Rolling Stone Blows The Lid Off Oil/Gas Speculation By Goldman Sachs

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Most people don’t realize that the insane gas prices last year had nothing to do with increased demand and had everything to do with market speculation and hoarding encouraged by the top investment banks.

Now True/Slant’s own Matt Taibbi uncovers the truth behind the scam.

Read the rest at True/Slant.

  • gerryf

    Most people DID realize it–they just were blaming the wrong people (Big Oil).

    Big Oil certainly enjoyed a windfall from the situation, but they didn’t create it. All they did was maintain roughly the same profit margin they always enjoy–now, of course, 7 percent on 100,000,000,000 is more than 7 percent on 50,000,000,000 and I am not crying for Big Oil, but the gouging was going on upstream.

    To actually see it laid out like that in RS is a little more revealing, but it was clear from the moment that ex Senator Phill Gramm set out to dergulate energy futures trading (which led to not only to the outrageous speculation in oil prices, but also the rise and collapse of Enron) that we were heading for this.

    And it’s still going on even now.

    There oil tankers floating around off short with no place to drop their oil and any time a squirrel farts in Saudi Arabia the price of Oil still jumps $4 because there’s too much money floating around out there looking for a place to be invested in the short term.

  • kranky kritter

    So, should we worry about the long-term supply of fossil fuel or not?

    And more importantly, do we have someone to blame for the price going back towards $3 yet?

  • Jim S

    Oil is largely speculation by various corporations. Gas is a combination because back when gas was really cheap the oil companies shut down refineries purely to have an excuse for prices to go up.

  • gerryf

    Yes, we do have someone to blame for the price going back up–the same people that should have been blamed the last time. They are doing it again.

    But, you are correct, we SHOULD worry abou the long-term supply of fossil fuel. The amount of oil is finite and the easy stuff has already been collected. We should also be concerned because the people who control the source (and the markets) have interests different than our own.

    That concern, though, is separate from the market manipulations we encountered last year and are seeing again.

    As for the oil companies shutting down refineries, that is an excuse for prices to go up and down, but not as directly as you say Jim. True, they did shut down quite a few refineries, but many were old regineries. Newly built refineries had the capacity to take up the slack. However, and this is a big however, the new refineries are always operating at close to 100 percent of their capacity.

    When something happens to a refinery (hurricane, fire, etc, change over from winter to summer blends) the other refineries cannot pick up the slack as they once did.

    So, it does result in increases.

    This is a separate issue from before, though.

    Lord knows I don’t want to apologize for Big Oil, but the it’s not so cut and dry as some people make it.