up in price from the price of gas to the price of lemons/limes in the grocery store. C'mon already.

 

[wopr21]

So are the airlines ready to raise the fares yet? What the hell already. EVERYTHING and I do mean EVERYTHING has gone up in price from the price of gas to the price of lemons/limes in the grocery store. C'mon already.

Yes but if we do, everyone will fly LUV. They have an infinite amount of seats.... remember.

wopr21

 

[cooper43]

Maybe it is time for a little reregulation. If we had some reregulation of prices so that we all can make a living and avoid under cutting each other to the point that we are all destroyed. There should be a floor on how low prices can go according to the fluctuation of fuel. Fuel is something that all airlines has to have (for that matter everyone even indivituals). It is not realistic that the legacy carriers, who can take passengers all over the world, can compete with Low cost airlines that do not have the over head that the majors have. Now having said that to be fair the majors must improve thier service. We should stop nickle and diming our customers. We can do that if we had some price stability. Just a thought, I am sure there are lots of wholes in my therory. LOL

 

[SolidCactus]

Ok, maybe this is a crazy thought, but think about it... Do you think there is any possibility that al qaeda maybe figured out how to manipulate our markets and futures? In the past, they had been quoted as saying things like they will stop at nothing to destroy our economy. They thought 9/11 would be enough to do it, but it wasnt. Do you think that maybe they mastered market manipulation?

I know that my theory is a little bit off the wall, but I really wonder...

 

[Gilding the Lily]

Ok, maybe this is a crazy thought, but think about it... Do you think there is any possibility that al qaeda maybe figured out how to manipulate our markets and futures? In the past, they had been quoted as saying things like they will stop at nothing to destroy our economy. They thought 9/11 would be enough to do it, but it wasnt. Do you think that maybe they mastered market manipulation?

I know that my theory is a little bit off the wall, but I really wonder...

It is off the wall only because it doesn't take al qaeda to manipulate our markets; we do it to ourselves on a daily basis.

 

[freedom]

So are the airlines ready to raise the fares yet? What the hell already. EVERYTHING and I do mean EVERYTHING has gone up in price from the price of gas to the price of lemons/limes in the grocery store. C'mon already.

I think that everything you talk of is called essentials .... you see what's in the grocery store is called FOOD , people cannot live without it ... so they can raise the price as high as they like and no one can do anything about it ....

As for the price of GAS , in many places that's called an essential as well .. gotta have gas to go to work so one can have a job to pay bills ...

FLYING on the other hand is NOT an essintal ... i do NOT need to fly to SAN for a threeday weekend ....

 

[LGA Fleet Service]

Why is oil over $139?

OilIntel.com

As if in direct defiance to the CFTC, speculators reacted as if Katrina II hit the Gulf and wiped out all refineries, the Saudi oilfields were on fire and Iran closed the Strait of Hormuz. A sequence of events like these would be necessary to justify the unprecedented gains today in energy futures, not a 4 or 5 cent drop in the dollar, or a well-timed forecast from Morgan Stanley.

What happened today is another severe blow to the U.S. economy as Wall Street keeps plowing the money that the Federal reserve made available to them back into commodities to make up for the huge losses they sustained in the housing crisis.

Which begs the question, will the airlines be able to use the Fed as the 'lender of last resort'? I mean come on now, if the Fed can bankroll the theft (And make no mistake, that's what it was) of Bear Stearns by JP Morgan and then guarantee hundreds of millions in more speculative debt in the transaction for JPM, why the hell can't the airlines belly up to the Fed?



WashingtonPost


Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.

The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.


Light at the end of the tunnel? Or freight train rushing towards us?

NYPostOpEd

Two-thirds of petroleum in the United States is used for transportation - but half of the transportation sector's fuel flows into commercial trucks, trains, buses, airplanes and ships. As a result, only 44 percent of each barrel of oil is used to produce gasoline in this country, and some of that gasoline fuels business - delivery vans, landscapers' trucks, fishing boats, industrial and farm machinery, etc.

