Comments on: Did Speculation Fuel Oil Price Swings?

60 Minutes: Speculation Affected Oil Price Swings More Than Supply And Demand

[pavoldi]

My question after reading the quote below is this - What exactly is the difference between "the farmers" or "the airlines" and "me and my family"?

How is it that when I hedge my future fuel costs in the exact same way big industry players do, that I become an evil ''speculator'' or ''part of the problem'' that needs to be regulated, maybe even taken out of the game completely as if the banks I depend on to make this possible are somehow treasonous in their efforts?

Granted I don''t take delivery, but I am using meager gains now to offset the higher priced gas i will assuredly be buying next year.

"It was created so that farmers could gauge what their unharvested crops would be worth months in advance, so that factories could lock in the best price for raw materials, and airlines could manage their fuel costs..."

pavoldi(dot)com

[aceditor]

This is the worst piece of journalism yet on this issue. What happened to balanced journalism? Most in this game beieve it was supply and demand yet noone was interviewed. The only person you talked to who backed your story is Michael Masters. Dan Gilligan only talks about volatility. The expiry of futures contracts ensures that speculation cannot run up the price. An enquiry by the commodities and futures exchange commission also concluded that it was not speculation. The 25 dollar jump you talk about in September was caused by a so called Short squeeze, that is people betting the price was going down being forced to buy contracts on expiration. CBS is a joke as Dan Rather will testify.

[talkingham]

Do we really have to ask this question about did speculation fuel oil prices?

Either the crooks on Wall Streets around the world fueled the high prices or world oil usage dropped by 66% over the last month.

These jackals are playing us like a yoyo. Free market my butte.

[niceface19]

Some in our government are very good at making hoax for profits.

[regularguyec]

It''s not just oil. Hedge funds are paid on a "mark to market" basis at year end for price increases in underlying investments. Look at Apple Computer in 2007, driving up to over $200 on the same leveraged speculation, with an underlying increase in futures contracts, which were purchased on the call side and sold on the put side to achieve a locked in profit, as highly leveraged investment entities drove the price upward. Then at year end, they dropped market support and sold the stock, dropping it back to the $120s where it started. All the stocks can be manipulated by the large fund managers, and the market volatility makes market investment like Las Vegas, with too much premium built into the pricing.

I m a French Canadian, i might do some writing mistakes so be diligent. I m a great fan of 60 min., and now they open a big door. Who did know that JP Morgan Chase was the biggest oil buyer in USA ? Further more it is very very ironic that they openly said that they don''t have or provide any influence ? Sure !!! Exxon Mobil Corp TOP INSTITUTIONAL HOLDERS JP MORGAN CHASE & COMPANY 76,300,458 Shares
1.50 % Out Value $$$$$$5,925,493,56 30-Sep-08, BP TOP INSTITUTIONAL HOLDERS JP MORGAN CHASE & COMPANY 7,467,454 Shares .245 $$$374,642,167 30-Sep-08...and that''s what is available publicly. Obviously, the America should regulate right now to avoid such situation that we lived last summer.

[tucson23]

As I recall, when prices were high there were many people on these message boards, mostly conservative types, who were claiming that it''s all supply and demand and there was no one to blame for our misery. Perhaps those people will learn something from this article...but I doubt it.

[spwizard]

What shoddy incomplete reporting on the Oil Price Manipulation this week. If 60 Minutes did all its homework they would have known the following:

1) It was Nancy Graham, as head of the CFTC, who wrote the Enron Exemption Rules that allowed Enron to manipulate California and other states'' energy prices.

2) Enron made over $40 billion the first year Graham''s "Exemption Rules" were in effect mainly in California. Major news networks played Enron broker audiotapes discussing this theft.

3) Ms. Graham quit as CFTC Head, 3 months after she had her Enron Exemption Rules legally approved, and went to work for Enron as a Board Director and was paid $1.4 to $1.8 million by Enron.

4) Ms. Graham pulled the same conflict of interest scam with Iowa Beef, and other commodity companies who also paid her off as a Board Director.

5) In 1996, Enron''s CEO Ken Lay became her husband''s Phil Graham''s Presidental Committee Director and he contributed $1 million to the Graham''s Mason University think tank. Plus other cash disbursements via campaign contributions.

6) Graham''s bought a 1000 acres Texas ranch paid for by Enron and Iowa Beef.

Now for the investment bank payoffs her husband Senator Phil Graham received for voiding the Glass-Steagle Act? I have only scratched the surface here about the treasonous Grahams.

60 Minutes dropped the ball not reporting the whole truth on oil specualtion which they should have known!

[adamcarrenta]

I buy my home heating oil from an oil company that warned, no encouraged me to lobby congress to close the Enron loophole. I just checked their website -news portion- and found 10 articles(days) from Nov 27 2007 to October 29, 2008 where they explained what this article says. But not in as many words or details. They explained that oil delivery companies want the price to be closer to $1 per gallon for home heating oil rather than $4 per gallon because they make cents per gallon, not percent markup.
Check their news paragon oil co - especially the November 27 2007 and link to contact congress.

As this article explains - congess did not pass legislation to stop the manipulation. If they stopped allowing margin on oil speculation oil prices would go down more.

