Comments on: Did Speculation Fuel Oil Price Swings?

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

[doharding]

Lesson Learned
Now that the U.S. infrastructure has been torn apart at the seams and personal sacrifices made (such as the airline industry over fuel prices), how will any Presidential Administration stop this activity if they are not proactive and aware of their surroundings? Most government agencies don%u2019t seem to be very proactive or responsive to situations that protect ordinary citizens. It reminds me of what I%u2019ve read about the fall of the Roman Empire.

The money is being funneled to the people who found their way around a broken (stock market) system such as the MIT students who beat the odds in Vegas or a person who broke a computer algorithm to access bank accounts. It begins as an intelligent game then becomes a so called unenforceable crime.

Where are the smart people working in the Treasury Department or Law Enforcement? Have they taken a second row seat to the Defense Department and the Bush Administration? The government used to hire smart people empowered to work for the common good, but today the most highly educated people are now working to beat the system rather than doing constructive work.

When was the last time the government has followed through with an investigation to resolve a problem. Have they secured and developed the resources to do it? Proactive. Is this what we are doing now? Or reactive.

[fingerlakes6]

We have met the enemy and it is Wall Street. Thank you for amplification of this story. Please follow through on it. How is it to be fixed, this hijacking of America for corporate greed? Don''t give them any more money, demand what they have and are missusing be given back. Hardworking American people are at the end of their ropes, and this is no where near done. Bush was right, terrorists are working every day to attack America. He has helped his corporate buddies every step of the way in their attack on this country. Congress is just as implicated in this mess as well. Lazy, unqualified and in position for their own gain, most of them are worthless. Hopefully there is hope after Jan. 20th.

[young5gun9]

This is old news. I don''t know if I''m stupid or CBS is, because I thought regulations were put into effect Sept 30 as part of the 2008 Farm Bill to prevent manipulation of oil prices. Regulations to close the Enron Loophole that allowed this "dark trading" were passed by both houses. The bill was vetoed by Bush. His veto was overturned and now oil futures trading is regulated. I''d say the closing of the Enron Loophole affected oil prices, but I must be unenlightened because no one else seems to think so. In essence what Morgan Stanley and other investment firms did to manipulate oil futures was, if not legal, impossible to prove, until Sep 30. Now that they''re trades are transparent, prices more accurately reflect the market. Change has come.

[cariboubarbi]

Yes speculators boosted and manipulated oil prices.

Google "Enron Loophole".

It''s a little loophole Bush and the Republicans created to allow speculators to do exactly that.

[mek0123]

For every 20 independent or democratic supporting person who has logged a comment, there is one that seems to beieve the story is a fallicy at best. That 5% bunch drinks the spiked punch from the talking heads.
For those of us (myself included) that believe at least 90% of Steve''s story, it appears that the investment houses used OUR pensions/401K''s/403B''s/Roth''s etc., to screw us at the pump and for home heating. I wish I could meet the s.o.b.''s that did this. Perhaps their names will be eventually published. Enron was as crooked as they come and as I got a lot of phone calls from friends (during and after this episode who reminded me that I had stated just this scenario almost two years ago),but didn''t know who/what, but everything pointed to a charade being played. I assure you Ken Lay is alive and well with his wife and all his kazillions of money. Cremated within 48 hours after death at a hideaway in Colorado? Really??

[perm3800]

This is the dumbest darned story. OF COURSE it was speculators...all that money out there chasing fewer and fewer available high turnover products found oil futures. The price at which oil was selling had not changed and OPEC declared they would not alter production quotas yet futures skyrocketed in price. Then came a drop in demand, political instabilities and the futures market crashed, forcing oil prices slightly below where they had been just prior to the false rise in futures. Unfortunately, some members of the families of the rulers in OPEC had invested in those same inflated futures and, coupled with the failed hedge funds tied to mortgage securities, experienced significant loses and so the production of oil is to be decreased in an effort to raise the prices.

Not a lick of the price change had anything to do with the true availability or production of oil.

People have to wake up to the fact that the gloval economy is floating on Monopoly money. Very few countries have a currency that is backed by hard assets. Most currencies, especially the dollar, are backed by their perceived stability. Just a gentleman''s agreement between thieves.

[lawton777]

Of course it was the speculators who figured out how to control the law of supply and demand. Bush''s policies set the table for them! Only ignoramuses would think otherwise.

[nynestor]

`` i these unsophisticated people always lay the blame on that unknown "speculator" lurking in the shadows ! /i ''''

No one was ''lurking'' in the shadows, it was all done in the open but most everyone is ''trained'' (indoctrinated) not to look at the big picture. Once you are a specialist in any field, you lose perspective from the outside or from a way to manipulate buy not using the rules.

But basically what I''m saying, the audit trail is there but ''everybody knows'' speculators can''t affect the price of commodities so no one is looking in the right place.

But face it, the big money has left the US and not because of any economic slowdown. The US dollar is about to collapse and no (with inside info or brains) wants to hold any position in dollar denominated assets.

