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Friday, February 24, 2012

This is how the final emergent of a dismal Republican field regains the White House
Posted by Jill | 5:44 AM
Sane people have been scratching their heads throughout this GOP primary season, looking at the parade of charlatans and lunatics that have been bleating their insane ravings in what seems like 2,987,497,221 debates since the whole mess started and wondering how any of these miscreants could ever have any chance of winning the White House. We've wondered, "How are they going to do it?" With an admittedly glacially-slow recovery starting to take dim hold in the minds of the American people, and with Barack Obama holding significant leads over ALL of the remaining denizens of the Republican Klown Kar, I's natural to wonder how the business community -- the Koch brothers, the less-visible chairmen of other oil interests, and the others that we can lump together in the greed wing of the GOP -- will manage to snatch victory from the jaws of defeat.

Now we know.

Gas pump prices.

The people around Obama should really have anticipated this. David Axelrod is old enough to remember waiting in line for gasoline in 1973 and 1977. He's old enough to remember skyrocketing gas prices and shortages that become so much a part of American life in the late 1970s that McDonald's was able to capitalize on it and envision gas line-as-party:



The oil shocks of the 1970s made Jimmy Carter a one-term president, for all that he was right about everything he said in the now-infamous "sweater speech":



"Sacrifice." That's a word Americans have never wanted to hear, at least not since World War II. It's funny how sacrifice used to be equated with a kind of patriotism, but in the first decade of the new century we had Dick Cheney responding to calls to reduce our dependency on fossil fuels supplied by the very people who begat the 9/11 hijackers by saying it was unnecessary because ours is a blessed lifestyle. It never ceases to amaze me that forty years later, the very same people who waited in line for gas in their twenties are the ones the news media show at the pump expressing shock at gas prices. But then, this is a country that slapped photographs of Osama Bin Laden in crosshairs on their Hummers, then went out and pumped fifty gallons of Saudi oil-based gasoline into them with absolutely no sense of irony and even less willingness to make the connection.

Commodity markets are difficult for most people to understand. Everything most of us know about commodities speculation we learned from Trading Places:



This is not to say that there is a complete media blackout on the true cause of recent skyrocketing gas prices. Those Americans who still have some grey matter in our crania can put together that the stuff they're hearing on the evening news about Iran and the Strait of Hormuz might have something to do with it. And if we read a bit further, there are a few intrepid news sources talking about speculation being the real culprit. ABC News is one of them:

Bart Chilton, a commissioner at the Commodity Futures Trading Commission, the federal agency that regulates commodity futures and option trading in the United States, said it’s time to look at home — in addition to overseas — when searching for the reasons why gas prices are on the rise.

“I’m fired up,” Chilton said. “I’m concerned and we have to look after consumers.”

According to Chilton, much of the problem is actually “made in the USA,” created by Wall Street traders who gamble on oil prices.

“There aren’t markets without speculation,” Chilton told ABC News. “It’s the excessive speculation we are concerned about.”

Chilton, who has served as commissioner since 2007, said far too few players control far too much of the market, allowing them to push the price of gas higher and higher. Chilton and the CFTC are attempting to implement caps on the total positions speculators can take when trading in the oil futures markets.

Chilton obtained an energy research report from Goldman Sachs spelling out how much the Wall Street firm estimated speculators had pushed up the real price of oil sold to make gas, due to large bets in the markets.

Using the numbers from in the Goldman Sachs report, combined with current information from the CFTC, Chilton calculated how much speculation is driving up the price at the pump for the average consumer.

He shared calculations with ABC News for the first time.

By Chilton’s calculation, if you drive a car like a Honda Civic, you’re paying $7.30 more than you should every time you fill up — to Wall Street speculators. If your car is a Ford Explorer you’re paying an extra $10.41.

For a Ford F150, he says owners pay an additional $14.56 per fill up -or more than $750 a year.

Now that ought to be a wake-up call to Americans, except that this is from a blog on the ABC news site and I have no idea if it actually made it onto the evening news that low-information voters watch while serving the kids their chicken nuggets and Kraft mac 'n' cheese. But of course facts don't matter when you have a country that wants whoever is president at any given time as some kind of All-Powerful Big Daddy That Will Make the Boogeyman Go Away. George W. Bush told everyone to go shopping and not worry about Osama Bin Laden, and Americans were reassured. And what they want now is for Barack Obama to wave a magic wand and make gas prices drop to a dollar a gallon again. He can't do it any more than Jimmy Carter could make the Middle East turmoil that plagued his presidency go away.

