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Congress Looks for a Culprit for Rising Oil Prices (World record sized mirror required...)
NY Times ^ | 6/25/08 | JAD MOUAWAD

Posted on 06/24/2008 11:04:50 PM PDT by Libloather

Congress Looks for a Culprit for Rising Oil Prices
Wednesday June 25, 4:35 am ET
By JAD MOUAWAD

With Americans growing angrier by the day about high gasoline prices, nobody can accuse Congress of turning a deaf ear.

On Wednesday lawmakers will hold their 40th hearing so far this year on the cause of high oil prices. Filing bills on Capitol Hill to combat the problem is becoming a cottage industry, with clever names like the Prevent Unfair Manipulation of Prices Act, or PUMP Act, and the No Excuses Energy Act.

Until recently, lawmakers had focused on the traditional suspects: oil companies and the Organization of the Petroleum Exporting Countries. But increasingly, they are casting a suspicious eye on the role of investors, including speculators, in driving up prices.

As the ninth hearing of the month gets under way on Wednesday, one of the nation’s best-known energy experts, Daniel Yergin, is expected to tell Congress that the focus on speculation is largely misguided.

Mr. Yergin will join numerous other energy experts who have declared that the rise in oil prices can be explained by basic economic factors, such as the limited growth in supplies in recent years, a weakening dollar, a global surge in energy demand and a string of production disruptions in countries like Nigeria.

“When an issue is this hot, it would be so much easier if there was a single reason to blame,” Mr. Yergin said in an interview on Tuesday, previewing his testimony before Congress.

“The oil shock is real and is about the hottest political issue right now,” he said. “So Congress feels the pressure to do something but there is not much it can do to promote peace in Nigeria or to get the value of the dollar to go up.”

(Excerpt) Read more at biz.yahoo.com ...


TOPICS: Extended News; Government; News/Current Events; Politics/Elections
KEYWORDS: 110th; congress; culprit; energy; energyprices; oil; prices
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"...there is not much it can do to promote peace in Nigeria..."

Nigeria? Isn't that where William Jefferson D-La was busted?

Senator Schumer, in an interview, said he could see no easy answers to high oil prices.

Out-of-touch RATS. Nothing new. (And just how are they influenced by Big Enviro lobbyists?)

"No, we can't! (Unless I fold again.)"

1 posted on 06/24/2008 11:04:51 PM PDT by Libloather
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To: Libloather
Two Men fell overboard from a freighter, one a conservative and the other a liberal. The Liberal said to the conservative that you can't swim your way out of the ocean, and he refused to swim.

The conservative paid the liberal no mind and began to swim based on the stars and his faith, the liberal just treaded water waiting for some one to save him.

Eventually the liberal surcummed to the power of the ocean while the conservative hit the beach in Hawaii.

Moral of the story, don't listen to libs, God put men on the earth to struggle to survive.

The moment you stop struggling, you die. There is no entitlement to life.

2 posted on 06/24/2008 11:20:10 PM PDT by dila813
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To: Libloather

High gas!!! BLAME THE DEMOCRATS

The only way to lower gas is to kick out ALL incumbent politicians, especially Democrats. They have stopped ALL building of Nuclear power plants, has stopped all building of oil refineries, and has put about 90% of KNOWN oil reserves off limits.

Right now Red Communist China is drilling in the Gulf of Mexico, 50 miles from our shores, and our American companies are not allowed to.

Most oil production and exploration has been banned in the USA since 1981.

We have oil off the cost of America, but it was stopped because the environmentalist, and the Democrats who say that the rigs would be unsightly and oil would be spilt.

THESE ARE LIES.

1. The wells will be located at over 100 miles. Because of the curvature of the Earth, we can the horizon we see is about 20 miles away, anything more than that would be invisible.
2. There has not been a major oil spill from a rig in over 40 years. Even though Hurricane Katrina destroyed dozens of oil rigs, NONE OF THEM SPILT ANY OIL.

America has to wake up to the fact that this crisis is the making of the Democrats and Wacko Environmentalist, NOT THE OIL COMPANIES.

Oil companies have been heavily regulated for about 100 years, that means the CONGRESS - NOT the oil companies is responsible.