 

[SolidCactus]

Why is oil over $139?

OilIntel.com

As if in direct defiance to the CFTC, speculators reacted as if Katrina II hit the Gulf and wiped out all refineries, the Saudi oilfields were on fire and Iran closed the Strait of Hormuz. A sequence of events like these would be necessary to justify the unprecedented gains today in energy futures, not a 4 or 5 cent drop in the dollar, or a well-timed forecast from Morgan Stanley.

What happened today is another severe blow to the U.S. economy as Wall Street keeps plowing the money that the Federal reserve made available to them back into commodities to make up for the huge losses they sustained in the housing crisis.

Which begs the question, will the airlines be able to use the Fed as the 'lender of last resort'? I mean come on now, if the Fed can bankroll the theft (And make no mistake, that's what it was) of Bear Stearns by JP Morgan and then guarantee hundreds of millions in more speculative debt in the transaction for JPM, why the hell can't the airlines belly up to the Fed?



WashingtonPost


Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.

The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.


Light at the end of the tunnel? Or freight train rushing towards us?

NYPostOpEd

Two-thirds of petroleum in the United States is used for transportation - but half of the transportation sector's fuel flows into commercial trucks, trains, buses, airplanes and ships. As a result, only 44 percent of each barrel of oil is used to produce gasoline in this country, and some of that gasoline fuels business - delivery vans, landscapers' trucks, fishing boats, industrial and farm machinery, etc.

very good articles. they explain everything. very disgusting, what our government has become. we're so screwed. it will take years to repair the damage of this administration.

 

[Gogges Pisano]

Article lays out EXACTLY why oil is going as high as it is .... and no, it has nothing to do with supply and demand regardless of what you are being told. Every American that reads this should be outraged. Pass this on to everyone you know.

ICE, ICE, Baby, Conclusion
Special to the Star-Telegram

"What’s been happening since 2004 is very high prices without record-low [oil] stocks. The relationship between U.S. [oil] inventory levels and prices has been shredded and become irrelevant."

— Jan Stuart, Global Oil Economist, UBS Securities

"What you have on the financial side is a bunch of money being thrown at the energy futures market. It’s just pulling in more and more cash. That’s the side of the market where we have runaway demand, not on the physical side."

— Tim Evans, Senior Oil Analyst, IFR Energy Services [From testimony: U.S. Senate Permanent Subcommittee on Investigations’ report, "The Role of Market Speculation in Rising Oil and Gas Prices," June 27, 2006]

The Love of Money
Record high prices without record low oil inventories, analysts saying that so much money flows into oil commodities that it gives the impression of shortages, when in fact no shortage exists. That mirrors the situation in the commodities market for food, as Bloomberg pointed out in its April 28 article, "Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin": "Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies." That’s right; food, oil and gasoline have become an "asset class." No longer are you fighting a neighbor at the supermarket over the last box of Cheerios®; now you’re fighting the futures traders, who are actually determining what you will pay for that cereal.

We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?

It wasn’t always this way.

In the past, the Commodities Futures Trading Commission acted as the cop on the beat, ensuring that buyers in the market were not distorting or manipulating prices beyond what supply and demand normally dictate. Certainly, if a hard frost hit Florida and cost growers an orange crop, then bidding up the price of the remaining oranges was both a wise investment and allowed under the trading rules. Right now investors know that if they borrow and invest huge amounts in commodities futures, they can create a shortage on paper – which drives prices up just like an actual shortage of any given product would. What kept traders from cornering the market that way in the past were the government’s anti-manipulation rules.

Lay, DeLay, Gramm, Gramm & Clinton

The late, infamous Enron head, Ken Lay, realized in the eighties that he could make more money bidding up energy in the futures market than by actually creating and selling energy. But, under then-current rules, how much you could make swapping paper was limited. Fortuitously, Lay had excellent Texas political connections; and in November of 1992, the head of the Commodities Futures Trading Commission moved to exempt energy-derivative contracts and related swaps from any government oversight.