But today there seems to be something far more sinister than world affairs, or even oil speculators, at work. The visibility of Halliburton during the last decade, and the political visibility today of the Koch brothers, with their heavy investment in right-wing Super PACs, gives the men who run the U.S. oil industry a face and shows that their political agenda is exactly the same as that of Senate Minority Leader Mitch McConnell: to make Barack Obama a one-term president. It's hard to believe that it's an accident that oil prices are skyrocketing just as the economy has begun to show signs of life. Rick Ungar certainly smells a rat, and so do I.

Yesterday Barack Obama made passing reference to increased oil consumption in China and uncertainty about Iran, but most Americans don't want to hear that. This is a country that has proven itself to no longer have higher brain function, but instead is ruled by the reptilian brain. Over half of Americans already disapprove of his policies on energy as a result of the price run-up at the pump in the last few weeks. Unless he wants to hand the keys over to the likes of Willard Romney or Rick Santorquemada next January 20, he'd better start talking about Wall Street speculators. That is an image that even the worst mouth-frothers in the flyover states can understand.

Update: Also, too.

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3 Comments:
Blogger Phil said...
There was a fire at one of the four oil refineries here in Washington state last week and they are already predicting four dollar a gallon gas, three days too late.
Gas went up eighteen cents in one day and over thirty since that fire.
That one refinery processed over two hundred thousand barrels of crude a day into gas, diesel and jet fuel.

ONE, of four.
Then they came out and said they might run out of crude to process within nine or ten days, a complete fucking lie because it all comes out of the Alaskan pipeline.

Who is shitting who here?
2/25/12, 2:11 AM  
Anonymous Ted said...
It's long been obvious to me that Americans will pay any price for gasoline. The oil companies COULD charge $10.00 per gallon and we would pay. Maybe not for LONG; someone would decide that they could get rich enough charging only $9.50 .. and the politicians would be getting so much flack that even they would have to decide whether the contributions from the oil guys could overcome the anger of their constituents.

The oil guys -- and in this group I put the Wall Street commodities guys and speculators -- are always trying to figure out just exactly what the "magic number" for gasoline is. 18 months ago they tried $4.00 and found it to be about the upper limit before people started to park the Hummers and buy Hondas. It looks like they are trying again and will likely find a slightly higher number this time. I'm estimating $4.50-5.00 with regional differences. But I wouldn't be surprised to see them try a higher number before falling back.

I've also long suspected another force at work. We see gas prices go up periodically. "Alternative" energies -- wind, solar, small hydro, ... -- then start to emerge and get some traction only to be taken out [again!?] when the price of oil declines. (Can someone say Solyndra!?) I've always been convinced that's a ploy of the oil companies to determine which alternatives are then most viable. Draw some money into the alternates. see what -- if anything --flies, and then either buy the technology from the resulting bankruptcy or simply assume that no one will reenter it -- as a "failed" technology -- any time soon.

And before I go, you have mentioned the electronic "high frequency trading" engaged in by Wall Street whereby computers watch every transaction and jump in to buy anytime the bid-ask spread is advantageous.
[See this as one very recent account of the problems http://www.investorplace.com/2012/02/bank-of-america-a-high-frequency-traders-dream/.] So the price of oil may only be going up because it's going up.

I can't find the link at the momemt, but if memory serves I saw somewhere that the typical tanker load of oil these days is bought/sold over 3 times while in transit from the Middle East to its destination. Sure sounds like "speculation" to me.

And for those who think the oil market is too complex to manipulate: I offer that Mr Rockefeller had that worked out 100 years ago. Not much has changed. No new oil [marketing] companies have entered the US in a LONG time. Probably the last were the Russians [LUKOIL]. The Chinese companies aren't here!

A short quiz: How much oil is produced in Alaska today? [Remember the Alaska pipeline and Valdez spill?] And where does it all go?
2/25/12, 7:22 AM  
Blogger jurassicpork said...
Well, gee, even if it was the president's job to keep oil and gas prices down (and it is NOT), wouldn't that smack of gov't overreach? So WTF is the GOP talking about?
2/29/12, 12:57 PM  
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