Blame Oil Speculators, Not Obama, For Rising Oil Prices

Blame Oil Speculators, Not Obama, For Rising Oil Prices

There’s little truth to claims that Obama has curbed U.S. oil production and driven up gas prices in the process. As NPR noted this morning, the number of drilling rigs in U.S. oil fields has quadrupled under Obama and domestic oil production hit an 8-year high in 2011. For the first time in 60 years, the U.S. is now a net fuel exporter.

Oil demand was actually down 4.6 percent last week over last year, while the supply of gasoline has actually increased slightly since a year ago. So why are gas prices so high? As McClatchy’s Kevin Hall explains today, there is a systemic problem: speculation.

U.S. oil fields has quadrupled under Obama - NPR.org

But the numbers tell a different story - the number of drilling rigs in US oil fields has quadrupaled since Mr. Obama's been in office, and last year they pumped the most oil in 8 years.

Domestic oil production hit an 8-year high in 2011 (politifact.org) Rated true

For the first time in 60 years, the U.S. is now a net fuel exporter

What ‘War On American Energy’? U.S. On Track To Be Net Fuel Exporter For First Time Since 1949

So what's driving up gasoline prices in Florida? Pure, rampant, speculative greed.
Oil consumption is down. Production is up. The US is exporting more than we take in. But leave it to speculators to push prices up.

WikiLeaks: Saudis often warned U.S. about oil speculators

WASHINGTON — When oil prices hit a record $147 a barrel in July 2008, the Bush administration leaned on Saudi Arabia to pump more crude in hopes that a flood of new crude would drive the price down. The Saudis complied, but not before warning that oil already was plentiful and that Wall Street speculation, not a shortage of oil, was driving up prices.

Did Speculation Fuel Oil Price Swings?

"Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions," Gilligan explained.

Gilligan said these investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery."

"They're trying to make money on the market for oil?" Kroft asked.

"Absolutely," Gilligan replied. "On the volatility that exists in the market. They make it going up and down."

Of course one of the biggest speculators in Oil is Goldman Sachs, as noted by Sen. Bernie Sanders;
Stop Oil Speculation Now

Ten years ago, speculators only controlled about 30 percent of the oil futures market. Today, Wall Street speculators control more than 80 percent of this market, even though many of them will never use a drop of this oil. Their only function in this process is to make as much money as they can, as quickly as they can.

Goldman Sachs has warehoused millions of barrels of oil, in their ongoing effort to manipulate prices and profits for themselves, even as they admit speculators are the ones driving up the prices.
Time for Financial Regulators to Limit Speculation in Oil Market

These speculators own contracts on nearly 300 million barrels of oil, equivalent to almost a third of the United States National Emergency Reserve - so much so, in fact, JP Morgan is renting supertankers to store their excess reserves offshore because they've run out of space on land.

JPMorgan Hires Supertanker for Storage, Brokers Say (Update3)

JPMorgan, which has never hired an oil tanker based on data compiled by Bloomberg going back five years, follows companies including Citigroup Inc.’s Phibro LLC unit and BP Plc in hiring ships to store crude or oil products at sea. The firms are seeking to take advantage of higher prices later in the year.

“It’s opportunity-driven,” Sverre Bjorn Svenning, an analyst at Fearnley Consultants AS in Oslo, said by phone. “I doubt it’s going to be a permanent or new sort of trade.”

At least the Dodd-Frank Wall Street reform act addresses the rampant oil speculation that is currently driving up these prices.

The worst part about all this? Increasing offshore drilling will do nothing to relieve the pain at the pump. All it will do, is allow speculators and Big Banks to further increase their already obscene profits off oil. It will do nothing to lower prices, because oil is no longer driven by supply and demand.

reply to post by Blackmarketeer


If you would've listened to the NPR story, you would know your premise is false..

They answered your question during the broadcast, and the answer wasn't "greed," or "speculation."

You didn't listen or you don't want to tell the whole story.

The truth is simple market forces: supply v. demand.

We are net exporters of gasoline, but the demand is so high in Europe, et c. that it forces the price up as buyers outbid each other for the limited amounts we can ship.

American refineries produce gas cheaper than others, far cheaper.

Others are paying higher prices for foreign gasoline.
(Recall Energy Secretary Chu's observation that Americans should be paying "European prices" for gasoline.)

Since the Europeans (and others) can buy our gas for less than they currently pay, they are now buying more if our gas.
Since there is a limited supply, they bid the price up.
Simple, really.

This is just like the Nike shoe phenomenon.
Nike sells a new or re-introduced version of a popular shoe.
More people want the shoes than there are shoes.
$200 Nike shoes sell for $2000.

Supply v. demand.