A vote was hurriedly put together before the Clinton White House would take over, and so Lay could finally start "dark" – unregulated – futures trading. The head of the CFTC was Wendy Gramm, wife of Texas Senator Phil Gramm; five weeks after she left, she became a board member of Enron in Houston.

Fast-forward to late 2000 and H.R. 5660, the Commodity Futures Modernization Act of 2000, sponsored by Republican Congressman Thomas Ewing of Illinois. That bill went nowhere, even though Tom Delay’s wife Christine was then working for a Washington lobbying firm, Alexander Strategies – which Enron had paid $200,000 to push through legislation for permanent energy deregulation in these "dark" markets.

Six months later came Senate Bill 3283, also named the Commodity Futures Modernization Act of 2000. This time around the sponsor was Republican Sen. Richard Lugar of Indiana, and now Phil Gramm was listed as one of the bill’s co-sponsors. Like it had in the House, this bill was destined to go nowhere until, late one night, it was attached as a rider to an 11,000-page appropriations bill – which was signed into law by President Clinton.

Now traders had an officially deregulated market for energy futures. Worse, that bill also deregulated many financial instruments – including the collateralized debt obligations that are at the center of today’s mortgage crisis, which may well cost us more than $1 trillion before it’s over.

Everybody Was Warned!

As USA Today wrote of this fiasco in January of 2002, "But, as a power marketer, [Enron] could buy enough energy-futures contracts in a region to create a virtual monopoly." That’s right: As early as the winter of 2002, it was widely known that the 2000 Commodities Futures Modernization Act had created a monster, capable of running up energy prices outside of the normal law of supply and demand. Worse, our government had been warned this was going to happen. Representatives of the Federal Reserve, the Securities and Exchange Commission and the CFTC had already told Congress not to deregulate energy because "the market was ripe for manipulation." Everybody was warned; that’s why this deregulation bill was stealthily inserted into that appropriations bill without a floor debate.

Phil Gramm’s office denied that he had anything to do with writing the section of that bill that actually deregulated energy. And yet Prof. Michael Greenberger, formerly a CFTC board member himself, said that Gramm’s wife Wendy, along with a few lobbyists and Wall Street attorneys, had rewritten it. When Robert Manor of the Chicago Times wrote about this situation on January 18, 2002, neither Gramm could be reached for comment.

Kill It Before It Multiplies

When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of Morgan Stanley, Goldman Sachs, British Petroleum, Deutsche Bank, Dean Witter, Royal Dutch Shell, SG Investment Bank and Totalfina. In 2001 ICE purchased the International Petroleum Exchange in London; renamed ICE Futures, it now operates as an "exempt commercial market" under section 2(H)(3) of the Commodity Exchange Act. As the Senate hearings pointed out in the summer of 2006, "Both markets operate outside of any CFTC oversight."

If you reread the quotes at the start of this story again, you find that many officials in the government warned against what would happen in a deregulated energy market, because it was so easy to manipulate. We already know this to be true thanks to Enron’s California misdeeds. And, as we pointed out last week, British Petroleum was busted for manipulating the propane market and fined over $300 million; and Amaranth Partners was caught manipulating the natural gas market, unconscionably causing the futures price for natural gas to raise every Texan’s electric bills. (It took two years for Amaranth to be exposed.) And yes, the manipulation happened in the new "dark" and unregulated exchanges, making it almost impossible to uncover. So it’s not a question of "if" some "theoretically possible" manipulation and distortion of the market will result from this bill, championed by Phil Gramm, his wife Wendy and Christine Delay’s employer, Alexander Strategies. The reason it is not theoretical is because we keep catching well-known companies doing it on a regular basis.

No Conscience in Congress?

All you hear daily is that the world has a severe shortage of oil, or you can buy only 200 pounds of rice at one time, or we will have a gasoline crisis this summer, etc. But it takes only a minute to find hundreds of quotes from highly respected oil and economic analysts, (not to mention CEOs of the major oil companies), that completely dismiss the claim of oil, gas or food shortages that have been headlining the news.

