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Title: Leaked Documents Reveal Major Speculators Behind 2008 Oil Price Shock: Hedge Funds, Koch, Big Banks, Oil Companies
Source:
THINKPROGRESS
URL Source: http://thinkprogress.org/green/2011 ... ked-cftc-oil-speculation-data/
Published: Sep 15, 2011
Author: THINKPROGRESS
Post Date: 2011-09-15 18:57:58 by Brian S
Keywords: None
Views: 7917
Comments: 16
Last month, Sen. Bernie Sanders (I-VT) leaked confidential data about oil speculation to a number of media outlets, including the Wall Street Journal. Ordinarily, the Commodity Futures Trading Commission, the regulatory body that oversees futures trading, does not provide identities of speculators to the public. However, the data leaked by Sanders provides a rare snapshot into the trading volumes by major speculators right before the oil price spike in the summer of 2008.
As experts from Stanford University, Rice University, the University of Massachusetts, and authorities have concluded, rampant oil speculation was the prime driver of the record high prices for crude oil three years ago.
To view a copy of the data, click here for documents leaked by Sanders. To view an organized spreadsheet, click here.
Notably, the top speculators are noncommercial players, meaning they are companies that simply and buy and sell crude contracts with no interest in actually refining and selling the product. Each contract in the list represents 1,000 barrels of oil. The documents show the total volume of trades made on one specific day shortly before the record high price of $148 per barrel.
The data, though revealing, still does not give a complete picture of trading strategies. Speculators invest in multiple private exchanges, and trading tactics can shift from day to day. Moreover physical plays, such as buying up large quantities of actual oil and storing it on tankers or in large containers, are still largely hidden from public view.
Tyson Slocum, an oil speculation expert at Public Citizen, reviewed the documents and spoke with ThinkProgress. He said that this data is important because it shows who the “big players are” and underscores the need for transparency and regulation in these so-called dark markets:
SLOCUM: What this tells us is who the big players are, because volume equates market share in a way, if you are driving volume, and if your volume is at a significant enough amount you become a price setter or at least a price trender where you’re going to have the effect of unilaterally influencing prices and that’s very significant. And you’ve got sort of a cascading effect, and the smaller traders are going to follow Goldman Sach and others will chase the leader, which is why Dodd Frank said Congress shall set position limits in these markets. Position limits would limit the market share, limit the positions banks could take. Dodd Frank recognizes the danger that one or two traders can have when they dominate the positions in a given market.
Professor Michael Greenberger, a former CFTC official, told ThinkProgress that the “short” positions outlined by the document might cause confusion because in many cases banks act simply as intermediaries for their clients. Critics will note the net short positions and assume incorrectly that many of these players were simply betting on prices to go down, not up. Greenberger explained that if you look closer at the data, the trading shows banks and other speculators were actually pushing the price up:
GREENBERGER: When you look at it carefully, the speculative money has all been heavily weighted in the favor of buying in the direction of the price going up. […] They go in and buy long in the regular futures market, which sends a long signal to the market, that there’s a supply problem that really doesn’t exist. To keep their long bets in place, they have to do something called the “Goldman Roll,” which is these contracts don’t go on forever. They expire. So what they have to do is sell short to get out of the contract when the expiration takes place, then roll around and buy long again to keep the long bet on the books. So the long bets are predicated on intermediate short bets, that are canceled out within three or four days of each other.
Regardless of the actual trading strategies, the volume makes clear that not only were Goldman Sachs and Morgan Stanley, as well as pension and sovereign wealth funds, among the top participants in the oil speculation bubble, but so were politically connected hedge funds. Elliott Management, one of the top hedge funds revealed by the documents, is led by Paul Singer, a billionaire investor and a major donor to Karl Rove’s network of attack groups and to Republicans on the Financial Services Committee.
As we have discussed on this blog, “all the major oil companies (Shell, BP, Occidental, etc) operate like Wall Street investment banks and use their privileged position in the oil market to make speculative bets on the price of oil.” An accidental leak of private Chevron data two months ago confirmed that the company relied on sophisticated speculation strategies, just as much as drilling and refining oil, to make a profit. This data seems to confirms that Koch Industries — a conglomerate that has admitted that it is among the top five oil speculators in the world — participates in the oil speculation market on the level of big banks.
The Dodd-Frank law passed last year contains a mandate that the CFTC crack down on rampant oil speculation by imposing position limits to curb the number of contracts held by participants in this market. As lobbying firms have spent months fighting these new rules, it is instructive to note that the biggest players 2008 oil price spike have also flooded campaign coffers of DC politicians, potentially hoping for influence in shaping these rules or weakening the CFTC’s hand (through budget cuts and other limitations). MapLight has compiled the campaign donations for some of the largest speculators revealed by Sanders’ leak, which can be viewed on this spreadsheet.
