Feds Probe Possible Oil Price Manipulation
Gov't Reveals Wide-Ranging Investigation Of U.S. Oil Markets Began 6 Months Ago
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The Commodity Futures Trading Commission on Thursday said it started the probe in December and took the unusual step of publicizing it "because of today's unprecedented market conditions."
Crude prices, which on Thursday hovered around $127 a barrel, have risen more than 42 percent since early December. Gasoline prices are nearing a national average of $4 a gallon, up from about $3.20 a year ago.
The commission said details of the investigation remain confidential, but announced a handful of other initiatives designed to increase transparency of U.S. and international energy futures markets.
For example, the CFTC said it will immediately require monthly reports from institutional investors who manage funds designed to mimic the price of crude oil and other energy futures. The goal, the agency said, is to identify the amount of such index trading and to "ensure that this type of trading activity is not adversely impacting the price discovery process."
The CFTC also said it has reached an agreement with its British counterpart and InterContinental Exchange Inc.'s Futures Europe to expand surveillance of energy futures contracts with U.S. delivery points, including the benchmark West Texas Intermediate crude, which trades on the New York Mercantile Exchange.
"The implementation of today's measures will improve oversight of the energy futures markets to ensure they reflect fundamental economic forces of supply and demand, free of manipulation and fraud," the CFTC said in a statement.
U.S. Sen. Jeff Bingaman, chairman of Senate Energy and Natural Resources Committee, earlier this week asked the CFTC to provide the committee with more information about its oversight of energy commodity markets.
The practice of including investment banks in the commercial participant category calls into question the CFTC's continued assertion that noncommercial participants, or speculators, follow rather than lead oil price movements.
Sen. Jeff Bingaman, D-NM"The practice of including investment banks in the commercial participant category calls into question the CFTC's continued assertion that noncommercial participants, or speculators, follow rather than lead oil price movements," Bingaman wrote in a letter Tuesday.
Congress earlier this month voted to give the CFTC greater oversight of unregulated electronic exchanges, such as ICE, as a way to protect consumers and deter price distortion and manipulation.
A Senate subcommittee investigation last year found that hedge fund Amaranth Advisors LLC, which collapsed in 2006 after losing more than $6 billion in natural-gas trades, had shifted its activities to ICE from the regulated Nymex to avoid trading limits, and that the "excessive speculation" raised homeowners' heating bills.
Speculation has been cited as one on many factors contributing to surging petroleum prices, along with assumptions about new supplies, limited demand growth, possible supply disruptions overseas and the dollar's depressed value against other currencies.
© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.



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See all 103 CommentsThis is almost as ludicrous as the twisted conservative idea letting industry like the gun and tobacco and war profiteering corporations of America policing themselves. How ridiculous these fascists!!
Ya think. No not in America or on the Stock Exchange.
I guss late is better then never. Still...doesn''t mean they will get any good results.
A few years ago, Bush did an "investigation" on oil price fixing. In one week, they said "No price fixing was found" What investigatin is started and completed in one week? That was no investigation. That was a token.
We already know that OPEC is fixing the price. It is an illegal organization who''s sole purpose is price control. Why aren''t we dealing with that in International Law? If there is no law, then make one. The President should lead this for the world''s sake. That is what Reagan would have done.
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This dog and pony show is just that...a show to make people feel better about paying $4 for a gallon of gas. Of course collusion and manipulation are happening. If it wasn''t, oil companies wouldn''t be making hundreds of billions in net profit. It''s nice to fantasize about a moral government stepping in to make sure oil and gas are on the up and up, but I wouldn''t hold my breath even if Obama gets elected. You should still plan on paying $5 to $6 a gallon in the next few years.
The greed (mortgages, oil, food, etc) in this country has gone completely haywire.
It is greed. Greed, greed, greed...AND...they can get away with it.
If the oil companies say they HAVE to raise the price because of demand, then, fine, raise the price to whatever you want...only that portion being raised goes in the US Treasury...and not oil company profits.
Oil is a natural resource....we, the people of the world own any and ALL natural resources. It is time the people take them back.
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Posted by haoli25 at 05:54 PM : May 29, 2008
ROFLMAO!!! TOOOOOO FUNNY.
NO! Bad investor!
It doesn''t make sense that you can''t be a citizen of most countries, much less own anything within that country unless you were born there...yet last years adversary can legally own half the property in this country if you have enough $$$$s''
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Yeah, a manipulation of the Dollar, how about; lets stop printing!
We must stop all foreign investments and take back
our land.
I think we should make paying windfall profit/war profiteering tax retroactive and require the oil companies pay their due, as they should have been doing for this past five years.
Now theres a probe that will lead to nowhere once the shredders get finished in Cheneys office
Think about it... there are *NO* OIL shortages... zero. When was the last time in the last 2 decades you went to a gas pump and there was a shortage? NEVER.. that''s right. In addition, OPEC flat out said there''s no shortage and they''re meeting demand just fine.
Then comes the report about the lower oil reserves and then analyst after analyst came out calling for doom and gloom and how we''re going to 200/barrel and even higher and there''s an oil shortage... then WHOOPSIE, today they say the lower oil reserves was due to a temporary glitch because there was a delay at the unloading docks but that has since corrected itself. So, what about all those doom and gloom guys? AMAZING.