Even more troubling is that within months of the CFMA’s going into effect, we knew it had enabled easy manipulation of any energy market, but nothing was done to fix it. Nor was anything done when the Senate held its hearings on this matter in 2006, or in the House hearings last December.

Today we call this situation the "Enron Loophole," but that’s untrue. It’s not a loophole: it was a new law passed in 2000 – and far more individuals than Ken Lay have used that law to line their pockets with hundreds of billions of American consumers’ hard-earned dollars. That’s not my opinion, that’s direct testimony by numerous experts before both the House and Senate.

Professor Greenberger warned about our "New American Economy" far better than I could:

"Should we have an economy that’s based on whether people make good or bad bets? Or should we have an economy where people build companies, create manufacturing, do inventions, advance the American society and make it more productive? We are rewarding people for sitting at their computers and punching in bets. That’s not the way our economy is going to be built, and India and China, with their focus on science and industry and building real businesses, are going to eat our lunch, unless the American public wakes up and puts an end to an economy that praises and makes heroes out of speculators."

Greenberger’s statement explains why Detroit and other American manufacturers suffer while Wall Street speculators make a fortune — and your rapidly shrinking checkbook pays for it, every time you buy food, fuel or feed.

All because there is no shortage of these goods, you’re just being told there is because it’s more profitable – for a few – that way.

Everybody was warned; that’s probably why this deregulation bill was stealthily inserted into that appropriations bill without a floor debate.

© 2008 Ed Wallace

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and is a member of the American Historical Society.

http://www.star-telegram.com/ed_wallace/story/659081.html

 

[American Air Surf]

I already had a bet some time ago that Saudi sweet crude would reach $150 before the end of the year.

Get used to it. $6 dollars per gallon will be the new average and thanks to the greedy micro-brains in the witless house, America has no plan b.

Check, my "ANWR" Link in Water Cooler.

Additionally,-

http://europe.theoildrum.com/node/4112#more

 

[American Air Surf]

Why is oil over $139?

OilIntel.com

As if in direct defiance to the CFTC, speculators reacted as if Katrina II hit the Gulf and wiped out all refineries, the Saudi oilfields were on fire and Iran closed the Strait of Hormuz. A sequence of events like these would be necessary to justify the unprecedented gains today in energy futures, not a 4 or 5 cent drop in the dollar, or a well-timed forecast from Morgan Stanley.

What happened today is another severe blow to the U.S. economy as Wall Street keeps plowing the money that the Federal reserve made available to them back into commodities to make up for the huge losses they sustained in the housing crisis.

Which begs the question, will the airlines be able to use the Fed as the 'lender of last resort'? I mean come on now, if the Fed can bankroll the theft (And make no mistake, that's what it was) of Bear Stearns by JP Morgan and then guarantee hundreds of millions in more speculative debt in the transaction for JPM, why the hell can't the airlines belly up to the Fed?



WashingtonPost


Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.

The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.


Light at the end of the tunnel? Or freight train rushing towards us?

NYPostOpEd

Two-thirds of petroleum in the United States is used for transportation - but half of the transportation sector's fuel flows into commercial trucks, trains, buses, airplanes and ships. As a result, only 44 percent of each barrel of oil is used to produce gasoline in this country, and some of that gasoline fuels business - delivery vans, landscapers' trucks, fishing boats, industrial and farm machinery, etc.

It's the Fundamentals of OIL, not totally speculation.

http://www.energybulletin.net/45624.html

 

[delldude]

Ok, maybe this is a crazy thought, but think about it... Do you think there is any possibility that al qaeda maybe figured out how to manipulate our markets and futures? In the past, they had been quoted as saying things like they will stop at nothing to destroy our economy. They thought 9/11 would be enough to do it, but it wasnt. Do you think that maybe they mastered market manipulation?

I know that my theory is a little bit off the wall, but I really wonder...

Good point but plug in the Chinese.......instead of Al Qaida.

Like who's driving the price now anyways?