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Falling energy prices September 5, 2008

Posted by truthspew in Uncategorized.
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How come diesel fuel and heating oil prices are still up over $4 per gallon. Don’t give me the shit that it’s because the fuel today was bought on futures. That’s bullshit and we all know it. But what this article does prove is that the price of a barrel of oil is manipulated by speculative bidding. That’s a serious no-no in most trading circles but because of the Enron Loophole, they don’t have to report transaction in the oil spot markets.

Nice huh? That’s the other thing, recently National Grid asked to drop an increase in natural gas prices by 4.6%, but then they want to increase the distribution charge by 5.4%. I’m just a little miffed on that one because I have to question, what the fuck have I been paying distribution charges for over these years that National Grid has owned the energy market in Rhode Island?

Sort of how we’re all paying for the burial of high tension lines that once stood over India Park. National Grid fought tooth and nail not to have to pay the cost, but yet they kept collecting distribution network charges from us like they’d done for years prior.

As I’ve said before, the deregulation of the energy markets in Rhode Island were from the perspective of the consumer a very stupid move. It gets worse, even though National Grid does business in Rhode Island they’re a NATIONAL company, so who regulates it? It certainly isn’t our Pubic Utilities Commission since they have no enforcement teeth when it comes to electricity and natural gas distribution.

Push the pendulum back, eliminate the Enron loophole and put the regulation of electricity and natural gas suppliers back in the hands of the state regulators. Don’t stop there, give the regulators the power to impose enormous fines for screwing over the ratepayers.

NEW YORK – Oil prices sank below $106 a barrel Friday as a jump in the U.S. unemployment rate signaled to traders that Americans might keep paring back their energy use to save money.

The Labor Department said the economy lost jobs in August for the eighth consecutive month — and at a faster-than-expected pace. The unemployment rate spiked to 6.1 percent from 5.7 percent in July, above the 5.8 percent rate that analysts forecast.

“There’s been a terrific amount of growing concern about the outlook for demand globally,” said John Kilduff, senior vice president of risk management at MF Global LLC. “Today’s employment report emboldened that concern.”

Light, sweet crude for October delivery fell $1.93 to $105.96 a barrel in afternoon trading on the New York Mercantile Exchange, after falling to $105.13, its lowest trading level since early April. Since surging to a record $147.27 a barrel on July 11, crude has dropped by over $40, or more than 27 percent.

What could possibly stanch the drop is a cutback in production. Investors are waiting to see if OPEC decides to restrict oil output at its meeting next week in Vienna in response to the two-month plunge in prices. The Organization of the Petroleum Exporting Countries has indicated it may take action to defend the $100-a-barrel level for crude.

But with the dollar on the rebound, many analysts say even a production cutback could prove ineffectual in boosting oil prices.

The dollar weakened modestly against the euro and pound on Friday after the employment report, but rose against the yen. The dollar’s recent comeback has helped accelerate oil’s price decline. Commodities were bought by many funds to hedge against inflation and weakness in the U.S. currency, so when the dollar rebounded, funds unwound those hedges, thereby driving commodities prices lower.

The jump in the dollar and the decline in oil has also been driven by signs of economic weakness in developing countries around the world — particularly those in Western Europe.

“It’s sort of a race to the bottom among the leading economies — Europe is ahead at the moment. That’s pumping up the dollar, or making the dollar economy seem much less worse,” Kilduff said.

Heating oil futures fell 5.59 cents to $2.9678 a gallon on the Nymex, where gasoline prices dropped 6.19 cents to $2.6785 a gallon. Natural gas for October delivery edged up by 4.1 cents to $7.363 per 1,000 cubic feet.

In London, October Brent crude fell $2.25 to $104.14 a barrel on the ICE Futures exchange.

In addition to economic indicators and OPEC, traders are keeping an eye on storms developing in the Atlantic. Forecasters do not expect Hanna, Ike or Josephine to head for key oil facilities in the Gulf of Mexico, but the hurricane season is not officially over until the end of November.

The Energy Department’s weekly U.S. oil inventory report released Thursday showed a decline in gasoline inventories last week that was smaller than expected. But the report also showed surprising drops in stockpiles of crude and distillates, which include diesel fuel and heating oil; analysts had expected increases.