So, turns out, i was right YET AGAIN.
OIL is coming down now... watch... this investigation is putting light into a place of darkness known as the OIL RIGGING business (oil rigging having multiple meanings)
And if you want to see profiteering, you should see the profit margins in some other industries; they make the oil companies look like amateurs.
Yes go a head and investigate, and start at the top with the federal and thent he state governments.
Posted by piercetheval at 06:30 PM : May 29, 2008
12 years of Shrubs as president, 18 years of Repug controlled Congress, 12 years of war in the M.E. and a country that is scared of upsetting anybodys feelings. everything is P.C. now and the ACLU and others make sure it stays that way.
The five "sisters", the large oil firms, own a variety of firms that trade in the oil commodities markets. One trader may sell a bbl for $50 and that trader will then sell the same bbl for $60 and so on until the refinery needs it. The refinery pays the full cost of the bbl at the time it purcahses it. The raises in price as all artificial and adds no value to the product.
To me, this is the major cause of the price increases we have seen in the last few months.
Posted by ray999999 at 07:12 PM : May 29, 2008
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Actually, ray999999, if it weren%u2019t for your, so-called, tree-huggers, all the oil in Alaska, and other reserves, would have been used up years ago, just like the rest of the united states oil resources, and for less than $10 per barrel instead of the $130-plus per barrel that it is worth today.
Further proof, (as if any more is needed), that the Bush/Cheney Crime Cartel MUST be Arrested and held for Willful and Planned Treason against the United States and its Citizenry.
Hang ''em High, Hang ''em Soon.....
God gave this country all the resources we need and we would be fine, if we weren''t too stupid to harvest them.
The OPEC minister will look you in the eyes and say the following: "We are at war with you infidels. Have been since the embargo in the 1970s. You are so arrogant you haven''t even recognized it. You have more missiles, bombs, and technology, so we are fighting with the best weapon we have and extracting on a net basis about $700 billion/year out of your economy. We will destroy you! Death to the infidels!
While I am here I would like to thank you for the following: Not developing your 250-300 year supply of oil shale and tarsands. We know if you did this, it would create millions of jobs for US citizens, expand your engineering abilities, and keep the wealth in the US instead of sending it to us to finance our war against you ***.
Thanks for limiting defense department purchases of oilsands from your neighbors to the north. We love it when you confuse your allies.
Thanks for limiting drilling off your coasts, in Alaska, and anywhere there is a bug, bird, fish, or plant that might be inconvenienced. Better that your people suffer! Glad to see our lobbying efforts have been so effective.
Thank you, US Congress!!!!
And finally, we appreciate you letting us fleece you without end. You will be glad to know we have been accumulating shares in your banks, real estate, and publicly held companies. THANK YOU, AMERICA!"
I`ve said for years,..BUSHCO would EXTRACT Every Single Penny they could as their " White House Occupation " came near a close,...
We`ve been SOLD OUT to Corporate Greed,..The Banner of the RepubliCon Sect !
Shrub should be held in chains until his day in International Court,..''Crimes against Humanity '',.
Every sane person who is Not in Cahoots with These Criminals should be So Angry as to NEVER,EVER vote for a member of This Criminal Organization,.." The RepubliCon Sect",..
Ray999999 and all of his ZERO inmate pals should pay $500 every time they walk out their door,..this money would be distributed to fund Energy Efficiency.
BAN Re-CONS ! This Sect Has DESTROYED Our Nation !
Can you imagine what the cost of a Quarter Pounder would be if Bush & Cheney had been cattle farmers rather than oilmen?
Posted by atlanta30326 at 07:32 PM : May 29, 2008
How can a robber investigate a robber?
California almost went bankrupt due to Enron trading illegalities so that the GOP could oust the Dem governor Davis for Arnold Swartzenegger.
The system is corrupt and the GOP club is getting richer, and until we recognize and prosecute them (or behead them as the French did) and the *** that are behind it, nothing will change.
The GOP has changed from a party that promoted conservative fiscal policy that benefitted all, to a party of greedy corporatists that are willing to steal our country blind so that CEOs and others can make 9 digit retirements like Lee Raymond of Exxon. I''ll never ever vote GOP again.
http://abcnews.go.com/GMA/story?id=1841989
To me, this is the major cause of the price increases we have seen in the last few months.
Posted by ramos937 at 07:24 PM : May 29, 2008
This is the best explanation I have read in a long while. Price fixing is the name of the game. They can raise or lower the price per Barrel anyway they want and we suffer for their greed.
This is the best explanation I have read in a long while. Price fixing is the name of the game. They can raise or lower the price per Barrel anyway they want and we suffer for their greed.
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Posted by ToolMangler at 08:15 PM : May 29, 2008
I agree, but I also bet they wont even get a slap on the wrist before someone greases their palms to get it swept under the carpet
Posted by bullyforhim at 08:00 PM : May 29, 2008
I would agree to a 10% profit on occasion. but the over 100% profit we have witnessed in the past year is criminal and should be treated as such.
IF they are found guilty, does that mean we get a refund? ROFL
That would be ''par for the course''
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