Talk about Chicken Little’s. Oil prices are high and the Democrats wants to point fingers, instead of releasing the oil companies to drill. But remember for every finger they pointed at the oil companies, there are four pointing back at them.


3 posted on 06/24/2008 11:28:17 PM PDT by Exton1
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To: Exton1

I will profess my ignorance when it comes to this issue so I don’t mind anybody setting me straight if I am misinformed but this is what I understand so far.

1) normal supply and demand is not the only factor driving the price of oil.

2) Much of the price we are paying at the pump is due to wall street firms buying shares in corporations that are selling agents (ie, chevron, shell, etc) based on predictions about the future profit margins of those corporations.

3) That this speculation in futures is represented by one of the indexes on the NY stock exchange and is what both the selling agents use to set the price per gallon at the pump and what the oil producers use to set the price of crude oil per barrel that exon, chevron, etc buys from them.

4) That while this index is not an accurate measurement of the current value of oil (rather the future value), and is external to the corporations and producers such as OPEC themselves, this index is used by both of them to justify the prices they are setting. That if this index wasn’t used, they’d just use another in some other nation’s stock market. For a lack of a better way to put it, it’s as if they are just using this index to legitimize the prices they are charging.

5) About 40% of our oil consumption already comes from domestic production but oil from our own domestic supply is sold for the same price as foreign bought oil and the only way it wouldn’t be is if we were to nationalize our domestic oil production. (I am not advocating that).

So what is unclear in my mind, since I only have a basic understanding of how the stock market works, is how would an increase in supply of domestic oil stop the type of futures speculation that has been driving up the price of oil? Normal supply and demand is not what seems to be driving much of the price in the first place. Market manipulation seems responsible for much of it. If it is not true supply and demand of a product that is driving the price in the first place, what is to stop the investors from bidding up the price of oil shares in order to increase profit margins for the oil companies so that the shares they are buying are worth more and more?

It’s a win/win for everyone except for those of us who can’t afford to buy so many shares of stocks in oil companies that we are happy to see the price of gas at $4.25 a gallon. I guess if I could afford to buy that many shares in oil companies, I’d be happy to see gas prices at these prices.

I will stand corrected if someone can explain why I am wrong.


4 posted on 06/25/2008 12:22:52 AM PDT by LaurenD
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To: Libloather

Congress IS the Culprit in the Rising Oil Prices!


5 posted on 06/25/2008 12:48:04 AM PDT by A. Morgan (VOTE FOR A LIBERAL N' WE'LL BE UP TO OUR NECKS IN ILLEGALS and OUTA' GAS!)
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To: dila813
God put men on the earth to struggle to survive.

The moment you stop struggling, you die. There is no entitlement to life.

The moment you stop thinking you also die. I always advised my crew to stay put if they fell overboard while the vessel was underway. That way once they were missed and and I knew I had a man overboard I could 180 the vessel and start working a down tide grid from a direct reverse course. Hard to spot a man in the water...even at half a mile in a chop.. or a quarter mile in rough seas.

So perhaps the true moral of the story might be that you are both in the same ocean and you are both in the same trouble(Hawaii will only be where you wished you were.) so stick together and pray that the Captain knows what he is doing.

I wouldn't want an inexperienced Captain at the wheel..might as well swim, but neither would I want a seasoned Captain who was known to fall asleep at the wheel and had a tendency to run aground all the time.

In the political waters I find myself in today, I think I might stay off the deck all together without a lifejacket on.

6 posted on 06/25/2008 3:25:46 AM PDT by KDD (Bob Barr for President.)
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To: Libloather
As the ninth hearing of the month gets underway on Wednesday . . .

Reporter sounds a tad cynical, doncha think?

7 posted on 06/25/2008 3:26:18 AM PDT by sportutegrl
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To: Exton1

[1. The wells will be located at over 100 miles. Because of the curvature of the Earth, we can the horizon we see is about 20 miles away, anything more than that would be invisible.
2. There has not been a major oil spill from a rig in over 40 years. Even though Hurricane Katrina destroyed dozens of oil rigs, NONE OF THEM SPILT ANY OIL.]

