Boone Pickens & Those Stealing From Consumers (& Investors/Traders) Should Be Hung

This peak oil crap reminds me of the dot.com crap.

Don't price us on price to earning.
We need price to sales.

Why because this time its different.

I can remember one of the geniuses saying that internet companies could just stop their marketing and then their Income would increase, of course why would their customers stay if they stopped marketing.

Point is this peak Oil stuff is load of crap, the Oil price is up because its priced in dollars and the Oil producers don't want to earn less, also they have to make up for everything they lost over the dollars depreciation.

Of course the don't realize that they are destroying the market for oil, better than any regulation ever could.

 

this would be a good time for Bush-II to show his leadership....

since it seems anyone complaining about the economic impact and destruction of life as most Americans know it, due to the unfettered rise in the price of oil, and how it is causing people on the ground to rethink everything about their ways of life, whether being a soccer mom and taking a trip to the grocery all the way to whether or not the police / fire trucks will roll on emergencies....

since anyone complaining of pointing out the negetive deliterious effects is being smeared with some socialist, communist name calling by those in support of these conditions,

then, a simple solution would be for Geo Bush II to show his commanding, authoritative leadership and get out in front of this "thing"

hey, after all, isn't he an Oil Man?
hey, after all, isn't this what these last 8 years were all about anyway?

hey, after all, with stocks going up, oil going up, with stocks going down, oil going up,

hey, after all, isn't this what the Texas Delegation has wanted all along?

 

The future is in Horses, Horse Farms, Stables, Carriage Mfg's., Saddle Makers and Hay Baylers. Seems we did alright many years ago with that method of transport. Bring on the HorsePower!

 

Boone Pickens is the reason you're paying $4.5 a gallon for gasoline.


"In general, like all other commodities, the price is based on supply and demand. If the only players were oil producers and refiners, the market would be well-behaved and would be far more responsive to consumer demand. It used to be that prices would be determined by a balance between spot prices (shipments of crude oil that are on the way to refiners but, for whatever reason, become available for sale), and the price refiners can get for their total product slate on the wholesale market. Spot prices would be determined by looking at the recent prices paid for shipments as reported in a couple of industry newsletters, such as Platts Oilgram or Argus reports.

The introduction and recent popularity of trading crude oil and refined product futures changed the market. Here, traders who have no possible way of receiving or refining crude oil purchase contracts and hold them to trade on price fluctuations, at a profit, and before delivery. In theory, the futures market provides a trading ground where a willing buyer and seller agree on a price and the price is instantly public, thereby setting a marker for the industry. Unfortunately, this market was simply overlaid on top of an already functional market with well-entrenched pricing practices. It is the duplication of systems that provides fertile ground for speculative games.

First, speculation in this market is very expensive, because oil is traded in 1,000-bbl contracts. It is a game fit only for investors with lots of money and willing to take large risks, primarily wealthy traders and those operating high-risk investment and hedge funds. As it turns out, several players of this ilk entered the energy market during the brief Enron era, where they learned the tricks of the trade.

The California energy crises provided a special training ground for savvy energy commodities traders who quickly learned how to work the information system. Specifically, they learned that they could drive up natural gas prices incrementally by purchasing one natural gas spot market contract and submitting the trade to one of the journals that collects and publishes market trade prices. At the time, there was no method of validation, so the trade price was published. In the meantime, the same investors could be holding several natural gas futures contracts. The price of the futures would increase on the report of the spot trade price that was reported.

Since it was only one contract, the investor could then sell the spot contract at market value, even at a loss, not report the sale and reap the benefit of the rise in the futures market resulting from the report. The utilities that purchase natural gas depended on the prices for spot trades reported in the journals to accurately reflect what others (utilities) were paying for natural gas. In fact, it was common to write contracts between suppliers and utilities to reference certain prices in reputable journals as benchmarks for contract valuation on a day-by-day basis. Using this system, futures prices could be driven to lofty heights in a very short period. The opportunity to pull off a similar run up in prices still exists in the all too trusting oil markets.

