The Unintended consequences of the BP Oil Disaster

[DC Tom]

How could I not of known?

 

He sort of reminds me of ACORN, they were so damaged in the eyes of the public, that they are trying to rebrand themselves by simply changing their names.

 

In his defense, he was RFeynman before he was Steely Dan (before he was RFeynman again).

[Steely Dan]

You are an idiot. As I've posted before, I'm against corn-based biofuels...for reasons that are far sounder and much more coherent than yours would be.

 

You blamed "corn in the gas" for the high gas prices of 2008. Were you even close to right about that? No you weren't. Gas prices are a lot lower now and they are still putting corn in the gas. I'm not all that happy about the ethanol in the gas thing right now either but I wasn't an idiot enough to believe that it was responsible for $4 a gallon gas. Carry on.

[Steely Dan]

How could I not of known?

 

He sort of reminds me of ACORN, they were so damaged in the eyes of the public, that they are trying to rebrand themselves by simply changing their names.

 

Just so you know changing names is something a lot of people here have done. I was tired of the Steely handle and decided to change it. Unfortunately I changed it wrong. I wanted to change it to Peter Gabriel but goofed. Once I can change it again I will be on the board as Peter Gabriel. Happy Pappy?!

[DC Tom]

You blamed "corn in the gas" for the high gas prices of 2008. Were you even close to right about that? No you weren't. Gas prices are a lot lower now and they are still putting corn in the gas. I'm not all that happy about the ethanol in the gas thing right now either but I wasn't an idiot enough to believe that it was responsible for $4 a gallon gas. Carry on.

 

 

Every spring, gas prices spike because they have to shut down infrastructure to clean it, because ethanol is hydrophillic, so they can't run the summer blend through the system without cleaning it first. This causes a spike in prices, as production and transport infrastructure goes offline. That's your "corn in the gas" price spike, you moron.

 

The other reason in 2008 that gas prices spiked is because the dollar weakened. Oil prices didn't increase nearly as much measured in Euros.

 

Try, just try to understand something about the topic before you spout off.

[Magox]

 

Every spring, gas prices spike because they have to shut down infrastructure to clean it, because ethanol is hydrophillic, so they can't run the summer blend through the system without cleaning it first. This causes a spike in prices, as production and transport infrastructure goes offline. That's your "corn in the gas" price spike, you moron.

That is absolutely 100% Coooooooorrect!!

 

When I use to recommend clients to buy gasoline futures or options, the best time historically speaking was around the beginning of March or so, right after heating oil demand cooled down or at least the anticipation of it, which naturally of course would lead to lower crude and gasoline prices. As you mentioned many refineries do go through their annual maintenece periods and during that time period it would be a great time to buy Gasoline contracts.

[Steely Dan]

 

Every spring, gas prices spike because they have to shut down infrastructure to clean it, because ethanol is hydrophillic, so they can't run the summer blend through the system without cleaning it first. This causes a spike in prices, as production and transport infrastructure goes offline. That's your "corn in the gas" price spike, you moron.

 

The other reason in 2008 that gas prices spiked is because the dollar weakened. Oil prices didn't increase nearly as much measured in Euros.

 

Try, just try to understand something about the topic before you spout off.

 

Right, holding back contracts had nothing to with it. Why don't you try understanding something first.

 

Your hypothesis back then was it was solely the corn in the gas. I don't remember you saying anything about the weakening dollar which was public knowledge back then. You also couldn't understand that cheap gas prices are an economic necessity. We all say dumb things sometimes. I actually respect your opinions on things when you aren't calling me an idiot.

[Magox]

Right, holding back contracts had nothing to with it. Why don't you try understanding something first.

 

Your hypothesis back then was it was solely the corn in the gas. I don't remember you saying anything about the weakening dollar which was public knowledge back then. You also couldn't understand that cheap gas prices are an economic necessity. We all say dumb things sometimes. I actually respect your opinions on things when you aren't calling me an idiot.

Who was holding back contracts? Specifically who?