You weren'tlistening, or you don't want to tell the truth.

jw

I would say this is false.. Obama has been warmongering everywhere possible which has had a direct impact on oil..

He is an even bigger warmonger than both Bushes were..

Personally I think Obama's head is so far up inside his colon that everytime his gut moves he feeds himself..

Originally posted by jdub297
reply to post by Blackmarketeer

 

American refineries produce gas cheaper than others, far cheaper.

Others are paying higher prices for foreign gasoline.
(Recall Energy Secretary Chu's observation that Americans should be paying "European prices" for gasoline.)

Since the Europeans (and others) can buy our gas for less than they currently pay, they are now buying more if our gas.
Since there is a limited supply, they bid the price up.
Simple, really.

You weren'tlistening, or you don't want to tell the truth.

jw

edit on 26-2-2012 by jdub297 because: w

Umm, no. In Libya, who also refined their own oil, gas was 20 cents and not several dollars. Until recently anyway...

reply to post by jdub297


As the NPR broadcast states, oil production is up higher than ever, and use is lower. They state "US energy policy is not to blame".

What is to blame is the unregulated speculators that are using any opportunity - like fear over Iran - to gouge prices.

reply to post by Blackmarketeer


Here, I'll makr it easy for you. Here's the summary:

Gas prices are on the rise and there's a slew of possible reasons as to why. Tensions with Iran, the Obama administration's policies, and Wall Street speculators have all been cited as factors. But it still doesn't answer why prices are increasing while U.S. demand for gasoline is going down. Weekends on All Things Considered host Guy Raz talks with NPR's John Ydstie about some hidden factors behind the jacked up gas prices.

Here's the link to the broadcast(it is 3:35 long):
What's Behind The Rise In Gas Prices?

Case closed.

jw

reply to post by alienreality

I would say this is false.. Obama has been warmongering everywhere possible which has had a direct impact on oil..

He is an even bigger warmonger than both Bushes were..

So what country has he been 'warmongering' in? Iraq war was ended by Obama, Afghanistan is a joke, and Libya was a rather successful UN mission, now over. In case you forgot, Bush invaded Afghanistan and Iraq.

the us has plenty of shale oil but the refinerys are all closing down that right there is why gas prices are going up. there doing it on purpose imo.

Originally posted by Blackmarketeer
reply to post by jdub297

 

As the NPR broadcast states, oil production is up higher than ever, and use is lower. They state "US energy policy is not to blame".

What is to blame is the unregulated speculators that are using any opportunity - like fear over Iran - to gouge prices.

BS, and you know it.

Listen to the story.
Pay attention to the part at 1:55 that says

"It's not possible to keep the gas in the US because of the free market. ... The rest of the world sees this, and they're bidding up the price, and we're paying bigger prices at the pump."

deny ignorance

jw

reply to post by jdub297

Gas prices are on the rise and there's a slew of possible reasons as to why. Tensions with Iran, the Obama administration's policies, and Wall Street speculators have all been cited as factors. But it still doesn't answer why prices are increasing while U.S. demand for gasoline is going down.

Which is exactly what I stated in the OP. LOL, your lack of reading comprehension aside, let me further break these three points down:

Tensions with Iran - in other words, speculation that supply will be cut (we don't actually buy oil from Iran, but other countries do). This hasn't affected our supplies at all, and as repeatedly pointed out, our supplies are at an all time high.

Obama administration's policies - his policies aren't cited as a contributing factor, as mentioned, we have more oil now than we ever had, and for the first time since 1949 we are exporting oil.

Wall Street speculators - which is exactly what this post is about. Wall Street Speculators, and what all those little links you obviously didn't bother to click refer to.

As one of those links above states - without the speculators, industry analysts claim a barrel of oil would cost between $60-70, but due to speculation, it's increased by $30-40, to it's current level of nearly $100. Speculation isn't the only reason why oil costs what it does, but it's the one driving prices up into the $5-6 range.

reply to post by Blackmarketeer
Oh I am loving the irony.

I can imagine the foaming mouths, the pitchforks and cries of hatred when gas spiked and Bush was POTUS.

But when it happens to l'il ol Obama?

It's not his fault. Don't blame him. (leave Brittany alone!)

reply to post by Blackmarketeer


You quted the summary, but not the story.

You are wrong and you know ut.

here's the link to the 3:35 story again. the part that starts at 1:55 refutes the other specualtive reasons and sums it up to free market forces.
Get real.

What's Behind The Rise In Gas Prices?

jw

As long as this sort of speculation is allowed to run amok prices will keep climbing.

Speculators blamed for rising oil, gas prices

Financial speculators historically accounted for about 30 percent of oil trading in commodity markets; producers and end users made up about 70 percent. Today, it's almost the reverse.