For more on Koch Industries’ role in deregulating the oil speculation market, carving out the infamous loopholes, and actually inventing the first oil derivatives, view our report here.
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This is just too much to take.
Hedge Funds, Koch, Big Banks, Oil Companies...
It's a left-wing bonanza!
Don't forget those pesky ATM machines.
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#2. To: jwpegler (#1)
The fixation with the Koch Brothers by leftwingnuts is hilarious.
Proxy IP's are amusing.....lmao
#3. To: Badeye (#2)
The fixation with the Koch Brothers by leftwingnuts is hilarious.
The left has a fetish about the Koch Brothers. It's creepy.
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#4. To: jwpegler (#3)
They needed a replacement for Haliburton lmao
Proxy IP's are amusing.....lmao
#5. To: Badeye (#4)
They needed a replacement for Haliburton lmao
They move from demonizing one person, company, or industry to another, leaving a trail destruction in their path.
The left has nothing to offer but fear itself.
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#6. To: jwpegler (#5)
Whats really amazing is the stunning silence from the Leftwingnuts over the Solyndra scandal.
Proxy IP's are amusing.....lmao
#7. To: Badeye (#6)
Whats really amazing is the stunning silence from the Leftwingnuts over the Solyndra scandal.
It demonstrates how hypocritical they.
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#8. To: jwpegler (#7)
It demonstrates how hypocritical they.
True.
But then we have the stunning DEFENSE of Sarah Palin in the past 48 hours from quite a few well known leftwing media outlets, not the least of which is the New York Times.
Could the leftwing of the political world be having a breakdown? lol
Proxy IP's are amusing.....lmao
#9. To: Badeye (#6)
Whats really amazing is the stunning silence from the Leftwingnuts over the Solyndra scandal.
The left already knows capitalism does not work.
With the economy still in the dumper -- maybe permanently? -- and full-time jobs becoming as scarce as rain during a drought, huge percentages of Americans have had their (misplaced) faith in the American dream shaken, the upper-middle-class consumerist lifestyle is exposed as a mirage for anybody who plays by the rules. Capitalism and the America that embraced it as a way of life is now and forever more a failure. It does me good to know that the generation that voted in Reagan and his ideology will see their America die from that ideology before their very own eyes and knowing they had a hand in its destruction.
#10. To: Godwinson (#9)
The left already knows capitalism does not work.
rjotflmao.
The Left doesn't know HOW to make it work, as Owe-bama demonstrates daily.
Proxy IP's are amusing.....lmao
#11. To: Badeye (#10)
The Left doesn't know HOW to make it work, as Owe-bama demonstrates daily.
Capitalism is supposed to work regardless of govt. In fact Obama has to do nothing and it should be humming along. But capitalism is a failure like Communism is a failure. But because Americans are cowards, they can't face up to the fact that their economic system failed - so they double down on failure.
With the economy still in the dumper -- maybe permanently? -- and full-time jobs becoming as scarce as rain during a drought, huge percentages of Americans have had their (misplaced) faith in the American dream shaken, the upper-middle-class consumerist lifestyle is exposed as a mirage for anybody who plays by the rules. Capitalism and the America that embraced it as a way of life is now and forever more a failure. It does me good to know that the generation that voted in Reagan and his ideology will see their America die from that ideology before their very own eyes and knowing they had a hand in its destruction.
#12. To: Godwinson (#11)
In fact Obama has to do nothing and it should be humming along.
Are you related to 'mining gold'?
I only ask because you are demonstrating a level of ignorance here I've only seen one other time, and that was via ming in the past 36 hours here.
Proxy IP's are amusing.....lmao
#13. To: Godwinson (#11)
The financial crisis is an example of Capitalism at work. The losers got sorted out very quickly... BTW, you know Boofer's biz is closer to tits up...
America...My Kind Of Place...
"I truly am not that concerned about [bin Laden]..."
--GW Bush
"THE MILITIA IS COMING!!! THE MILITIA IS COMING!!!"
--Sarah Palin's version of "The Midnight Ride of Paul revere"
I lurk to see if someone other than Myst or Pookie posts anything...
#14. To: Badeye, Godwinson (#12)
Are you related to 'mining gold'?
Just because someone else sees the obvious flaws in capitalism doesn't mean they are the same poster, Boof.
#15. To: mininggold (#14)
Just because someone else
...is an idiot doesn't mean they are related to ming.
Fair enough.
Proxy IP's are amusing.....lmao
#16. To: Badeye (#15)
LF has an edit feature.
America...My Kind Of Place...
"I truly am not that concerned about [bin Laden]..."
--GW Bush
"THE MILITIA IS COMING!!! THE MILITIA IS COMING!!!"
--Sarah Palin's version of "The Midnight Ride of Paul revere"
I lurk to see if someone other than Myst or Pookie posts anything...
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