This was accurately predicted a few weeks ago.

they squeezed our their private taxation, the suckers still in there take a loss, and they will be back soon enough.

Since there’s is absolutely nothing to stop them, and since they are pretty much certain to make vast sums of money, they would be stupid not to keep doing this, till someone with the power puts an end to it.

and that’s not too likely.

and, although every drop of gas sold retail, is instantly jacked up to reflect the speculation, how long will it take to drop down? oh, that takes longer doesn’t it. keep squeezing fellers.

of course, it’s a free market isn’t it?

The word “speculation” never appears in the article

Doesn’t need to, Lynch made it all very clear when he referred to the bubble popping. My question is: How much of our economy is dependent on this predatory casino gambling, and when we Americans say enough?

Crude Oil Prices Collapse

Narrative on Bin Laden Raid Collapses

D-Day word of the day: “Collapse.”

At least it’s better than “Prolapse.”

HuffPo heading asks, “Gambling On Hunger: Is Wall Street Fueling Global Unrest?” Yes and they have been for sometime now. I’ve been following this on financial pages for several months (e.g. “Johann Hari: How Goldman gambled on starvation,” Independent.Co.Uk, July 2, 2010) showing that HuffPo broaches this subject after the fact of the takings.

Tangential– Update on Murdoch’s monopoly plans regarding the UK media:

Firstly (and these are my words), wait for Andy Coulson to resign as David Cameron’s most senior aides, which depoliticised the story by ending daily calls from the Labour party for his removal. Some speculate that senior NI executives urged this course of action on Coulson for that very reason, of course.

Secondly, hold tight until the government approves parent company News Corporation’s proposed takeover of BSkyB, which would give commercial competitors, including Guardian Media Group, publisher of the Guardian, one less reason to investigate the scandal, having fought and lost a battle to prevent the deal winning regulatory approval.

More in “Phone hacking: NI’s crisis management” (Guardian.Co.Uk, May 5, 2011)

Ok… so we are upset about gas prices… But this has been happening for years with natural gas. Speculators determine mor eor less what my gas bill is in the winter. It fluctuates wildly from year to year and even month to month. My bill would jumps for like $10 to $80 every December regardless of usage. Tempatures and consumption have little to do with your bill. I swear I have even gotten a note in a bill explaining that speculators where the reason the this bill was so high so dont cry to us about it.

Dirty sons of bitches; they are like Bonnie and Clyde. Shoot and rob eveyone and when the feds start to come after them they find cover and run and hide. Next to lobbyists and grave robbers these people are the worst.

Four problems with your narrative:

1 — The recent run-up in crude prices is directly traceable to the disappearance of Libyan oil from the market, as a result of their civil war. Since oil use is relatively price inelastic, the price tends to jump when a major producer goes off-line for any reason.

2 — We, as a species, are bumping into serious supply constraints on petroleum. We slammed into them headlong in the summer of 2008, which is what led to the price run-up (oil consumption isn’t very price-elastic in the short term) and helped trigger the crash.

Blaming speculators is fun and easy and lets you forget the far scarier fact that peak oil has slipped from the distant future into the present. It also lets you ignore the part you, and everyone you know, play in what is happening. According to the EIA (generally a pretty bullish organization, and certainly not a traditionally peak-savvy one) global production of conventional oil peaked in 2006. What’s sustaining supply is unconventional oil (like tar sands) and natural gas condensates. If that doesn’t scare you at least a little bit, you do not understand the degree to which the global economy depends on cheap energy.

3 — If you’ve been paying attention to the employment numbers (especially the most recent new unemployment claims) and other economic indicators, you have noticed what looks like an oncoming dip in our multi-dip recession. This would cause a reasonable person to conclude that oil demand is likely to fall again. Additionally, the 2008 run-up convinced a lot of people that they needed to cut back on their energy consumption, and the change in behavior appears to be somewhat stable.

4 — It is not unreasonable to believe that the death of bin Laden will make the middle east more stable, not less. I don’t really think it will unless it leads to a quick roll-up of al Qaeda and subsequent US withdrawal. I am certain it improved the moods of many traders. Markets are social organizations of humans — sentiment and mood are at least as significant to short term price movements as any rational calculations.

So who do the American working tax payer need to bail out this time?

ethanol producers, wind farms, solar power, Amtrak, farmers, sugar producers. I could go on.

Amen. Could not agree more. Let me just add that about 70% of the recent run-up in oil prices can be attributed to the declining US dollar. So it only makes sense that as the dollar firms, the price of oil will drop.

Seems that to many, “speculation” is a dirty word though, and the root of all evils. Too bad they don’t understand how hedging is used by everyone from the local farmer to major airlines to generate price CERTAINTY and minimize price risk.

. Let me just add that about 70% of the recent run-up in oil prices can be attributed to the declining US dollar.

can you explain this please? thanks.

(This took me hours to write; it’s too damned busy around here!)

Ha. People really think that the market is driven by fundamental analysis and logical events, but much of price pressure–both up and down–is completely due to speculative trading. I’ve done it, it’s like Vegas on Wall Street, addictive, and potentially very lucrative if you figure out the trend and jump on and off before the rest of the sharks.

There are a couple of other couple of things to consider in oil and gas prices:
the recent refinery shut-downs for maintenance, which has to be completed soon or it starts looking (obviously) like manipulation and starts costing the companies serious money by not producing and selling product;
the issue of political will in the face of $4+ prices ($5+ diesel)–these prices seem to trigger anger to the level that political action starts being an option, and while oil companies enjoy pricing freedom, they do not want to actually push the electorate to the point where anger is high enough to actually do something.