 

Cheap gasoline prices an economic necessity, ok (yet you approve of a moratorium on oil drilling which will make prices go higher, ok ). Anyhow, What does this have to do with how prices are determined? And how is this relevant to the discussion?

[Steely Dan]

Who was holding back contracts? Specifically who?

 

Cheap gasoline prices an economic necessity, ok (yet you approve of a moratorium on oil drilling which will make prices go higher, ok ). Anyhow, What does this have to do with how prices are determined? And how is this relevant to the discussion?

 

The ABC's of Oil Manipulation

 

Market Strategy

 

If you are an end user, then market volatility is your enemy – indeed, that is why end users began to use derivatives in the first place. But if you are a middleman, then volatility is your friend, and the only bad news is no news. Likewise, good access to market data is essential to end users – whereas privileged or “asymmetric” access to market data is beneficial for intermediaries.

 

The temptation is therefore always there for intermediaries to create artificial volatility through “hyping” or even creating news, and to move the market around. Whether or not BP and Goldman Sachs trading arm J Aron were involved in such collaborative behaviour during the late 90s is an interesting point, since they were uniquely well placed, but if they did, they wouldn’t have been the only ones.

 

Certainly by 2000 manipulation of settlement prices – for the purpose of making trading profits “off exchange” – was rife on the IPE to the extent that the opportunity for profit to which it gave rise was affectionately known by IPE locals as “Grab a Grand”. When I discovered it by chance, and blew the whistle on it, my allegations were buried by the UK’s Treasury, FSA and IPE between them, and so was I, personally and professionally.

 

Meanwhile, in 1999, Goldman Sachs managed to convince the US regulators, the CFTC, that they were entitled to the same regulatory “hedge” exemptions as those market participants who were genuinely hedging their physical requirements. This, combined with the collapse of Enron in December 2001, cleared the way for the complete takeover of the global energy marketplace which has followed in trading on (and off) the ICE platform, and prepared the ground for making money out of the growing constituency of financial investors.

 

It's not a moratorium for some silly reason. It's a moratorium for a very good reason.

[Steely Dan]

Link

 

PERHAPS 60% OF TODAY'S OIL

PRICE IS PURE SPECULATION

By F. William Engdahl, 2 May 2008

 

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

 

Keep reading at the link if you want to know how.

[Steely Dan]

Here's more from the above article;

 

All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”

 

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

 

It's not surprising that almost nobody has a firm grasp on this.

[Magox]

Here's more from the above article;

 

All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”

 

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

 

It's not surprising that almost nobody has a firm grasp on this.

Man, you have a hard time understanding things don't you? If you would of understood what I had earlier stated, I said that when Oil had gone up to $147 a barrel, about 10-20% was speculative froth. The more reasonable price based on the dollar, supply and demand AT THAT TIME should of been around $100-$115 a barrel.

 

Those who decided to keep buying oil above $125 a barrel, were burned, and burned badly. When prices go to high, guess what happens to the price Steely?

 

Well....

 

What do you think happens to the price when the prices don't align with the fundamentals?

 

Well....

 

But, this article, which is strictly one man's opinion, doesn't support your argument that the Oil companies are to blame for the high prices. The article suggests that speculation caused prices to go higher, which they did, but they weren't the sole reason why they were as high as they were.

 

Prices eventually find their true value, and when prices get too high, a CORRECTION is in store. And those who chase after markets almost ALWAYS GET BURNED!

[Magox]

It's not a moratorium for some silly reason. It's a moratorium for a very good reason.

First off, this guy suggests that there may have been some sort of collusion amongst the investment banks, and he self-admittingly states that he doesn't know if collusion actually took place

 

 

Please Steely, first you say that the Oil companies are to blame for the high oil prices, and then when you figure out that you have absolutely nothing to support your argument, you dig up some dudes opinion on the investment banks, which doesn't support your original argument. Then you state that our Economy NEEDS low gasoline prices, but yet you support an off-the-cuff reaction of a 6 month moratorium on oil drilling that will lead to lower supplies which leads to what?

 

You are full of contradictions...

