The real truth about the oil crisis

Saturday, June 21, 2008 11:38 PM EDT

Letters such as Jason Kufs' “It's Gas Prices, Stupid!” only prove one thing -- how little Conservatives understand about the current oil crisis and the economy. Not that that should surprise anyone.
This is, after all, the party of George W. Bush.

Or perhaps, I should say that Conservatives want you to think that they believe that the sky-high cost of oil is all the fault of the Democrats, and that the big solution is MORE DRILLING!

Which is why the push is on to open up restricted areas to more drilling. Common sense would seem to dictate that this would help bring the prices down, and make the USA more oil-independent, right? Wrong.

The real cause is what's known as “The ENRON Loophole.” In 2000, former Texas oilman and Bush-buddy, ENRON chairman Ken Lay - an indicted criminal on 11 counts of securities and wire fraud before his death - persuaded Congress and federal regulators that the electronic trading markets would be more “efficient” if those transactions and trades were deregulated - essentially, performed without supervision or oversight by U.S. regulators. These unregulated markets are called “Dark Markets,” where investors such as hedge funds and investment bankers can use loopholes in Commodities Law to manipulate the markets without accountability.

It is these futures speculators in the trading pits of NYMEX who are able to manipulate the prices of oil for pure profit - with virtually no transparency.

Additionally, because investment banks employ these speculators, by driving the price of oil to sky-high prices, investment banks can recoup huge losses for things like housing mortgage scandal losses?

Of course, all raw materials - corn, wheat, copper, etc. are all commodities, so by driving these prices up along with oil, the revenues increase exponentially.

Once again, ordinary citizens are bailing out the crooks by paying exorbitant prices. Of course, the frenzied calls for more drilling are just typical diversionary tangents, designed to give the oil companies and their investors exactly what they most want a guarantee that the U.S. will remain hooked on oil for generations to come.

Karl Logan

Auburn

The Citizens' Say

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There are 11 comment(s)

iowa wrote on Jun 23, 2008 11:42 AM:

" All this talk about gas prices. There is something you can do about it. It is time to start e85. Gas in the middle west is a lot cheeper that it is on the east cost. The price of gas encludes the state tax. So Karl look to your govenor. The state of New York is the most tax state in the nation. "

karl wrote on Jun 23, 2008 8:16 AM:

" By the way--thid morning, Barack Obama called for the closing of the "Enron Loophole" in order to reign in oil speculation--so I'm onto something here, despite the nattering naybobs of negativissm... "

Unknown... wrote on Jun 23, 2008 7:50 AM:

" I suspect that the republicans want to drill more & more here because they want to get high priced oil to the market without the high cost of transporting it from the middle east, resulting in even higher profits. They really don't want to lower the cost. Only if we build more refineries, and start flooding the market will the price start coming down. "

karl wrote on Jun 23, 2008 12:12 AM:

" Your opinion is welcomed just like any other's, demsarecrazy--like I said, if you've got a better one, go ahead and post it. I stand ny my assertions. The traders were deregulated in 2000; so your denials of the theory I proposed and summed up from accumulated research is pretty weak--just like you entire "rebuttal".
Go ahead, Einstein, we're listening. "

AJ wrote on Jun 22, 2008 11:19 PM:

" I would only add that there is another factor driving up the cost - that is the dollar has been tanking, which is for all practical purposes a hidden tax. Another gift from the Bush administration. "

demsarecrazy wrote on Jun 22, 2008 7:41 PM:

" First off Karl I don't think I ever mentioned in my post that we should drill. Perhaps you may want to re-read what I posted. Second, speculation doesn't just happen in oil and energy trading it is very common in equity, debt and every other market in the world. Speculation has been going on since the inception of the NYSE. One thing you and every other person fails to realize that speculators take risk. There once was an energy hedge fund called Amaranth Capital that doesn't exist anymore because of the fact that their traders were long when the market went short. Furthermore, you may want to educate yourself on the filing requirements of public companies especially the "investment banks" you mentioned in your letter to the editor. The auditing standards today are far stricter than they were during the Clinton years (think Enron, Worldcom and Tyco to name a few) so your deception argument is pretty weak much like your argument altogether. "

movedsouth wrote on Jun 22, 2008 2:30 PM:

" Yes, the price of gas IS because of futures trading! "

brew1234 wrote on Jun 22, 2008 12:49 PM:

" What don't you people understand in Karl's post? High oil prices are a result of unethical futures trading and have nothing to do with supply and demand. You are all panicing because of what the price at the pump is doing to your life. Don't give the oil companies what they are manipulating the public to get. They already have more than enough oil leases that they are not drilling now and they also don't have the refineries to process the oil. They will just sell this oil to foreign nations that can refine it. Why don't they drill oil in the leased areas they have now? Because they don't want to increase supply. Congress needs to once again regulate futures trading as we did before bushie oil boy and his cronies took office. Then oil prices will fall like a rock. "

karl wrote on Jun 22, 2008 11:24 AM:

" demsarecrazy, it's a rebuttal, not a tutorial.
My purpose and intention in this letter was to dispel the diversionary hype and blame from the likes of Kufs, which is only further seeking to politicize the issue, and does NOTHING to truly inform the public about the REAL problem!
The public should not be duped into believing that, by simply opening up the ANWAR and offshore drilling sites, that it's going to change one damned thing. All that would do is justify the endless usage of, and pandering to, the Big Oil companies.
Why are companies still posting losses? I don't pretend to know--deception? Gee, could they really be less-than-honest? WOuld it really surprise anyone?
Besides, at the same time, why then is Big Oil posting record profits consistently for months and months? I'm not saying that the Oil companies are NOT also just lining their pockets and profiteering as much as they can in the waning days here of the Bush regime, but there's only so much you can fit into one letter, so I had to choose what point I wanted to make.
You got a better theory? I'm all ears if you do. Just please don't spout any of that "Drill NOW!" crap! "

cm wrote on Jun 22, 2008 10:17 AM:

" I meant to post this HERE not on twocents-
When looking at the MAP section for the ban area that everyone wants lifted-I can see and agree some of it needs to be lifted-
ONLY IF there are better laws in place, demanding that MOST of the oil drilled there STAYS in the USA
NOT NOT NOT sold to other countries!!

Drilling still will not aid us until 2012, BUT WE need to get petitions out/write letters to our leaders demanding LAWS out into place NOW, or drilling will not help us in 2012 EITHER!

be sure to read thru most of the solutions & alternatives sections.
The map section/commentary was funny.

Under the Gas Prices & You the EXplainer section is a good aid to understanding how it works.

http://www.cnn.com/SPECIALS/2008/fueling.america/index.html "

demsarecrazy wrote on Jun 22, 2008 9:51 AM:

" Karl,
Clearly you are like any other dem that picks apart a problem and offers no solution. Every person in the US can hedge higher costs of fuel by simply buying an oil company's shares. If your statement about oil profits offsetting the losses from mortgage losses were true then why in the last week did Lehman Brothers post a $2.8 billion loss even though oil prices stayed at or near record prices? The democrats have controlled both Congress and the Senate for nearly 2 years yet I haven't seen a comprehensive plan to solve the nation's energy problems. "

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