Deep Green Crystals

« Craigslist declassified | Main | Reading my interview over at Curious Office »

May 9, 2009

Reading Mark Andersen’s Oil versus Technology

More proof (if anyone needed it) that Oil prices have been and continue to be manipulated.  I know the affects of being a small player in the oil game all too well.  Read this

excerpt:

Was there really price manipulation? Absolutely. While SNS may have been the first to call the game "rigged," both for Enron and for this most recent oil price run-up, all the experts are now on board, having seen how quickly prices declined on the downside.

As Daniel Yergin, author of The Prize, put it in a special Wall Street Journal supplement last week: "As oil approached the previously untouched $100 barrier in 2007 [Pub. Note: Crossing that barrier was first predicted here in SNS], other factors began to play a larger role. The impact of financial markets became more and more evident, with investors becoming increasingly active. --- The impact of speculation and hedging on the price was self-reinforcing, leading to more speculation and hedging."

What Daniel either  doesn't know or doesn't write about is the worst part of this story: the Trigger Theory - the increasing likelihood that physical sellers of oil were a part of this price speculation effort.

As proof that the media, and therefore the world, continues to live in ignorance of how the oil industry really works, I would offer a front-page business story that noted "increased inventory levels" of oil, even as the price "unexplainedly" went up 11% in a day.

When, exactly, will Congress (excepting Washington Sen. Maria Cantwell, who really does) get it, will the media get it, will the public get it? After they've been skinned five more times? Never?

Two weeks ago, sensing soft pricing, oil transhippers froze tanker traffic. They decided not to deliver on time, which converted the world's tankers instantly into a huge new warehouse; it also allowed inventories on land to pile up. The result was immediate: cut off supply, prices rise - in this case, 11% in one day. That is called price manipulation, and the oil business is better at this than at finding new oil in the ground. And no, you won't find this story anywhere else but here.

By running the price up from around $14 to over 10 times that amount, price manipulators seeking bloated profits achieved several unintended consequences, in addition to making money on options:

A National Public Radio report on Wednesday suggested that most projects in solar and biofuels had been negatively impacted by current low prices. Members will remember our Special Letter by then-biofuels leader Martin Tobias, suggesting that major oil providers were driving up feedstock prices to eliminate biofuel companies as competition (SNS: Special Letter: Big Oil - 1; Renewable Fuels - 0, July 21, 2008).

One private equity expert from the Northwest, quoted in the NPR program, said that about one-third of his VC contacts are "frozen - paralyzed with fear." That would mean, not investing in alternative energy sources, among other things.

And the Saudis are suddenly talking about pumping more oil, even as they meet to discuss oil reductions. The Saudis seem smarter about oil pricing than the Texans. (Of course, the Texans brought us Enron, the JFK assassination, and under-the-table federal political control for 30-50 years.)

With OPEC meeting again in a month, the Saudis turning moderate, the Texans getting ready to "juice the machine" again, and Silicon Valley trying to move ahead on its investments, the battle is joined.

Is it possible that Big Oil will, accidentally, help Silicon Valley? I think so.

Will the Saudis, using OPEC, try to prevent it? I think so.

In which case, the problem isn't really Oil vs. Technology at all, but the Saudis vs. the Texans, with the VCs and their companies - and the planet's welfare - in the middle of the fight.

Won't ExxonMobil, when it realizes what it's doing, come back and whack the alternative energy companies, just as Martin's company got whacked, totally in line with its habit of paying $5-10MM/year for fake science denying global warming?

Yes, it will. It wants its crazy profits, and it wants no threats at the same time. People who read this, and really understand it, will keep watch for its every move, as it works to jack up prices while creating Fear, Uncertainty, and Doubt about global warming, alternative energies, and anything related to them.

Posted by Martin at May 9, 2009 8:58 AM

Trackback Pings

TrackBack URL for this entry:
http://www.nwventurevoice.com/cgi-bin/mt-tb.cgi/3530

Comments

Post a comment