In this situation, there is no reason for oil companies, or foreign producers, to get involved in driving prices up. All they have to do is sit back and sell oil at the prices created by investors. For months now, major oil companies and even OPEC members have pointed out that prices are being set in the futures markets by speculators. However, producers should note that the entire process described above can be reversed, and the speculators can make money on puts as they drive prices down, leaving producers holding the bag.

There are producers and refiners out there selling and buying crude oil, in part, based on prices set by speculators in the futures market. Each time a trade is made in that market, refiners and producers note the price, up or down. This becomes the price against which spot pricing is weighed, i.e., a buyer in the spot market looks at the current price in the futures market and reasons "if I have to purchase oil today at market price, the futures price is the amount established in the current market," and weighs this price against the most recently reported spot price in the preferred journal. Thus, the futures price and spot price are used as a measure to begin negotiations for a spot market delivery."

 

Dude are you serious

 

Well. This info has been in public domain for quite some time.

See how clueless the ET traders really are?

http://findarticles.com/p/articles/mi_m3159/is_12_226/ai_n15979950/pg_1

_________________________

LOS ANGELES, June 1, 2004

(CBS) When a forest fire shut down a major transmission line into California, cutting power supplies and raising prices, Enron energy traders celebrated, CBS News Correspondent Vince Gonzales reports.

"Burn, baby, burn. That's a beautiful thing," a trader sang about the massive fire.

Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard – on audiotapes obtained by CBS News – gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.

"He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million."

"Will you rephrase that?" asks a second employee.

"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.

The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with power producers, traders deliberately drove up prices by ordering power plants shut down.

"If you took down the steamer, how long would it take to get it back up?" an Enron worker is heard saying.

"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another says.

"Well, why don't you just go ahead and shut her down."

Officials with the Snohomish Public Utility District near Seattle received the tapes from the Justice Department.

"This is the evidence we've all been waiting for. This proves they manipulated the market," said Eric Christensen, a spokesman for the utility.

That utility, like many others, is trying to get its money back from Enron.

"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"

"Yeah, grandma Millie, man"

"Yeah, now she wants her f------g money back for all the power you've charged right up, jammed right up her a------ for f------g $250 a megawatt hour."

And the tapes appear to link top Enron officials Ken Lay and Jeffrey Skilling to schemes that fueled the crisis.

"Government Affairs has to prove how valuable it is to Ken Lay and Jeff Skilling," says one trader.

"Ok."

"Do you know when you started over-scheduling load and making buckets of money on that?

Before the 2000 election, Enron employees pondered the possibilities of a Bush win.

"It'd be great. I'd love to see Ken Lay Secretary of Energy," says one Enron worker.

That didn't happen, but they were sure President Bush would fight any limits on sky-high energy prices.

"When this election comes Bush will f------g whack this s--t, man. He won't play this price-cap b------t."

Crude, but true.

"We will not take any action that makes California's problems worse and that's why I oppose price caps," said Mr. Bush on May 29, 2001.

Both the Justice Department and Enron tried to prevent the release of these tapes. Enron's lawyers argued they merely prove "that people at Enron sometimes talked like Barnacle Bill the Sailor."

 

"The rise in prices is speculator driven. It appears that those who learned the skills of gaming electricity and natural gas prices during the California Energy Crisis simply moved on to the crude oil market while US regulatory agencies took steps to thwart them in US electric and gas markets. Investigators in the Enron case found it was easy for traders to manipulate the media by reporting false information. Subsequent negotiations with the industry resulted in a Code of Conduct, which specifically applies to reporting of electricity and gas prices. (Energy Crisis Investigation / Initial Decision / Policy Statement / Code of Conduct). Not surprisingly, electricity and natural gas prices, including futures markets, have been much less volatile since the Policy Statement appeared.