The dems and rino liberals plan to destroy the middle class as they continue to drive oil prices up and promise lies of alternative energy sources. It is the politicians way to destroy all peoples every where they can.


8 posted on 06/25/2008 3:51:18 AM PDT by kindred (I am now a third party conservative and glad conservative Bob Barr will be on the ballot..)
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To: Exton1

[High gas!!! BLAME THE DEMOCRATS
The only way to lower gas is to kick out ALL incumbent politicians, especially Democrats. They have stopped ALL building of Nuclear power plants, has stopped all building of oil refineries, and has put about 90% of KNOWN oil reserves off limits.]

Unfortunately, the American people have been dumbed down and Obama will have prices up over 7 dollars an gallon; stupid is as stupid does and Obama leads by 15 points.


9 posted on 06/25/2008 3:53:53 AM PDT by kindred (I am now a third party conservative and glad conservative Bob Barr will be on the ballot..)
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To: Libloather

[On Wednesday lawmakers will hold their 40th hearing so far this year on the cause of high oil prices.]

We have far more to fear from the democrats and rinos in Washington D.C. than from the murdering terrosists.


10 posted on 06/25/2008 4:01:31 AM PDT by kindred ( Third party conservatives Chuck Baldwin and Bob Barr will be on the ballot..)
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To: LaurenD
I try to help you out a little with my limited knowledge.

There are two different markets. A) Equity or asset market such as NY stock exchange that deals with companies produce oil or are in some oil related field. B) The commodity market which deals the actual products such as oil gasoline, corn, wheat, sugar, and so on based on supply and demand.

If you buy stock in oil companies then you are buying their risk and rewards. On average, the reward has been only 10% profit.

If you are a “player” in the commodity market then you are only buying and selling the product. Lets say Mobil needs rise money. They need to sell one barrel of oil but that barrel is still in the ground and and it will take three months to get it out. You, as a “player”, buy a contract for $100.00 for that barrel and will take delivery three months now. You, the player, have no intention of taking delivery, you are going to sell your barrel to highest bidder before your contract expires in three months. At this point, due to supply and demand, your barrel could be worth $120.00 or $80.00. Now, Mobil oil makes gasoline and will buy that barrel oil back from you. At $120.00 per barrel, higher price at the pump. At $80.00 per barrel lower price at the pump. For every trade on the commodity market you have “player” making money and a “player” losing money.

11 posted on 06/25/2008 4:34:51 AM PDT by steveab (When was the last time someone tried to sell you a CO2 induced climate control system for your home?)
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To: LaurenD
The basic problem is supply and demand. Demand has increased while supply has not increased sufficiently to maintain historically low gas price levels.

The answer is to increase supply and, to the extent possible, decrease demand on a world wide basis through conservation. That would bring the market back into balance, when compared to historical levels. Anything short of doing those two things will not have any significant impact on the price of gas over the long haul because demand is going to continue to grow. Another comment: Much of the price we are paying at the pump is due to wall street firms buying shares in corporations that are selling agents (ie, chevron, shell, etc) based on predictions about the future profit margins of those corporations.

Wall Street firms are not the owners of "Big Oil". Pension funds, IRA's, individuals, etc. own the stock in those companies. Oil is subject to the law of supply and demand just like all other commodities.

12 posted on 06/25/2008 4:57:53 AM PDT by Loyal Buckeye
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To: LaurenD

More on the commodity market.
As a “player” you do not have to be an oil company or farmer.
Any “player” can buy or sell contracts.
Or the “player” can buy a put or sell a put or buy a call or sell a call.
Then there is a sub-commodity market called option trading which is based on the price of the contract itself not on the price of the product.


13 posted on 06/25/2008 5:26:36 AM PDT by steveab (When was the last time someone tried to sell you a CO2 induced climate control system for your home?)
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To: Libloather

Media whore Bill Richardson was on F&F this morning (after not being seen yesterday due to tech problems, though he talked on the phone). Spewed the usual party line of ten years to develop domestic resources, blah, blah. Said the oil companies have lots of places to drill and yet want more (duh-you drill where there’s oil, not where there isn’t; leasing doesn’t mean there’s oil there and you don’t drill where the odds are against you.). Finally said he supports drilling except in ecologically sensitive areas.

