Oil hits record near $140 a barrel on dollar, fire

Yahoo / AP ^ | 06/16/2008 | EagleUSA

[AndyJackson]

It’s an essential monopoly good with inelastic demand that we are forced to buy. ...those of you selling things other than fuel are going to be feeling the pinch pretty soon....There are many restaurants in my area(OheilO) that are near closing their doors

Bingo. You have the whole economic problem in a nutshell.

[AndyJackson]

Goldman, Morgan Stanley Profits Conceal Reliance on Commodities "Surging prices are attracting investors ....and companies hedging by buying derivatives, the strength of Goldman and Morgan Stanley, which dominate the market for commodity derivatives. The two New York-based companies accounted for about half of the $15 billion of revenue that the world's 10 largest investment banks generated from commodities last year, said Ethan Ravage, a financial-services industry consultant in San Francisco."

$7.5B for these two is their FEES from trading derivatives.

[SAJ]

The index spec game, as currently constituted, began in early-mid 2002, due to the game having been ''legitimated'' by the Commodity Modernization Act of 2001.

By 2003, the game was well under way. Only beginning early last year did the game begin to get out of hand, and right now, of course, it's way out of hand and very distortive of mkts.

Good trading to you!

[SAJ]

I'm telling you, mate, the Regress are not required in this process.

What must happen is that CFTC need to reclassify investment banks when acting as agent for their clients. When big inv't banks trade for their own accounts, CFTC -- quite accurately -- classifies them as ''reporting traders'', otherwise known as ''large specs''.

When, however, these same banks act as agent for a client, say a pension fund or an endowment, they are classified as ''commercials'', aka ''hedgers'', and are not subject to position limits in any CFTC-regulated market. This is, of course, pernicious nonsense.

All that has to happen is for CFTC to reclassify banks-acting-as-agent as large specs...which they in fact are. We don' need no steenken Regress on this, m'friend.

[jveritas]

Let us see if there is a connection using a simple arithmetic.

A year ago 1 Euro = 1.35 Dollars oil was at $ 70 dollars.

Now 1 Euro =1.55 Dollars and oil is at $ 140 a barrel.

In other word the dollar dropped by 15% versus the Euro from a year ago but the oil barrel surged by 100% for the same period of time.

The oil speculators are not following any market drivers or fundamentals, they are only going crazy and wild, and they must be stopped.

[Wolfstar]

WarToad posted: So.... what exactly was the energy policy Cheney worked so hard on putting together?
am452 responded: Some people have a financial interest to keep the staus quo.

As always, the knee-jerk tendency to blame Bush-Cheney for every problem known to man is based on ignorance or venality, maybe both. Congress never enacted the Bush-Cheney energy policy. Furthermore, Congress has been sitting on its collective hands about energy since at least 1973. Let's see now, during that same period we've had presidents Nixon, Ford, Carter, Reagan, GHW Bush, Clinton and GWB. We've had Dem-controlled Houses for that entire time except for the period between January 1995 and January 2007. In other words, Republicans controlled the House for just 12 of the last 34 years since the 1973 oil shock. They did not control the Senate for the first two years of the GWB administration or the second two years.

From Wikipedia:

The 1973 oil crisis began on October 17, 1973, when the members of Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab members of OPEC plus Egypt and Syria) announced, as a result of the ongoing Yom Kippur War, that they would no longer ship oil to nations that had supported Israel in its conflict with Syria and Egypt (the United States, its allies in Western Europe, and Japan).

[At] The same time, OPEC members agreed to use their leverage over the world price-setting mechanism for oil in order to raise world oil prices...Because of the dependence of the industrialized world on crude oil and the predominant role of OPEC as a global supplier, these price increases were dramatically inflationary to the economies of the targeted countries, while at the same time suppressive of economic activity. The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency. The United States of America, however, failed to produce any major intitiatives towards reducing its foreign dependency.

[gogogodzilla]

The sad thing is that they would voluntarily stop if there was another inflation-proof investment option out there.

As the hedge funds are simply looking for a place to park their money to weather out what is, in essence, a negative rate of return found in more traditional investment options.

And the only way inflation will end is if the dollar is strengthened and interest rates rise. But the Fed is more concerned with repeating the mistakes of the Carter administration... than avoiding them.

[wtc911]

We are at war. I see them as traitors who are helping our enemies and destrying the country.

_______________________________________________

I assume that you mean those in Congress (like McCain) who prohibit us from accessing the 16,000,000,000 barrels of oil that we have within our own borders.

[never4get]

In other word the dollar dropped by 15% versus the Euro from a year ago but the oil barrel surged by 100% for the same period of time.

Thank you for pointing that out to the fools who think the "weak dollar" is one of the great reasons pushing the price up. The price is also sky rocketing in parts of the world where the euro currency rules. This price surge goes well beyond normal supply/demand. This is all happening when there is no shortage of oil on the market.

[jveritas]

This price surge goes well beyond normal supply/demand. This is all happening when there is no shortage of oil on the market.

Agree 100%. Math is a very stubborn fact but the fools will not believe it.

[thackney]

This is all happening when there is no shortage of oil on the market.

Not at $140 a barrel.

Try holding out for $40 a barrel and see how much oil you can buy.

[jjm2111]

I agree too. Please someone in the there-is-no-speculation crowd tell me that this:

is a rational market.

[okie01]

If I'm reading your chart correctly, the price of oil has gone from $51/bbl to $140/bbl since the Democrat Congress was seated in January, 2007.

Coincidence?

I think not.