BTW, I hear Iran opened an ''Oil Bourse'' to rival NYMEX. Could it be some of the money went there??? No wonder the Israelis are screaming for the US to bomb them, LOL!

[nynestor]

Folks, this is not new news. If you guys had been paying attention to alternate sources of information, this story actually broke months before the prices actually rose. The major media outlets lag behind so pitifully it''s no wonder we are not still in the Stone Age.

Yes! The first round of bailouts went to Morgan Stanley and in the light of their failed real estate positions (SIV/CDO''s) they used the money to pump up the futures markets AND specifically, OIL!

Now think, there were food riots all over the world because futures went up!

But I have news for you guys; the next bubble is in treasuries. Where did all that oil money go to?? Tip: the treasuries/bonds are about to collapse and will bring the dollar down in flames. At that point in time the USA will be broke and won''t be able to buy oil. You think oil at $147/barrel is painful? Multiply that times 10 and you''ll get the picture. This will directly affect food distribution .. Eh.. get your ammunition ready! You''ll need it.

[fantastic356]

You guys still believe that speculators have the power to raise prices ? Why is it that everytime a stock or commodity goes up or goes down - these unsophisticated people always lay the blame on that unknown "speculator" lurking in the shadows ! Hello !
The speculator is you dear reader for speculating on the speculator as the only cause for all these market swings ! What am I saying ? There are specualtors on both sides of a trade - and if there are - how can you distinguish between the "long" speculator and the "short'' speculator ? Well you can''t - because these guys move in and out of their long or short position sometimes every 3 minutes!

[edward3608]

The oil market right now is in contango. The idea is to create an artificial decrease in supply. Purchase oil now at aprx $37 a barrel and then hold it for future sale when the price of oil is higher. Keep buying and keep storing it and manipulate the market by creating a supply and demand problem where demand is higher than supply Otherwise keep it off the market.Just hope that that the producers don''t increase production.

[joey_c_89101]

CLOSE BUT 1/2 CIGAR!! Lets get the other half. FACT! the price of futures is only a bet and an option for a contract to sell oil at price! that price for oil WAS NEVER PAID... YET BIG OIL hyped up the price via media and pretended that aoil was high annd ALL REFINERS RAISED GAS PRICES IN HARMONY! (HAR MONEY!) GET ''EM. CHARGE ''EM. PROSECUTE ''EM. FOR THEFT, FRAUD, COLLUSION and CONSPIRACY TO DEFRAUD.

[edward3608]

It''s not just oil. The price of natural gas was rising from spring into summer of 08. This is when the price of NG should be declining because of less demand for heating use. In July the price was almost aprx $14 per mcf. Notice that the price of NG has also declined following that of oil as speculators have left the market.

[splashy79]

Why am I not surprised? With all the deregulation and let-em-at-it attitudes that the Republics have had, the greedy immoral criminals have been gouging everyone to make a buck, ignoring basic decency and how much they hurt others.

[saturday8pm]

Surprise! Speculation drove oil pricing.

Some thoughts:

1) Supply and Demand pricing is dead as we know it. GOOD LUCK investing in a "free" market where prices are meaningless. The only people who''ll be left standing are those who can take the hits when The House wins the bet.

2) How much you wanna bet brokerage houses will use some of that bailout cash to fight any regulation legislation that''s sure to come down the pike?

Thanks again, "60 Minutes". I''d like to see followups to this story and try to incorporate them into a larger piece on the financial meltdown.

[ayoneman]

No wonder that one main tenent of communism was the baning of speculators. They have been the scrouge of hmanity for generations. They collude to buy up commodities, raise up prices artificialy even when supplies are plentiful by creating false shortages, by withholding commodities from the marketplace. Sheer speculation and cornering of the market. We Americans just sat quietly thinking that the 3 dollars per gallon was going to the Arabs, when most of it went to the speculators. I think that the Government shoul d tax each gallon by 2 bucks in order to maintain conservation and not allow the speculators and the Arabs again get their hands on this excess money. We Americans got used to high gas prices and we will be taken advantage again very soon. Might as well the government take the money and reinvest in the economy.

[davemanfoot]

What a better way to keep the oil coming for profits then to invade a country with the 3rd largest oil supply. I suspect the actions of firing the Baath Party and not hiring the Iraq Army taken by the CPA under Bremmer has to do with getting the Iraq Oil Law passed to insure the oil and profits kept coming for speculators.

[fueluser]

Hello People !
This country is in a world of hurt with greed from speculators who have no respect for others well being or way of life.
What goes around comes around !

[jerrynelse]

"And here''s the rest of the story": Does anyone think it was coincidental that the speculative run up in the price of oil coincided with Israel''s threats to attack Iran in 2008 which has the 2d largest oil reserves in the world? and the precipitous drop was after the US vetoed Israel''s plan as revealed in David Sanger''s NY Times report yesterday. http://www.nytimes.com/2009/01/11/washington/11iran.html?ref=todayspaper

[taichi11]

After watching your story, I am wondering why gas prices in the Chicago area have risen in the dead of winter?