May 20, 2008
Elaine Meinel Supkis
With little fanfare, gold jumps another $15 today. It has risen from nearly $800 to over $900 in less than a month. This is probably partially due to wheat and rice falling drastically. But oil shoots ever upwards! What a shock. The US talks about bomb, bomb, bomb Iran and lo and behold, oil shoots up in price. When will we learn? Never! Diesel goes up too and we marvel about this. And Congress has decided to park Xerxes' throne on the edge of the sea and commands OPEC to produce more oil and drop prices or else! OPEC says, 'Stop feeding those speculators cheap loans and free Funny Money™.' And the US pops the King of Saudi Arabia in the eye and he runs off to Putin who loves OPEC. Putin absolutely adores OPEC and hopes they keep the price of oil high as possible.
Crude oil rose above $129 a barrel in New York for the first time after billionaire hedge-fund manager Boone Pickens said oil will reach $150 a barrel this year because supply isn't keeping up with demand.
Producers are ``running out of oil,'' Pickens, the founder and chairman of Dallas-based BP Capital LLC, said on CNBC today, reiterating comments he made to Bloomberg News on April 29. Goldman Sachs Group Inc. and Deutsche Bank AG also said in the past month that prices would rise.
``It's not just Boone Pickens; just about every big global bank has raised its price forecast in recent weeks,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``When prices last fell below $20 in 2001 there was a surplus. That's no longer the case. There's now a deficit.''
The US stock market, last week shot up on the 'good' news that oil was going up because they thought the Federal Reserve would drop interest rates to Japanese levels. But this week, all that happiness is melting away under the basilisk glare of harsh reality: inflation is surging world wide and it is very much fueled by high oil prices. I have lived on this planet a long time. Not as long as some, but long enough to deal with several oil price spikes. All of the previous ones were very much attached to wars. And indeed, so is this one, quite frankly.
The US public refuses to understand that wars in the oil pumping nations of the Near East=high oil prices in America. Simple, isn't it? All my life, I have seen 'experts' try to talk us into believing that there is no connection between wars and oil or high prices of oil due to wars and raging inflation here in America. But this round of high oil prices/wars/raging inflation should finally put that stupid propaganda game in the grave. Since even a fool can now see that oil wars=>high oil costs=>high inflation=>bad global recessions, we can deal with this problem. I am a realist. If wars in or around oil pumping nations=>high oil costs, it is laughably simple how to fix this.
We don't launch wars of choice in the middle of oil fields! DUH. Afghanistan has no oil, it has opium. US wars of aggression=>economic chaos=>high illegal drug production=>cheap illegal drugs in the US. So if we want to stop illegal drugs from flooding into our cities, again, we stop the wars that launch this. The war on terrorists was not waged where it mattered the most because the US didn't want to fight Saudi Arabia, Egypt or Israel. We had to displace our ire elsewhere. Killing Afghani peasants or Iraqi urban dwellers was more pleasing than wrangling with the Saudi Royals.
This is because irritating the Saudi Royals=>oil supply to world strangled=>global financial collapse. Just three days ago, our supposed leader crept into the Saudi Royal palace to beg for more oil. This was a fool's errand. The problem isn't the amount being produced, it is the probable future hazard of moving oil. For the markets we see in the news are not for oil today.
The record price is for FUTURE oil. Since the US persists in talking about war, war war with the very clever and ill tempered Iran Kitty, is it a surprise to see oil futures shoot to the moon? Of course not!
The oil being bought will be delivered IN THE FUTURE at only $130 a barrel. And if this future features the US and Israel bombing Iran, this is a bargain. For future oil may be going for $300 a barrel by then. The buyers of the futures at $130 a barrel will make a killing if the price of oil shoots up that high. This is what they are betting. Isn't it ironic?
So when will our media talk frankly about this? Will Americans want to vote for Bomb, Bomb, Bomb McCain? Or Obliterate Them All Clinton? Even poor Obama has been forced to snarl and snap at Iran so he can get Jewish support in the election cycle. If the US public wants cheap oil, we should repudiate anyone talking about bombing ANY Iranians for ANY reasons. Period. Vote for Ron Paul, eh? Or Nader for crying out loud. But Americans can't come weeping to the world about future high oil prices if we are threatening war. Period.
The House voted Tuesday to let the Justice Department pursue energy antitrust and price fixing cases against members of the OPEC oil cartel, although critics said such attempts would likely be fruitless and could prompt a backlash from oil producers.
The bill, approved 324-84, also would create a special Justice Department task force to investigate energy markets to root out manipulation and unwarranted speculation.
Similar measures are part of a package of Democratic energy proposals being considered in the Senate.
