Why the Oil Price keeps Increasing

July 11, 2008 by Dr. Diego Rodriguez

FALLING OFF THE PRECIPICE?

Sometimes the price of oil drops sharply. Like it did on 8 July 2008. Plummeted right down by $4. (Eileen Ng, Oil prices holds steady after sharp $4 drop, AP, 8 July 2008 ) All the way down to about $141 per barrell. (id.)

WHAT IT REALLY COSTS

That’s the oil that costs $5.26 per barrell to produce in the Middle East. (Performance Profiles of Major Energy Producers 2006, Energy Information Administration, United States Department of Energy, http://www.eia.doe.gov/emeu/perfpro/tab11.htm

HUGE PROFITS

That’s a 100% markup? Noooo. 1000%? Oh, no. Much, much more.

The amount of money they take in is unrelated to costs of production.

“Prices these days have moved totally unconnected with the crude’s fundamentals.” (Koichi Murakami, cited in Gillian Wong, Oil Prices Steady Above $106 a Barrel After Overnight Plunge, AP, March 18, 2008 )

This introduces the role of speculation:

AP says so: “the sinking U.S. dollar and speculators have been key drivers behind oil’s doubling in price over the past year to record levels.” (Madlen Read, Oil rises on Middle East tension, supply worries, AP, 10 July 2008 )

And so does Fox:

It’s time to speak the truth. No more disingenuous questioning and wondering. No more exasperated resignation. We know the reason why oil prices are high, and it’s time to admit it and do something about it.

Oil prices are high because of speculation, pure and simple. That’s not an assertion, that’s a fact. Yet rather than attack the speculation and rid ourselves of the problem, we flail away at the symptoms. High gasoline prices?

Oh, let’s use hybrid cars, or drill in the Rockies or off the California coast.
How about doubling the use of ethanol, even though it costs more to produce than the energy you get out of it? Then again, we can go to Alaska, or build more refineries, or triple the number of nuclear power plants. Sound good? (Commentary by Mike Norman for FOX Fan Central, The Danger of Speculation, FoxNews.com) (emphasis added) (photo FoxNews)

The prices are unrelated to costs of production. Fox News expert Mike Norman says speculation is the cause. And he’s right. What else could it be?

in order that freedom may once for all disintegrate and ruin the communities of the GOYIM, we must put industry on a speculative basis (Protocol 4)

RUIN

“EasyJet warned that the high cost of fuel will force more airlines to the wall this year as it admitted that profits are at the mercy of the global oil price.” (Dan Milmo, Easyjet says airlines at the mercy of oil prices, The Guardian, 7 May 2008 )

DEFINITELY NOT A SUPPLY PROBLEM

Tell me, how is it free when speculators rule the roost? It’s one thing when they do what they do with pieces of paper called stocks, but it’s another when they do it with a vital commodity like oil. We saw the devastation their Behavior wrought in the 1990s, and we’re witnessing it again right now.

Moreover, it would be one thing if they were right and buying oil for all the right reasons. But they’re not.

Recently we saw crude oil supplies rise to a six-year high. Gasoline stockpiles were at a three-year high. Distillates have come back from a steep deficit to inventory levels that are now above where they were last year. Natural gas inventories reside well above their five-year average. (Mike Norman, supra) (emphasis added)

THE SPECULATORS HAVE A HOME

The New York Mercantile Exchange is the preeminent energy futures market in the world. It has become the price-setting mechanism for oil. Even OPEC refers to NYMEX when it sets its price targets. (Mike Norman, supra)

Even though Mr. Norman is unable to identify the speculators by name, he correctly identifies New York as their base of operations. He also mentions that they control the stock market.

New York is, of course, the largest Jewish city in the world.

“The New York metropolitan area is home to the largest Jewish population in the world outside Israel. New York City’s Jewish population in 2001 was approximately 1.97 million, 1.4 million more than in Jerusalem but 600,000 fewer than in Israel’s largest metropolitan area, denoted as Gush Dan. However, the city of Tel Aviv proper (within municipal limits) has a smaller population than the Jewish population of New York City proper, making New York City’s the largest Jewish community in the world.” (Demographics of New York City, Wikipedia) (pic: http://www.destination360.com/north-america/us/new-york/images/s/new-york-city.jpg)

ATTACKING THE SPECULATION

Mike Norman says, “Attack the speculation”.

How does this work?

Maybe we have an example from history. Say, from the days of King Edward I.

Back in 1278, the Jews had been clipping the coin on a mass scale. Jews engaged in practices like “shearing”, where they filed the edges of the coins. “Clipping” involved cutting off the edges. They were even “forging” (coating a core of base metal with the melted clippings).

The penalties for these offenses were increased from expulsion to execution, but the Jews weren’t afraid. They had heard these lines before plenty of times.
On 18 November 1278, many of these Jewish criminals were arrested. At least 600 were accomodated in the luxurious Tower of London. After a full and fair trial, some 269 were executed in accordance with the law. (Richard Levy, Antisemitism: A Historical Encyclopedia of Prejudice, ABC-CLIO, 2005, pp. 132, 133)

The great King Edward had no problem figuring out who was working the economic ruin of his kingdom. He set the legal process in motion, and solved the problem. While execution seems a stern remedy in these modern times, there are plenty of penalties short of that which could solve the problem in a flash.