U.S. gasoline demand has been hovering about 1.6 percent to 3.1 percent lower than a year ago, but demand for distillates is still higher than a year ago, according to Peter Beutel, head of the energy risk management firm Cameron Hanover.

Meanwhile, distillate imports are at their lowest level in years, he wrote in his research note.

“If any rally gets going, distillate is likely to lead it,” Beutel wrote.

___

Associated Press Writers Alex Kennedy in Singapore, Pablo Gorondi in Budapest, Hungary, and Joe Bel Bruno in New York contributed to this report.

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Oil down but oil and natural gas prices still up? August 13, 2008

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The following letter to the editor appeared in the Providence Journal this morning.

Jim Cummings: Cut electricity, gas prices next?

01:00 AM EDT on Wednesday, August 13, 2008

With the rapid decline in the price of a barrel of oil, can we expect to see National Grid and the Rhode Island Public Utilities Commission soon collaborating to announce a retraction in the dramatic price increase for electricity and natural gas they recently implemented?

Just curious.

JIM CUMMINGS

East Greenwich

The problem with oil and natural gas is that they’re both traded on ‘futures’ markets. What we’re paying now for gasoline and oil was set a long time ago. That’s why futures were developed, it started with agriculture and they didn’t like the wild fluctuations of pricing.

To me futures trading violates the law of supply and demand. When demand is higher than supply prices go up. When it’s the opposite, prices go down. But in setting a price for your product or service you want to reach what is called equilibrium.

The current futures market looks more like a boom-bust cycle. And how curious is it that way back in 2000 an insertion was made to an appropriations bill that removed most oversight of most markets. It was called the Enron Loophole. We all remember Enron don’t we? Ran the grid in California into the ground, their CEO was a friend and donor to George W. Bush.

That loophole allows big oil to trade without federal regulation. It also allowed a system of shadow banks to prop up to assume some of the debt for the trades.

And there was a recent move to close the Enron loophole but it failed. I hope they’ll try again but I think that big oil is getting the picture. Look at the declining price of a barrel of oil.

But it’s still wildly inflated. I recall reading a piece where an economist said that fully 60% of the price of a barrel of oil was based solely on speculation (Ie. Futures Contracts).

So when oil was $150 a barrel, it should really be $60 a barrel.

Chew on that one for a while.

AFA: Stop $10 Per Gallon Prices June 11, 2008

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The AFA is known for being, how shall was put this, rather ignorant about things in general. They’re usually off track when it comes to loving relationships, separation of church and state, and things of that nature. Now they’re off track on oil and gasoline.

Act now to keep your family from paying $10 a gallon

Tell Congress you want action on rising gas prices now!

Dear Anthony,

For the past 10 years Congress has refused to do anything to make our country energy self-sufficient. Because of their inaction, we soon will be paying $5 a gallon for gas with the possibility of $10 a gallon in the future. Their refusal to do anything has hurt nearly every family in America. Because environmentalists have kept us from developing our vast and plentiful energy sources, we are now at the mercy of foreign governments (many of which are hostile).

If you believe Congress should allow the exploration of energy sources which would not materially affect our environment, now is the time to send that message. Can your family afford to pay $10 a gallon for gas? They will be forced to if Congress doesn’t act now!

We have abundant energy reserves, but the environmentalists won’t let us use them. All efforts to provide for our needs end up in court because of the environmentalists! A handful of environmentalists are forcing all Americans to pay outrageous amounts for gas!

Will our families have to wait another 10 years for Congress to act? They will unless Congress hears from American families now.

Tell Congress you want common sense action now to reduce the red tape that keeps us from becoming energy self-sufficient!

I’ve discussed the real reasons for the increase in price of a barrel of oil. It has nothing to do with environmentalists but much to do with the companies that control the oil.

Just look at this series of graphs, you’ll see that while the northeast and west coast pay the most for gasoline, we drive comparatively little and pay a smaller percentage of income on fuel, whereas those who live in flyover country pay less for gas, but drive more and pay a higher percentage of income for fuel.

And it isn’t the companies you’d think, it’s oil extraction firms, major investment banks et al that are reaping the extreme profits. If you think the oil companies proper are making obscene profits, look at the banks. They’re making money hand over fist.

