Posted on 07/03/2008 4:45:49 PM PDT by brwnsuga
He will have to win the Presidency first. And it won't be in the next two or three weeks. :)
...And there is a national security dividend! Sooooo-—drill here, drill now, pay less !!!
I think the futures traders didn’t realize this loophole until about 2 years ago. OR, if they did, they were scared to take advantage of it.
From what I’ve heard in congressional testimony and read, this loop hole is real, and it IS being exploited.
I saw several executives testifying about this last week. THey ALL agreed that the loop-hole needs to be closed yesterday.
Well, a little experiment might be educational...
Just tell the Big Bad Oil Companies, have at it; drill wherever you think the oil yield will be the most productive soonest.
No regulatory hurdles.
No new obstacles and legal barricades.
No allowing the eco-idiots to challenge your every move.
See how quickly meaningful and useful production begins, and then we resume this dialog.
"Where the rubber meets the road is where reality is at", as the stereotypical redneck is assumed to phrase it. Give it three years.
Anybody game?
I don't care if the moonbats' heads explode.
The last reliable number I remember for producing oil at the wellhead is 2005:
Saudi Arabia, $5 a barrel
The North Slope, $3 a barrel.
That ought to put things into proper perspective.
Assuming that we don't allow the "fungible BS" in the meantime. Even at $60 a barrel, the "unconscionable profit", for both the Big Bad Oil Companies and governments is breathtaking and obvious.
Needless to say, not one drop of this oil would be allowed to be exported, or "traded" for oil from any OPEC nation to save transportation costs. If the world's oil consumers are happy with OPEC, let them continue to be happy with OPEC.
Isn't it amazing that we allowed the nutjobs to say No Podemos for almost 40 years?
And get away with it?
Your figure of per barrel price in one location - the north slope - is not meaningful unless you indicate how much of the US market is supplied by that location.
Having lived near the Gulf, I am aware that the majority of the US supply comes from there - drilled in deep water at much higher cost.
Brilliant post here and this is exactly what it is giong to take.
The best reason to drill here drill now.
In 2007 the U.S. used 543,000,000,000 barrels of oil. 60% of which was imported. That means $469,152,000,000 (@$143.00 per barrel)of our hard earn money went to some other country.
Screw them, DRILL HERE, DILL NOW, COAL TO OIL.
Bump...
Futures can be used for speculation, but I don’t really see how the “Enron loophole” has actually made is less risky for speculators, or made it easier to corner a market the size of the oil market.
Mostly, Futures are a way to buy oil for later, locking in a price so you can plan ahead. Right now, the price we are locking in is $145 a barrel. That means people think they can make money selling their goods and services at that price, and they are afraid that if they wait, it will cost even more.
If you shut down the speculative market, you still have people who actually have to buy oil. And when they do, they can still buy it and store it up for the future. But instead of buying oil that will pump next month for next month (using futures), they will have to buy the oil NOW, and store it. Costs more to store, drives up demand for oil NOW, makes it harder to predict what happens later.
And how exactly do you force people to NOT sell their oil from 6 months from now? If I know I will have oil in 6 months, and you want it, why would government say I can’t sell it to you now?
And of course, even if speculation legislation could drop the price 25%, that would just make oil $110 a gallon, which DOUBLE The amount it was when the Democrats took over, equates to gasoline at almost $4 a gallon (refineries are almost losing money because they can’t sell gasoline more expensively, and they can’t get raw materials cheap enough, which suggests that soon people are going to stop buying the oil, which should lower the price).
And according to the democrats, 20% of the price when they took over was speculation.
So if 25% of the run-up is speculation, 75% is because the Democrats won’t let us drill for more oil. The “Enron Loophole” is Clinton’s fault, and the other 75% is the 40-year FAILED POLICIES of no-drill by the Democrats.
I thought the farm bill closed the Enron loophole. I know Bush vetoed it, but they just overrode the veto, so why are we still talking about closing the loophole? It’s closed, and the price of oil went UP.
Most of our oil is very expensive to extract. BTW, the $3 a barrel cost you quote doesn’t include the price of regulations, that’s just the actual work of getting the oil. The cost to the company to deliver that oil is much higher.
BTW, we should repeal this law tomorrow. Let’s just put a simple bill out that does nothing but repeal the loophole.
But before we do that, let’s bet the so-called economists about a 25% drop overnight.
I would take all my money out of the markets, and place that bet. I’d make a fortune.
Except the economist would NEVER place that bet, because he knows that there is NO CHANCE the price would drop 25% overnight if you repealed this law.
It’s all a lie. And when we pass the bill, and the price doesn’t drop, they will instead talk about how they KEPT THE PRICE FROM GOING UP ANOTHER 25%.
Just like the Democrats did with all their other bills. They’ve passed several measures, and the price has gone up — and in their last press release, they claimed that their measures had saved us from even LARGER PRICE INCREASES.
That wey they never have to prove they’ve accomplished anything.
Fact is, they shut down SPR, which was supposed to drop the price 5-25 cents, and the price went up. They passed a law calling for investigation into price gauging, and the price went up. They passed a law calling for lawsuits against OPEC and the price went up. They blocked oil drilling, and the price went up.
And when they close the “enron loophole”, the price will go up again.
You need to check out the size of the non-hedge market, ie, the number of futures now settled for cash rather than delivery.
It has exploded in the last three years.
Further, the CFMA allowed such exchanges as ICE to not have to report or enforce position sizes/limits.
Settling for cash just means that someone else bought out the delivery, right? Or can you sell oil that doesn’t exist on the market?
When you sell or buy a contract on one of the classic exchanges (CBOT, NYMEX, etc), you can settle the contract in cash, or physical delivery of the commodity at a accepted delivery terminal.
An example is a farmer. He sells a contract for X bushels of wheat at price $Y, to be settled by the contract date.
This contract requires him to either:
1. Deliver X bushels of wheat to a delivery terminal by the settlement date, or
2. let’s say he has a crop failure. He doesn’t have all the wheat required to settle the contract. He can go into the cash market, buy some physical wheat from someone (his neighbor, a local elevator, perhaps even the elevator where he’s delivering his wheat) to fill out the contract requirements.
or
3. He can settle the entire contract for cash.
That’s how things work in the classic futures exchanges.
Here’s how crude futures are traded on the NYMEX (NY Mercantile Exchange):
http://www.nymex.com/CL_spec.aspx
NB the terms of delivery, the grades that will be accepted for delivery, etc. Classical futures trading. NB2 the position limits, limits on price movement (what futures traders call “limit up” and “limit down” moves in a commodity price) and so on.
Now check out how WTI crude futures are traded on ICE, the new exchange opened by
https://www.theice.com/productguide/productDetails.do?productId=425&productTypeId=1047
Cash settlement only. No contract position limits. Also, something that you don’t see there is a lack of identical mandatory position size reporting to the CFTC that you see on NYMEX. ICE “shares” information with the CFTC, but it isn’t the same level of scrutiny that trading on the older exchanges receives.
BTW... guess who owns ICE?
Well, here’s the news of some of the initial owners cashing out:
Golly. None of those guys have an interest in the price of oil going up, do they?
NB - who has been publishing “analysis” of the oil markets, talking up the price to $150?
Goldman.
Who owns one of the biggest positions in ICE?
Goldman.
Nothing like talking your own book to make money.
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