Similar regulatory pressure would be difficult, if not impossible, in the crude oil market because it is unregulated and involves international trading. Instead, it falls on the investment community to police itself, or perhaps the Commodities Futures trading Commission could look beyond their recent investigation into hedge funds and take a look at the practices of individual traders who are not required to file reports because they fall below the reporting threshold. Right now, there is no way to forecast how long high prices can be sustained or to what level they will retreat when the party is over. [...]"


"One final thought - it seems like a major crude oil producer could bring order back to the market by selling real oil futures contracts for specific production from foreign sources and not buy them back later, thus forcing speculators to take delivery on crude oil."

http://oil-gasoline.typepad.com/george_clemen_oilgasoline/2007/12/special-report.html

 

[...]"The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Brent is used in spot and long-term contracts to value as much of crude oil produced in global oil markets each day. The Brent price is published by a private oil industry publication, Platt’s. Major oil producers including Russia and Nigeria use Brent as a benchmark for pricing the crude they produce. Brent is a key crude blend for the European market and, to some extent, for Asia.

WTI has historically been more of a US crude oil basket. Not only is it used as the basis for US-traded oil futures, but it's also a key benchmark for US production.


All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the “tail that wags the dog.”

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.” [...]


http://www.elitetrader.com/vb/showthread.php?s=&threadid=128374&perpage=6&pagenumber=4

 

McCain Defends 'Enron Loophole'
by Jason Leopold

John McCain May 19, 2008 Sen. John McCain says he opposes the $307 billion farm bill because it would dole out wasteful subsidies, but his chief economic adviser Phil Gramm also wants to stop its proposed regulation of energy futures trading, a market that was famously abused when Enron Corp. manipulated California's electricity prices in 2001.

Clearing the way for that California price gouging, Gramm, as a powerful Texas senator in 2000, slipped an Enron-backed provision into the Commodities Futures Modernization Act that exempted from regulation energy trading on electronic platforms.

Then, over the next year, Enron with Gramm's wife Wendy serving on its board of directors worked to create false electricity shortages in California, bilking consumers out of an estimated $40 billion.

Gramm left the Senate in 2002 but now has emerged as what Fortune magazine calls "McCain's econ brain," not only filling the Arizona senator's acknowledged void on economic expertise ("I don't know as much about the economy as I should") but recognized as one of McCain's closest friends in politics. The two men talk daily.

A McCain aide told me that the Arizona senator opposes the farm bill because it "rewards lobbyists" by granting rich farmers lucrative subsidies, although he would support "a reasonable level of assistance and risk management to farmers when they need America's help."

But the aide, who spoke on condition of anonymity, acknowledged that the presumptive Republican presidential nominee also opposes the farm bill because Gramm advised McCain that he should resist its regulatory language on the energy futures market.

Democrats have dubbed that gap in energy futures regulation the "Enron loophole," but it played a part, too, in the more recent attempt by the Amaranth Advisers hedge fund to corner the national gas market by shifting trades to the unregulated "dark markets" of the Intercontinental Exchange.

The "Enron loophole" also has become part of the debate over the soaring price of oil. Last week, a study sponsored by Sen. Carl Levin, D-Michigan, concluded that speculative futures markets were partly to blame for the surge in oil prices that have pushed gas at the pump toward $4 a gallon.

At a May 15 news conference, Levin said the skyrocketing price of oil is not the result of supply and demand. Speculators have taken over most of the futures market."[...]


http://www.baltimorechronicle.com/2008/051908Leopold.shtml

 

You guys have to make up your mind whether working with Enron is bad or not.

It was ok when paul krugman worked for them, it was ok when the so called "greatest treasury secretary in the history of the republic, bob rubin went to bat for them, but now it's a grievous sin when a republican worked with them.

Oh, I get it . It's only wrong When a Republican Does It. Yeah, I get it.