Originally Posted by FormerLurker
Americans are gullible and overly receptive to simplistic solutions, and more than willing to pile on the scapegoat that's being pushed on them.
The noise machine is crude, but effective....
The drilling argument is a bogus one, the area estimated by the MMS to contain the largest unproven reserves is the GOM, specifically the central and western portions where drilling is already allowed. It is also apparent that the eastern GOM (intermediate to deep water areas on the western Florida coast) has significant unproven reserves. And according to the USGS we have 48.5 BBO of onshore unproven reserves, and I believe most of these areas (excluding Alaska) are currently unregulated from drilling.
The next offshore area with the most unproven reserves is the Alaska North Slope.
I have spent some time going over the EIA energy data for crude oil and refined gasoline and diesel prices, and it becomes obvious that there is profit to be made in trading oil futures.
The crude oil and natural gas markets are being manipulated by oil and natural gas institutional and individual speculators.
See Energy Speculation: Is Greater Regulation Necessary to Stop Price Manipulation?
,Energy Speculation: Is Greater Regulation Necessary to Stop Price Manipulation? – Part II
, andEnding Excessive Speculation in Commodity Markets: Legislative Options
The first two links are from The House Committee on Energy and Commerce and the last link is from Senate Committee on Homeland Security and Governmental Affairs. You can listen to the Senate (audio in RealPlayer format (Question: How do I download this audio onto my computer?
All I seem able to do is listen to it in streaming mode. n00b on board)). The two House sessions have WMV files (which don't play on my G5 Mac (I have a bought and paid for Flip4Mac) so I used VisualHub to convert to AVI format and used VLC to view them), but be warned each video is several hours long. Note also that there are plenty of PDF files for each of these sessions from various industry experts giving their testimony before these congressional sessions.
So in December of last year our elected officials were already aware of the problem, but did nothing for six months, six months
Also familiarize yourself with the acronyms CFTC
, and NYMEX
Also from the CFTC
website see CFTC Emergency Authority Background
(PDF file dated June 26, 2008);
Since the agency’s creation in 1976, it has used its emergency authority four times.
November 1976 Maine Potatoes Traded on NYMEX
December 1977 Coffee Traded on New York Coffee and Sugar Exchange
March 1979 Wheat Traded on CBOT
January 1980 Soviet Grain Embargo
Note the time periods (all during the Carter administration) and an absence of the CFTC to use their regulatory powers since then, when the Republicans have either held the highest office or controlled congress for 26 of the last 28 years.
So if you want to blame someone for the CFTC inaction, blame the party of record, Republicans
My take? If the CFTC had used their regulatory powers in a timely fashion gas prices would have stayed in the $2 to $3 per gallon price range, and crude oil prices would have stayed in the $60 to $80 per barrel price range.
As to the USofA demand for crude oil and refined products, demand for both peaked in the first half of 2007 (EIA data source using 5-week, 13-week, 26-week, and 52-week running moving averages of weekly price reports). As should be obvious this peak demand occured before the most recent crude oil price spike (from ~$70/barrel to ~$140/barrel). I have one other very interesting plot of EIA data that I"m just in the process of finishing as I write this.
In closing, it is very possible that had speculation not run rampant, crude oil prices would have stayed in the $70/barrel range, and with the CFTC using it's regulatory powers, perhaps this temporary price spike will go away, so that in the fall we could see crude oil prices drop below $100/barrel. In other words, keep your fingers crossed.