1. speculation looting 60% of Food....AND 60% of OIL and causing the mortage bubble.. who'd a known
http://www.onlinejournal.com/artman/publish/article_3252.shtml snip"..."Perhaps 60 percent of oil prices today pure speculation
Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well who speculate.
In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation estimated that some $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60.
That would mean today that at least $50 to $60 or more of today’s $115 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on NYMEX and ICE exchanges in New York and London, it is more likely that as much as 60 percent of the today oil price is pure speculation. No one knows officially except the tiny handful of energy trading banks in New York and London and they certainly aren’t talking.
By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher. As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices.
Compelling evidence also suggests that the oft-cited geopolitical, economic, and natural factors do not explain the recent rise in energy prices can be seen in the actual data on crude oil supply and demand. Although demand has significantly increased over the past few years, so have supplies.
Over the past couple of years, global crude oil production has increased along with the increases in demand; in fact, during this period global supplies have exceeded demand, according to the US Department of Energy. The US Department of Energy’s Energy Information Administration (EIA) recently forecast that in the next few years global surplus production capacity will continue to grow to between 3 and 5 million barrels per day by 2010, thereby “substantially thickening the surplus capacity cushion.”
http://www.star-telegram.com/ed_wallace/story/651928.html snip"...Fiddling While We Burn
There it is in plain sight for everyone to see, exactly what I’ve been reporting for the past few years: Many individuals who are investing in oil and natural gas futures are going out in the media and trying to convince the American public that either we are out of oil or there is a serious supply shortage of crude against worldwide demand. The question is: Does it surprise you to discover that the US Senate investigated the rigging of the oil market by speculators in the summer of 2006 – and concluded that there was no supply and demand problem with oil? Did you know that their conclusion was that speculators were responsible for a 70 percent overcharge in the price of oil in the months leading up to the summer of 2006?
This from page 1 of the Executive Summary of that Senate investigation, there is this one troubling line: "Today, U.S. oil inventories are at an eight-year high, and OECD (Organization for Economic Co-operation and Development) oil inventories are at a 20-year high."
That’s odd because, in 2006, just like today, the media reporting covered the serious international shortage of oil and justified oil’s high price. Even more troubling is that the House of Representatives held a hearing this past December, ominously titled "Energy Speculation and Price Manipulation." How did it pass under the radar that both the Senate and the House studied the issue of price manipulation in our energy markets and both concluded that it was unregulated, massive trading in one futures market that was really driving up the price of oil and natural gas? And given that conclusion, why has Congress done nothing about it?"...
http://www.star-telegram.com/ed_wallace/story/659081.html snip"...The Love of Money
Record high prices without record low oil inventories, analysts saying that so much money flows into oil commodities that it gives the impression of shortages, when in fact no shortage exists. That mirrors the situation in the commodities market for food, as Bloomberg pointed out in its April 28 article, "Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin": "Commodity investors control more U.S. crops than ever before, competing with governments and consumers for dwindling food supplies." That’s right; food, oil and gasoline have become an "asset class." No longer are you fighting a neighbor at the supermarket over the last box of Cheerios®; now you’re fighting the futures traders, who are actually determining what you will pay for that cereal. "
http://www.star-telegram.com/ed_wallace/story/541726.html snip"...1. There Is No Shortage!
Gasoline reserves on hand have built up to the highest levels since the early nineties, which is remarkable considering that the nation’s refineries have been cutting back on the production of gasoline because their margins on gas have declined. In fact, gasoline reserves on hand have risen for 19 straight weeks, while oil reserves in this country have gone up in eight out of the last nine weeks – and would have gone nine for nine if fog in the Houston Ship Channel two weeks ago hadn’t kept oil tankers from unloading their crude.
In the same Bloomberg article that quotes Bodman from his CNBC appearance on March 4, he also said that thanks to ethanol the gasoline problem isn’t worse. He then added that the fact that making ethanol is forcing up the prices of other farm commodities, including hog and chicken feed, is “nowhere near as important as trying to relieve pressure on supplies.”
Of course, there is no pressure on gasoline supplies in this country as of today, but Bodman’s statement must have made eyes roll among the executives at Pilgrim’s Pride; they announced 1,100 layoffs on March 13, closing one processing plant and six of their 13 distribution centers because their company’s price for chicken feed went up $600 million last fiscal year and was on track to increase by another $700 million this year.
Here’s the scorecard, in case you missed it. There’s no shortage of gasoline or oil in the U.S. today, and we have near-record reserves on hand. Meanwhile, the Congressional mandate for ethanol has jacked up the price of chicken feed for Pilgrim’s Pride by $1.3 billion – and that’s just one companyprocessing chicken. This is what passes for acceptable to our Energy Secretary?
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