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Business Title: Leaked Documents Reveal Major Speculators Behind 2008 Oil Price Shock: Hedge Funds, Koch, Big Banks, Oil Companies 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.
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:
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:
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. Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Begin Trace Mode for Comment # 7. 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.
#2. To: jwpegler (#1) The fixation with the Koch Brothers by leftwingnuts is hilarious.
#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.
#4. To: jwpegler (#3) They needed a replacement for Haliburton 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.
#6. To: jwpegler (#5) Whats really amazing is the stunning silence from the Leftwingnuts over the Solyndra scandal.
#7. To: Badeye (#6) Whats really amazing is the stunning silence from the Leftwingnuts over the Solyndra scandal. It demonstrates how hypocritical they.
Replies to Comment # 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
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