OK, all these factors are reasonably true.

And these factors are exactly what traders trade on. News, speculation, indicators of changes in the market for a commodity, and trading trends themselves (which multiplies the above).

So, as a case, lets say Libya is aflame this week, which means there’s concern in the market about the pinch of Libyan oil availability, which means folks are wanting to hedge the market, which drives the price up. Good so far. Now if I’m trading, I see this and work out that the price will climb, and buy some futures, driving price further.

Trading may not actually cause the initial price rise, but it certainly jumps on board and amplifies the trend.

By the same token, when it seems the runup has run out of steam, I’m out of there before everyone else so I can lock in my gains, which everyone else does too, causing a sudden decline (that looks weird and confusing to everyone thinking the price is based wholly on fundamentals.)

in my humble estimation, this is really big news.
If it is like you suggest and I suspect the traders are worried by Holder’s comment in the last several days that initial evidence in investigating the speculation of oil et al was ‘disturbing’…
then we may have a new paradigm of activist/gov collusion against fraudsters and their (at least) initial willingness to respond positively to such activism.
This gets me excited for the [b]real[/b] possibilities of what FDL et al can do. Responsiveness of gov to clamor and consequent market responses to such probing.
There are a number of good news items in the last week and bodes well for the future if we can turn up the heat and keep poking around.
Yes, I’m still thinking this might work if we work it.

Here you go: InsideJob.Org

I agree with a lot of your points. I keep saying that oil futures speculation can’t be the main driver in rising gas prices. Spot prices drive futures prices and a circular relationship doesn’t make sense. However, i’ve been told by a very knowledgeable person (former Exxon employee, Chemical Engineer, and Harvard MBA) that “spot” oil prices don’t mean anything. Given that, the whole Oil futures and commodity speculation is a game with insiders and traders gaming the system. That, I buy.

Just as likely, big investors have merely changed their position, or hedged, and are now raking it in in the decline.
why wouldn’t a savvy MOTU expect – as the least bit of reportage of speculation made the news, and people see for themselves that demand hasn’t budged, that the only way to continue the profit making was to “correct” their position.
I’ll leave it to Taibbi to flesh out the details, and expect to see the same old, same old propreitary trading that just happens to be contra the “advice” to the rubes.
Just sayin’

Please stop with the “speculation is not behind the rise in oil prices” meme because it’s simply wrong.

Supply and demand has not caused oil prices to shoot up 40% in 12 months, because China, India and the US has not increased demand 40% over that same time frame.

In fact, the world is awash in oil today. Libya is all of 2-3% of US oil consumption and easily made up by the Saudis.

Similarly, demand has not gone down 10% over the last two days as crude prices have, either.

Get the speculators out of the markets-enforce position limits and require physical receipt of oil when purchased through futures contracts. Prices would drop another 50% in a week.

the most likely explanation is that the smart money rotated out of commodities in the past few weeks and the little guys are all getting stuck with forced liquidations of their futures contracts. leverage is a killer when the ballon starts to deflate.

thanks, its pretty simple isn’t it.

which is why when the supporters of these activities explain them, it is incomprehensible. and nonsensical.

Yes, and don’t forget storage. Inventories don’t rise with prices if its all supply and demand.

Not to mention all the cheap cash that is available to speculators thanks to our governments rich welfare program.

$4/gallon?

We’d be dancing in the streets @ $4/gallon gas here in Hawaii.

Price has just topped $5/gallon.

Speculation on the market is the engine which runs everything important decided by the Powers That Be, a cruel fact we have been all to slow to recognize but it is sadly the way things are. Our homes were snatched and traded in this manner, our jobs went overseas and ‘are not coming back, so there’ and all the important decisions this administration has made have been market oriented, not people oriented. Civil servants they are not.

I don’t see how anyone can pretend or believe that something above board is going on here. These are purely and simply waves of greed for illgotten gains which the public doesn’t see and cannot in any way be helped by. I for one would not mind at all if gasoline prices went up and the profits went to development of alternative renewable planet supporting energy systems. That’s not happening – the profits go into the pockets of the casino owners.

I will explain this to you again, because you do not get it.

1 — Oil demand is not particularly elastic with price. That is because people and companies mostly use oil for things they cannot conveniently stop doing. If you drive to work (like most Americans), think about how much more you’d be willing to pay for transportation, and what kind of dislocations you would have to go through in order to cut your commuting fuel use by 25%… and how long they’d take for you to implement. Then realize it’s as or more difficult for most of the other people around you.

2 — As a result of that, a small constriction in supply will cause a large and fast increase in prices with little to no change in demand. Consider what would happen to the price of food in your town if suddenly only 2000 calories per person per day was available. Prices would skyrocket.

3 — Oil is a global commodity; discussing the US market in isolation is idiotic. Libya provided approximately 1.5 – 2 mbd. No one else in the world has that kind of spare capacity, particularly not the Saudis.

Please (and most respectfully) spare me.

I have worked in financial services over 25 years and nothing you write is going to change my perspective on the greedy SOB’s that go to work every day on Wall Street.

You might convince others around here with your expansive diatribes that attempt to explain away what is pure and raw greed, but not me.

But, also take comfort in knowing I’m not trying to change what you believe, either.