[adamcarrenta]

I buy my home heating oil from an oil company that warned, no encouraged me to lobby congress to close the Enron loophole. I just checked their website -news portion- and found 10 articles(days) from Nov 27 2007 to October 29, 2008 where they explained what this article says. But not in as many words or details. They explained that oil delivery companies want the price to be closer to $1 per gallon for home heating oil rather than $4 per gallon because they make cents per gallon, not percent markup.
Check their news paragon oil co - especially the November 27 2007 and link to contact congress.

As this article explains - congess did not pass legislation to stop the manipulation. If they stopped allowing margin on oil speculation oil prices would go down more.

[likelyvoter]

So glad you guys caught up with this, waaaayyyy after the oil price bubble burst.

Der Spiegel covered this in more depth back in February of 2008. http://www.spiegel.de/international/business/0,1518,538412,00.html

[newhavenette]

Don''t usually hear black helicopters hovering overhead, but in this case, I''ve been intuitively suspicious of oil prices for quite a while. Something hasn''t smelled right. Who would have been helped during this past election year by high prices? Barack Obama, of course (not that I''m suggesting he had anything to do with it, mind you.) As if Leftists didn''t hate Republicans enough, hurting the little guy''s pocketbook would have been just the thing to clinch (fix) the election for Democrats. And who could have arranged such a convenient financial coup d etat?...... George Soros-types and their hedge-fund cronies, maybe? Perhaps we will never know. But it does seem as if the monkey business with oil prices precipitated the whole financial meltdown...an "unintended consequence," perhaps? I do hope someone investigates this further and doesn''t give up until the rats are exposed. After all, "transparency" is the new mantra of the Left, is it not?

[newhavenette]

Don''t usually hear black helicopters hovering overhead, but in this case, I''ve been intuitively suspicious of oil prices for quite a while. Something hasn''t smelled right. Who would have been helped during this past election year by high prices? Barack Obama, of course (not that I''m suggesting he had anything to do with it, mind you.) As if Leftists didn''t hate Republicans enough, hurting the little guy''s pocketbook would have been just the thing to clinch (fix) the election for Democrats. And who could have arranged such a convenient financial coup d etat?...... George Soros-types and their hedge-fund cronies, maybe? Perhaps we will never know. But it does seem as if the monkey business with oil prices precipitated the whole financial meltdown...an "unintended consequence," perhaps? I do hope someone investigates this further and doesn''t give up until the rats are exposed. After all, "transparency" is the new mantra of the Left, is it not?

[newhavenette]

Don''t usually hear black helicopters hovering overhead, but in this case, I''ve been intuitively suspicious of oil prices for quite a while. Something hasn''t smelled right. Who would have been helped during this past election year by high prices? Barack Obama, of course (not that I''m suggesting he had anything to do with it, mind you.) As if Leftists didn''t hate Republicans enough, hurting the little guy''s pocketbook would have been just the thing to clinch (fix) the election for Democrats. And who could have arranged such a convenient financial coup d etat?...... George Soros-types and their hedge-fund cronies, maybe? Perhaps we will never know. But it does seem as if the monkey business with oil prices precipitated the whole financial meltdown...an "unintended consequence," perhaps? I do hope someone investigates this further and doesn''t give up until the rats are exposed. After all, "transparency" is the new mantra of the Left, is it not?

[scottyw58]

The 60 Minutes investigation hits the nail squarly on the head as to how prices were driven up. However, except for the smoke screen we had all been subjected too, it didn''t really take a rocket scientist to see that it was futures investors that were raping the rest of us. Yes, I use the word "rape" here because that is just what it was.
Now for the even tougher act to follow... When will the rest of the "experts" open their eyes to see just WHY the entire economy crashed? It''s really pretty simple in that if you take BILLIONS of dollars normally spent by consumers on retail goods, and redirect it into buying gasoline and heating fuels, then your whole economy is going to tank. Which is exactly what happened. I had predicted the crash almost six months in advance for just that reason.
Now, with the price of oil back down and maybe some REAL controls on this absurd speculative trading, maybe we can get back to business as usual again!

[daencro]

The 60 Minutes report shows clearly that the oil speculators were profiting with a total disregard of the well being of the people AND the best interests of the US as a nation. When the oil prices skyrocketed a huge amount of money was sent overseas thus increasing our national debt and enriching oil producing nations.
Are the speculators that made so much money now getting a bailout from the taxpayers from whom they happily picked their pockets?

[mikevelez]

1. If the cause of the skyrocketing gas prices was the speculation in the FUTURES market, why was there an immediate effect in the PRESENT price of gasoline?

2. If the oil companies were not manipulating the market, why did they have record earnings during the period of skyrocketing gas prices?

[mikevelez]

1. If the cause of the skyrocketing gas prices was the speculation in the FUTURES market, why was there an immediate effect in the PRESENT price of gasoline?

2. If the oil companies were not manipulating the market, why did they have record earnings during the period of skyrocketing gas prices?

[mikevelez]

1. If the cause of the skyrocketing gas prices was the speculation in the FUTURES market, why was there an immediate effect in the PRESENT price of gasoline?

2. If the oil companies were not manipulating the market, why did they have record earnings during the period of skyrocketing gas prices?

[mikevelez]

1. If the cause of the skyrocketing gas prices was the speculation in the FUTURES market, why was there an immediate effect in the PRESENT price of gasoline?

2. If the oil companies were not manipulating the market, why did they have record earnings during the period of skyrocketing gas prices?