The House passed a similar bill targeting OPEC last year and the Senate embraced it, only to see the provision subsequently taken out of a broader energy bill. The legislation passed Tuesday would remove the current prohibition against pursuing antitrust actions against a sovereign country.
Many energy experts and legal scholars doubt that such an enforcement action would be successful.
So, instead of condemning all war talk, instead of negotiating with Iran as equals, the US Congress voted this winter to declare Iran's guards as enemy combatants. And Congress screams bloody AIPAC murder at Iran at every possible turn. Now, we want OPEC which includes Venezuela as well as Iran, to join with us and make oil cheaper.
HAHAHAHA. Iran prays every day for the US to go bankrupt. Bin Laden unrolls he rug in a cave and bows to Makkar [Mecca] for the US to be defeated and bankrupt. It is, in fact, a popular point of view. Billions of humans hope the US goes bankrupt. This is the fruits of our nuclear armed empire. Russia, for example, loves it when the US Congress or our demented Presidents and candidates for President all yell for war with Iran. This war is rapidly rebuilding the Russian military might.
An important aspect of war making: if your actions strengthen your foes, you got to stop and do something different. Obviously, strengthening foes is stupid. But the US is doing exactly that. The more we try to harm Iran, the stronger Russia becomes. And this strong Russia is making strong ties with the Saudi Royals. Eventually, they will displace us as the protectors of the Saudi Royals. After all, both belong to the same League: the oil exporting nations of the world. I.e.: they have common cause. This is why the Saudis shoved Bush aside as if he were a dog. They no longer need him to protect the Throne. They have Putin. Not to mention the Chinese. Half of all oil from SA goes to Asia. And half of Iran's oil goes to Asia. The US gets only 3%.
According to the Department of Energy, the percentage of cost for diesel for refining in 2002 was only 5.1% and the cost of raw oil was 46%. In 2008, the refining costs shot upwards to 20% [WOW] and the raw oil cost to 61%.
Between January and October 2006, Saudi Arabia exported an average of 1.41 million bbl/d of crude oil to the United States, accounting for 14 percent of U.S. crude oil imports. For this time period, Saudi Arabia ranked third (after Canada, Mexico,) as a source of oil imports to the U.S. In 2005, Saudi surpassed Venezuela as the third largest U.S. supplier of petroleum products. The Saudi Share of imports during this time period was 13.9 percent
Note that OPEC has twice the oil sales as all the rest of the world put together. They have such a large share, they can unilaterally control world oil prices if there is a lack of oil. We no longer have an oil glut like back in the mid-1990's. We are seeing tight markets and there is nothing we can do to change this. But the sudden hike in oil prices is due to the extra dangers caused by US loud talk about war with Iran.
Despite the hot talk aimed at Iran, Chavez of Venezuela plays pussy, too. Iran has periodically sent out feelers. Now, Chavez is joining. Not from fear but because he senses the US might give up trying to dominate the world via brute force or naked fear of nuclear war.
Whoever is elected, Chavez wants to start immediate exchanges. "It is through talking that we can then come closer and share and compare our views and then reach an agreement."
Chavez said he had been able to talk with President Clinton about many topics, "but after that everything broke to pieces."
The Venezuelan president said he first met President Bush in Canada and told him, in English, "I want to be your friend." But his efforts were rebuffed even when other heads of state served as intermediaries, including then-president of Mexico, Vicente Fox. "Even good friends could not get Bush to sit down and talk," he said.
Bush and his baby cowboy diplomacy did a lot of very real damage to our Ship of State. Instead, we became a Ship of Fools. And now are becalmed at sea due to the high cost of energy from OPEC nations. We can't threaten them to give us oil. We can't even beg for it. We must do something nice for them if we want oil. And this means we have to stop supporting Israeli aggression. And this is the problem: we can't do this at all. This is why, when 65% of the US public wants no more wars and 90% of the US public wants cheaper oil, we have only warmongering lunatics running for office. We have literally no choice in this matter. All three mainstream candidates talk about bringing home our troops around 2013. WHAT? HAHAHA. We might end up like the Russians in Europe: the only way home is if the other countries pay the bills? By 2013, the US will be broken. Already, we can hear the cracking of the bones. We can see the red ink blood spilling from oven veins. We are obviously dying as a global power.
So it irritates me to see Congress wasting time, talking about suing OPEC. Talk about pouring gasoline on a very volatile fire.
After focusing heavily on gasoline for decades, U.S. oil refiners are starting to redirect their attention to hiking diesel production capacity to cash in on a global boom in demand for the fuel.
