Mr. Darling needs to be beaten with an oil field
pipe wrench - he is paid by the foundation to convey misinformation.
The entire run up in crude prices is due to the number of speculators
that hold contracts on dry barrels. These evil folks could never hope
to take delivery of the commodities that they are bidding on. Worse,
they are bidding with a near zero investment backing their long
positions. Could it get worse that this?
Yes. In most cases, they are not even placing the 5% margin requirement
that is called for (it should be 50% margin). They are allowed to trade
for free, with no need to take delivery, and with what is essentially
no margin requirement.
Brian Darling - you are an evil traitor to this country you bastard.
If you know about how most crude is put on contract, and how that crude gets to our shores (discounting domestic, Canadian, and other non-OPEC sources) you would see the following:
The same bulk oil carriers (supertankers) going back and forth from the Straights of Hormuz to the various storage facilities on the east and west coast of the USA. Same bulk transporters, same tankers, same terminals, same refiners.
The domestic storage and refining capacity has not changed substantially for decades. Our usage has increased, which has put pressure in the tempo of the rate of transport and distillation. Overall, USA consumption has increased 20% since the 90's, and we have the same refiners and storage.
What has changed is the amount of money available to place on futures contracts. There is more money on paper to promise a certain price of delivery on a future date. So much money in fact, that these contracts exceed the available oil stock by 2 or 3 times the physical inventory controlled.
This has caused a tremendous surge in oil above the actual dynamics of supply and demand. If you and I stand around a grain silo and keep bidding up the price amid a climate of scarcity, and we have no hope of ever taking delivery of the wheat.....and we are joined by 1000's of other speculators that are doing the same thing?
That's a good picture of the trading pit at the NYMEX. How can we fix this?
Well, I suggest that we we hire a SWAT team to tear gas or pepper spray the Pit for a few days to clear out the most egregious offenders. Barring that, possibly Marlon Perkins could be brought out of cryogenic suspension in order to shoot a round of tranquilizer darts at the floor traders in the NYMEX and Chcago MERC pits. That ought to bring the price of crude down and fast.
Then we can limit trading to those that can take delivery of the product - period. Futures contracts on paper for dry barrels could be allocated to professional options boards adhering to stringent margins requirements.
The worst take on all this, of course, is the liars that frequent CNBC, mostly investment analysts that are paid to say that no amount of dry contract speculation can affect the price of oil. They are liars, they are stealing from you, and they must be dealt with, in the parking lot of the NYMEX, if need be.....maybe a slap, maybe a baseball bat, maybe a decent shaming.
Something has to be done bring conscience back to the futures business.
Have you ever noticed that the anchors and analysts on CNBC talk very fast. Especially the 'money bunnies', Maria Bartiromo and Erin Burnett, they talk really fast. One reason for this rapid repartee is that they have no idea what they are talking about, and they don't want you to notice.
While this can be forgiven when applied to a financial news anchor, it is unforgivable when dished up by a sector analyst. Specifically, the energy sector experts on CNBC should be beaten with a pipe.
A horrible lie is being circulated (via CNBC in particular), stating that the current price of crude oil could be due to any number of factors; it is just not known precisely what is causing the constant rise in the price of oil. Some analysts featured by CNBC say demand is the cause, some say speculation; they are both correct, but the role that speculation via crude futures trading plays in the price of crude is being deliberately hidden from public discussion, until now. I will enlighten you.
While there is no doubt that demand has played its part, we are seeing a new dynamic in the old commodity trader's bag of dirty tricks - this is the trading of 'dry contracts'.
I couldn't help myself when I saw this. Several interesting things
such as cultural references that place the Stooges most popular
episodes in the period immediately after WWII:
References to "this guy must be from outer space"; i.e., an
alien. America was preoccupied with science fiction at the time - Buck
Rogers, etc. Moe says this about Joe, meaning that he is acting
strange.
References to Matzha - The Stooges were Jewish and Jewish
writers and Jewish humor dominated Tin Pan Alley and the writing of
film and early TV. Still does I am proud to say that the only real
humor is Jewish humor even when written and performed by gentiles.
Notice the shoes and such, many types of sneakers and work shoes still are with us.
My teeth are getting chipped from a semipermanent habit of grimacing while I wait for web pages to load. I have broadband, several fast computers, and I've been around since before the web (had email since 1991), and so I know when to grimace. It's getting worse.
While many web sites have a snappy load-time (Ars Technica, fer instance), some blogs, like Techcrunch and Mashable are so loaded with widgets that they take at least 30 seconds to fully render. It's getting to be a frustrating exercise to click through from a feed to the site on these otherwise decent services.
I am an analyst specializing in new product strategies and critical review of new technology sectors. I am your outside eyes, a fresh POV, and a broadly experienced technical renaissance man. See my resume link above.