Problem is King Bill has done his best to do the bidding of his environazi friends in declaring some very promising areas in NM off limits due to ecological sensitivity.

Yelled at the TV — didn’t do any good but made me fell better!!


14 posted on 06/25/2008 6:06:25 AM PDT by CedarDave
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To: steveab

So a source of the problem is that people are bidding up the price of oil. So why then, do I as a person, or any other entity have the right to buy oil on the commodities market? This is hurting people that just want to buy gas for our cars and buy oil to consume whether they are a company or an individual.

Why not just have the oil go from the producers to the refinement and distribution companies and then they sell that oil based on supply and demand. The way it is now, we have an unnecessary middle man making money off of us and my question is why do they have that right when this artificial demand is driving up the price of gas?

These speculators are creating a market that is separate (ie, artificial demand that has nothing to do with how much oil people need for energy). Isn’t it easy to speculate that the prices will go up when the commodities trader himself is the one driving those prices up. Of course it’s going to go up because they are going to make it go up. They are going to ride it out at our expense until they are forced somehow to stop.

Like you said, the speculators could lose money too but they aren’t going to because it’s not real demand (ie.. our demand as a consumer product), but rather their own demand for the oil as a commodity to invest in.

In a scenario where a supplier sells a barrel of oil in 3 months from now for $120 a barrel because there are these commodities investors creating artificial demand, that same barrel of oil could have been sold to the refinement and distribution company for $100 a barrel. So in this scenario, the price at the pump would be 20% less. 20% of the cost of a gallon of gas goes to make the commodities investor rich, not to pay for the actual price of oil). Why??????

Why do these people need to do this? Why can’t they go and invest in something else? Oil is too important both to the overall health of our economy and our national defense. Just consider how much the AF alone uses in jet fuel.

If I as a person went and bought an oil future for 6 months from now for $150 a barrel, I would be hoping that the going price in 6 months is more than $150 per barrel. That would be a risk, but when the people by and large buying the oil as a commodity are buying enough that they can gamble on and then CAUSE the price increase, it’s really not a gamble at all.


15 posted on 06/25/2008 10:46:21 AM PDT by LaurenD
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To: CedarDave
Me too, ya haaaa, at last many more of us are beginning to see "The King's New Clothes"
16 posted on 06/25/2008 10:46:38 AM PDT by norraad ("What light!">Blues Brothers)
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To: LaurenD
Yes, you are absolutely correct , sir!

I think this malady can be traced back to the Tulips of Holland?

17 posted on 06/25/2008 10:49:10 AM PDT by norraad ("What light!">Blues Brothers)
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To: norraad

Thanks, but I’m a woman....LOL. For some reason, people keep thinking I’m a guy, even with a name like Lauren. I’ve been told by my husband that I don’t think with my emotions as much as most women do.


18 posted on 06/25/2008 11:05:00 AM PDT by LaurenD
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To: LaurenD
...yes, I knew that, & I knew you tell me so, I had paraphrased the great, yet now rather poor Johnny Carson sidekick Ed McMann, who always use that line.

I guess I could have been gender specific, but then the humor of the homage may have skewed.

Thank you again for your original point, all this could have been avoided from the get go, and the responsible parties are still around & up to more tricks emboldened by the the fact that the got away with the old ones .

19 posted on 06/25/2008 11:41:16 AM PDT by norraad ("What light!">Blues Brothers)
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To: LaurenD
The commodities market was created to bring price stability to the price of goods(in theory).

From what I have heard or read, the price of oil should be about $70.00 per barrel based on supply and demand, add $15.00 to $25.00 for unrest in the oil producing areas. The rest is due to too much money chasing too few of oil contracts, not oil.

The bubble will burst when the oil refineries say we are full, we have too much oil on hand.

One thing the feds could due would be rise the margin up to 75%. That would drive the fast money out of the market.

And we need to drill here in the U.S. that would knock some of the $15.00 to $25.00 off the price per barrel.

20 posted on 06/25/2008 4:39:30 PM PDT by steveab (When was the last time someone tried to sell you a CO2 induced climate control system for your home?)
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