[Steely Dan]

Man, you have a hard time understanding things don't you? If you would of understood what I had earlier stated, I said that when Oil had gone up to $147 a barrel, about 10-20% was speculative froth. The more reasonable price based on the dollar, supply and demand AT THAT TIME should of been around $100-$115 a barrel.

 

Those who decided to keep buying oil above $125 a barrel, were burned, and burned badly. When prices go to high, guess what happens to the price Steely?

 

Well....

 

What do you think happens to the price when the prices don't align with the fundamentals?

 

Well....

 

But, this article, which is strictly one man's opinion, doesn't support your argument that the Oil companies are to blame for the high prices. The article suggests that speculation caused prices to go higher, which they did, but they weren't the sole reason why they were as high as they were.

 

Prices eventually find their true value, and when prices get too high, a CORRECTION is in store. And those who chase after markets almost ALWAYS GET BURNED!

 

Are you aware that recent legislation was passed to curb speculative excesses?

 

Both the House and the Senate have approved strict legislation to reform financial markets with the passage of S. 3217, the Restoring American Financial Stability Act of 2010, and H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. Congress must quickly reconcile these bills and maintain the strong Dodd-Lincoln derivatives provisions to protect consumers from the Wall Street manipulation of energy prices.

These bills will prevent banks and speculators from exploiting loopholes and weak oversight in the commodity markets. These necessary reforms will help lower energy prices and limit volatility for American families and businesses. You can help make a difference on this important issue by telling your senator to support this legislation.

 

Dude you asked me a question and I found information from Chris Cook former head of International Petroleum Exchange of Compliance and Market Regulation. It's not just one man's opinion it's one man's very informed opinion. How long were you head IPECMR? How long were you on it in any way? I think I'll take my info from him rather than you, thanks. If you really want informed opinions then there it is.

 

As I said above there is no proof the oil companies were involved, yet, but there is circumstantial evidence.

[Magox]

As I said above there is no proof the oil companies were involved, yet, but there is circumstantial evidence.

It's like I'm talking to a wall, and the worst part about it is that I'm continuing to talk to a wall.

 

I SAID that there was SPECULATIVE FROTH, well before you even brought up this link. What part of speculative froth do you not understand?

 

Also, just for ***** and giggles, what and where is this circumstantial evidence that you talk of?

[Steely Dan]

First off, this guy suggests that there may have been some sort of collusion amongst the investment banks, and he self-admittingly states that he doesn't know if collusion actually took place

 

 

Please Steely, first you say that the Oil companies are to blame for the high oil prices, and then when you figure out that you have absolutely nothing to support your argument, you dig up some dudes opinion on the investment banks, which doesn't support your original argument. Then you state that our Economy NEEDS low gasoline prices, but yet you support an off-the-cuff reaction of a 6 month moratorium on oil drilling that will lead to lower supplies which leads to what?

 

You are full of contradictions...

 

Not really. Stopping pumping in the gulf needs to be done to ensure another tragedy doesn't happen again. If it costs me fifty extra cents at the pump for the next few months so be it. It's worth it. It's not worth it to line some aholes pockets. Nobody knew if Enron was involved in market manipulation in California until they found the smoking gun. Unfortunately, smoking guns are few and far between. Most cases in US courts are tried on circumstantial evidence. So if you want to believe that the widow who raised her dead husbands life insurance just weeks before his death is innocent then it's your right. It's a silly belief but your entitled to it.

[John Adams]

It's like I'm talking to a wall, and the worst part about it is that I'm continuing to talk to a wall.

 

Took a while to reach this.

[Steely Dan]

It's like I'm talking to a wall, and the worst part about it is that I'm continuing to talk to a wall.

 

I SAID that there was SPECULATIVE FROTH, well before you even brought up this link. What part of speculative froth do you not understand?

 

Also, just for ***** and giggles, what and where is this circumstantial evidence that you talk of?

 

Record profits and refusal to be sworn in by the Senate committee are a good place to start. If I were head of a company called before congress for some sort of suspected criminal activity and I was innocent I would beg them to put me under oath. I wouldn't try to keep them from putting me under oath. JMO

 

Dude, you asked;

 

Who was holding back contracts? Specifically who?