If Congress really wants to fix this, they need to break the banks away from the oil process. But to do so would be economically damaging as those investment banks are using oil profits to stave off insolvency.

I say good riddance. Indeed, we’re in for a rough ride. I was talking to my landlord the other day. He’s an old Italian guy, 90 years old and he lived through the Great Depression. He says that right now we are in a depression again. I can believe that, jobless numbers mount, rampant inflation, depression of the value of the dollar, and most of all productivity declines.

I also see news that they’re looking to extend unemployment benefits another 13 weeks, and then in areas particularly hard hit another 13 weeks. So in RI that means we’ll see another six months of unemployment insurance.

That is a sign. Another sign is that the number of people receiving food stamps and using local food pantries has gone way up.

And while we’re at it, maybe we can abolish the Federal Reserve once and for all? One of their key promises in forming that cartel was that it would eliminate the financial panics like recessions and depressions, yet the Great Depression of the 1930’s occurred on their watch, and the next Great Invisible Depression of the 21st Century is happening under their watch right now.

The simpletons at the AFA can’t understand that concept.

But we need to fight to stop this craziness. We middle class have been shat upon long enough.

Oil Prices June 10, 2008

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This is a very interesting analysis of the rising cost of a barrel of oil.

In essence several things come out of it:

  • Approximately 60% of oil prices are pure speculation.
  • That Enron sponsored the legislation to take away enforcement action from the board that was to regulate oil trading
  • The the Bush Administration holds a key position in this. Both Bush and Cheney come from the oil industry. Is it any wonder they managed to further erode the regulatory environment on oil trading?
  • There’s an interesting shell game going on in oil trading.
  • Almost all oil trading is controlled by U.S. and British concerns.
  • That the instabilities so famously reported have little to do with prices of crude oil.
  • The big investment banks are motivating much of the price increases.
  • This makes the push to war in Iran much more clear. There’s oil there.
  • This is going to come as a major slam on the Bush administration. Let us not forget that Kenny Boy Lay was a major donor to the Bush campaign. While I’m at it, lets not forget Cheney’s ties to the military industrial complex.

    The interference in our government by corporations has now reached astounding levels. We’ve let ourselves be lead down the primrose path. It’s time to rise up and fight back.

    A Market Driven by Speculation April 3, 2008

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    I’ve long thought that the price of a barrel of oil was artificially inflated and now someone comes and elaborates for me.

    The reality is that demand for gasoline has actually gone DOWN in the U.S. while reserves of gasoline are up. The same is true of oil demand and reserves.

    Refineries are scaling back because of the decrease in demand and the weakening dollar also puts its hand in to make us pay, pay and pay.

    Part of the offset in gasoline has been ethanol but that forced farmers to divert resources away from feed stock to use to produce ethanol which is why we’re seeing $4, $5, $6 and $7 a pound meat. You also have to factor in the price of transportation in your food because very little of what we ALL eat is grown locally.

    In essence, it’s the speculators driving the price of a barrel of oil sky high. And you’ll note that we’ve only been getting screwed since George W. Bush, a former oil man, has been in office. Any surprise there?

    There is some good news though. It seems that they’ve found a huge oil deposit, well not found they knew about it since the 50’s, but it is now economically feasible to extract a minimum of 200 Billion barrels of oil from North Dakota and South Dakota, though they think there might be 500 Billion barrels there which would be a 100 year total supply for the U.S.

    Wonder why fuel is so expensive? November 15, 2007

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    An article on Raw Story tells us that the U.S. military uses 340,000 barrels of oil a day.

    A barrel is 55 U.S. gallons. So that’s 18,700,000 gallons of oil per day, 6,825,500,000. Yes, 6.8 billion gallons. At $100 per barrel that comes up to $12,410,000,000. $12 billion dollars a year just for fuel.

    But even though 18.7 million gallons a day is only a twenty fifth total U.S. oil usage, you can bet your ass it helps increase the price.

    One of the biggest factors in oil pricing is fear. Fear of reduction in capacity to be precise.

    And by tapping out an extra almost 19 million a day, you can see supply goes up but so too does demand changing the equilibrium point so it now resides around $100 a barrel.