The work may be slow to come online, however, as U.S. refiners finish up a slew of current crude processing capacity projects they've already committed to and gauge competition from robust refinery expansion plans overseas.
"The trend that is important behind the story of the future expansions is the downtrend in gasoline," said Joanne Shore, analyst for the U.S. Energy Information Administration. "Any investment decisions, I would assume, would be focused on how we are going to boost the distillate yield, relative to the gasoline," she said.
Diesel prices are insane. I use diesel and back three years ago, they said the price hikes were due to the costs of starting up refineries that took out the sulfur. Now, the price is nearly a dollar higher. Diesel has risen at a much faster rate than regular gasoline as we see in the charts above from the Department of Energy. This, in turn, is hammering US business like a blacksmith working red hot iron. Shipping companies are going bankrupt pretty fast now. They clung on for the last three years but this year, the price rising by over 150%, they are falling off the cliff. This is striking at the heart of our infrastructure. Businesses depend on truckers bringing the goods in. Truckers are demanding much more money for deliveries. The fun years where we had trucks roaming the nation bringing us cheap goods from Asia is fading fast.
At one lumber yard I was visiting the other day, the boss was complaining about the cost of shipping. He was telling customers, the pre-built sheds were being discontinued due to high shipping costs and small profit margins! This is being played across the land. And it will gather like a storm and come howling back to haunt us all. I see the system freezing up. And today's news makes this worse. Congress is playing games while the fundamental reasons for this mess continue to worsen.
French fishermen angry at high fuel costs on Monday blocked a Mediterranean oil port and stepped up protests at other Atlantic and Channel ports to press demands for government compensation.
The action came as Agriculture and Fisheries Minister Michel Barnier was in Brussels meeting his European Union counterparts, seeking EU approval for an emergency assistance package anchored in a two percent fuel tax applied to fish wholesalers.
In Marseille, fishing crews strung a drift net across the entrance to the Lavera oil terminal, at Port-de-Bouc, preventing boats from entering and leaving the harbour, the port authority said.
It’s not OPEC pulling oil prices to ever greater-heights—it’s speculators. That’s the theory behind the Consumer-First Energy Act, a bill sponsored by Senate Democrats aimed at clamping down on runaway oil futures trading. As stocks fall, investors are fleeing to commodities, especially oil. But even the US government might not have the power to rein in the market, BusinessWeek reports.
“We regulate the trading of onions much more closely than the trading of oil,” argues one consumer advocate. “Regulation will bring some discipline to this raw speculation.” Speculators could simply jump to less-regulated exchanges—if they're the problem at all, some note. “We do not think the energy crisis will be solved by finding and punishing the big, bad speculator,” wrote one Goldman Sachs analyst.
Unlike Americans, even though oil inflation has been half of what we are experiencing, the global shortage of diesel is causing tremendous problems and the irritable French won't sit at home and whine or talk wildly about voting for Presidential candidates who will bomb Iran and make this terminal. No, the French go aux armes. To the barricades! Unlike in the US, the people of Europe can directly assault their leader's hideouts. Washington, DC, is isolated. And the trucker demonstration there didn't feature molotov cocktails, barricades, battles with the cops and attempts at storming up the steps of Congress.
Oil prices continue to rise and rise, with no end in sight. Virtually all other commodities seem to be following to be the same suit. Some now say a new economic system is emerging from the ashes of the old and now crumbling financial structure. Failing to meet even the basic needs of the common man, the current economic system is facing its worst crisis and appears in doldrums. It has miserably failed the underprivileged of this world.
Markets appear divorced from the fundamentals. F. William Engdahl strongly says in a recent write up that the oil markets (and other markets too) today are controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60 percent 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.
And the end-result is growing deprivation to a large number of people across geographical boundaries!
In the 90’s, with the war in Afghanistan taking its toll, the Soviet empire virtually melted before our eyes under its own weight. The number of deprived, form Moscow to Siberia and Grozny started to grow and grow rapidly. And as the number of have-nots in then USSR rose, the system could not cope with the pressures, and failed to provide even the basic needs to the common man in the streets. And within years the mighty and the powerful USSR was assigned into the annals of history.
Congress recently condemned 'speculators' for the high price of oil. Well, who is giving these damn 'speculators' all the cash to do this? Why, Helicopter Bernanke! And Congress is talking openly about war with Iran so between Bernanke and Bush we have...high oil prices. The speculators merely take advantage of a golden opportunity.
Which reminds us: gold is now shooting up faster than oil! Wow. The five month pause and decline which was due to Indian and China hesitating in buying gold is now business as usual. As the dollar pitches itself off a cliff, gold rises like a Firebird.