I supply you with two articles telling you who and how and you just gloss it over and continue to push your agenda. Those articles prove I was right to say that market manipulation was responsible for high gas prices and bi-partisan legislation (that includes the business friendly Republicans) proves it was a real problem. If you admit there is market froth then what are we arguing about? The one article believes that up to 60% of oil prices are due to speculation. That enters into market manipulations in my mind.

[NoSaint]

Not really. Stopping pumping in the gulf needs to be done to ensure another tragedy doesn't happen again. If it costs me fifty extra cents at the pump for the next few months so be it. It's worth it. It's not worth it to line some aholes pockets. Nobody knew if Enron was involved in market manipulation in California until they found the smoking gun. Unfortunately, smoking guns are few and far between. Most cases in US courts are tried on circumstantial evidence. So if you want to believe that the widow who raised her dead husbands life insurance just weeks before his death is innocent then it's your right. It's a silly belief but your entitled to it.

 

 

Instead of stopping them indefinitely there could be thorough, efficient inspections and then get the ones that arent cutting corners back on line faster. This isnt just about you paying an extra $5 every week for gas, Its also about an estimated 20,000 middle class people losing jobs if this drags. There are towns with nearly 100% of the people employed by some stage of a drilling company in this area, what are those people supposed to do while Washington figures out what should happen? I understand the scope of what happened, and am probably more upset then anyone else reading this thread, but there is a middle point that can be reached on this. The incident itself looks like it has potential to come down to a small handful of individuals that made TERRIBLE (criminally negligent) judgement calls, and not necessarily even a wholesale failure of the regulations in place.

 

I think that there is a very good chance that there are some tweaks to the system needed going forward, but this plan essentially leaves the top two industries in the state crippled (seafood, and oil), at a time when the state is going to be needing money the most (for cleanup).

 

I havent read through all the threads and posts over here on the topic, but honest question -- how many people on here have direct contact with the gulf drilling industry? Whether it be through jobs, family involved, etc.....

[Steely Dan]

Instead of stopping them indefinitely there could be thorough, efficient inspections and then get the ones that arent cutting corners back on line faster. This isnt just about you paying an extra $5 every week for gas, Its also about an estimated 20,000 middle class people losing jobs if this drags. There are towns with nearly 100% of the people employed by some stage of a drilling company in this area, what are those people supposed to do while Washington figures out what should happen? I understand the scope of what happened, and am probably more upset then anyone else reading this thread, but there is a middle point that can be reached on this. The incident itself looks like it has potential to come down to a small handful of individuals that made TERRIBLE (criminally negligent) judgement calls, and not necessarily even a wholesale failure of the regulations in place.

 

I think that there is a very good chance that there are some tweaks to the system needed going forward, but this plan essentially leaves the top two industries in the state crippled (seafood, and oil), at a time when the state is going to be needing money the most (for cleanup).

 

I havent read through all the threads and posts over here on the topic, but honest question -- how many people on here have direct contact with the gulf drilling industry? Whether it be through jobs, family involved, etc.....

 

I understand people are heavily involved in this. 11 workers were killed and 17 injured by the disaster. I think letting the idle workers collect unemployment for now is a good idea until they figure out how to keep something like that from ever happening again.

 

I'm still mystified by the fact that nothing had to be pre-planned for a situation like this. I guess less government involvement is a good thing.

[DC Tom]

Right, holding back contracts had nothing to with it. Why don't you try understanding something first.

 

Your hypothesis back then was it was solely the corn in the gas. I don't remember you saying anything about the weakening dollar which was public knowledge back then. You also couldn't understand that cheap gas prices are an economic necessity. We all say dumb things sometimes. I actually respect your opinions on things when you aren't calling me an idiot.

 

There's a late spring spike EVERY year because of ethanol. There was one this year. There was one last year. There was one in 2007. There's been one every year since they introduced ethanol. And ethanol absorbs water, which is bad for gas. So OBVIOUSLY, the reason is because every spring some mysterious "they" are "holding back" some sort of ambiguous "contracts".

 

And I did mention the dollar back in '08. That you didn't read it is not my problem.