A review of data from the Commodity Futures Trading Commission, which regulates oil trading, shows producers and merchants made up 36 percent and speculators 64 percent of all contracts traded in the week ending Feb. 14.

Not surprisingly, big Wall Street traders Tuesday projected oil will exceed $112 a barrel; some, such as Swiss giant Vitol, even suggested $150-a-barrel oil is coming. When they dominate the market, speculators' bids can make their prophecies self-fulfilling.

This is coming from long-time analysts in testimony to Congress.

im live in Europe.
Not long time ago gasoilne was 2,5 dolar per galon.
Now is 7,6 dolar per galon.More than 70% of price is taxes .
But this taxes ar split and hidden by warius names.
You americans by happy that your price is still so low ,it not last long.

Hmmm.. Oil Speculators or Obama.. Which could be causing all this? Well, that is kinda like the Chicken or Egg argument, as I see it. Obama's general tone and tenor toward Iran, Syria and the drone operations over Central/North Africa and Yemen affects everyone and the markets most of all. How can that not be seen as at least being directly tied if not a cause and effect?


Bush claimed it was all the speculators fault too. It was a crock when he said it and it's still a crock now. The only thing that has changed is the name of the man most directly responsible for either making everyone feel comfortable or making everyone feel very nervous and uncertain....perhaps even in a speculating mood.

If we DID allow for the idea that it really is the speculators, then it WAS really that under Bush too. In that case, Congress....both sides as I recall things....talked wayy back then about fixing those speculators good to it'd never happen again. I wonder how Obama stood on that? No matter.. either way, Congress can be blamed if speculators really are the case. Either way and from ANY direction, it's bad leadership and bad decisions in Washington.

reply to post by beezzer

Oh I am loving the irony.

I can imagine the foaming mouths, the pitchforks and cries of hatred when gas spiked and Bush was POTUS.

So find a post where I blame Bush for high gas prices or oil speculation. Otherwise please save the distractions.

Obama has signed the Dodd-Frank bill which will limit this type of speculation, but it won't go into affect for another year. So at least this president has acted to curtail this activity.

Originally posted by Blackmarketeer
reply to post by jdub297

 

Gas prices are on the rise and there's a slew of possible reasons as to why. Tensions with Iran, the Obama administration's policies, and Wall Street speculators have all been cited as factors. But it still doesn't answer why prices are increasing while U.S. demand for gasoline is going down.

Look again at the suumary you completely misconstrue.

If you are going to cite NPR as the impetus and source for your thread, you should accurately quote it and use it as is, not pick and choose what you think gets stars and flags.

The wporld sees our cheap production and they want it. They bid against each other to buy it. The price goes up.

Free market.
What's Behind The Rise In Gas Prices?

You are adding to the confusion the NPR story sought to dispel.
You misrepresent your source.

deny ignorance.

jw

reply to post by Blackmarketeer


Releasing oil reserves NOW would lower prices NOW
Cutting fuel taxes NOW would lower prices NOW
Open drilling areas in our country would cause OPEC to lower prices NOW because they want our business.

Smoke and mirrors from the Obama administration.

One thing that is also causing higher prices is that many US refineries are shut down right now to set the refineries up for new blending regulations that the EPA has made them do by spring 2012.

New requirements could raise cost of gas, shutter US refineries

A new study says that upcoming US Environmental Protection Agency (EPA) requirements could raise the cost of manufacturing gasoline, lead to the closing of domestic refineries, and force the US to double its gasoline imports while causing increased carbon dioxide (CO2) emissions. Baker and O’Brien executed the study on behalf of the American Petroleum Institute (API).

“The new EPA requirements could be devastating to consumers and communities across the nation,” said Bob Greco, API’s group director of downstream operations. “Consumers would be hurt by the increased cost of fuel projected by the study, and the closing of refineries could put local economies at risk, meaning there would be fewer jobs. In addition, we would be forced to rely even more on foreign fuel supplies, and that can only weaken our nation’s economy and national security.”

The study examines the potential costs of the EPA’s “Tier 3” fuel standard for gasoline blends, which could be proposed at the end of the year. It determined that the new requirements could boost the cost of making gasoline by up to 25 cents per gallon and could shutter up to seven US refineries. The study also predicted this scenario could drive up CO2 emissions by up to 7.4 million tpy because of the increased energy needed to manufacture the new fuel blend.

“These regulations don’t make sense environmentally or economically,” said National Petrochemical and Refiners Association President Charles Drevna. “The proposal would increase greenhouse gas emissions, hurt American consumers by adding billions of dollars to the cost of manufacturing gasoline, hurt communities and workers by threatening to put some fuel manufacturing plants out of business, and weaken America’s economic and national security.”