U.S. Embassy Attacked in Yemen; 16 Killed? | Main | Your Daily Dose of Insanity
September 17, 2008

President Bush Threatens Veto of Poison-pill Laden Drilling Bill; Oil Falls to $90/bbl

So far, Republicans have managed not to cave on offshore drilling (though ANWR seems to be out of the question). House Democrats passed a bill which would allow energy exploration on the Outer Continental Shelf, but sharply limited drilling closer to land. The bill would also increase the tax burden on oil companies to subsidize wind, solar, and conservation programs. President Bush says "no deal" and it looks like Senate Republicans will keep it from a vote.

Oil fell to near $90 per barrel today, the lowest it has been in seven months. Following the financial mini-crisis over the weekend, I bet Saudi Arabia is sending a big "I told you so" to the rest of OPEC. Of the oil producing states, Saudi Arabia seems most concerned with keeping the price of oil low enough to stave off the development of energy alternatives or a world-wide economic slump, either of which would cause oil revenues to plummet.

In related news, the Commodity Futures Trading Commission actually looked through the data and discovered that speculators were not manipulating the market to cause prices to skyrocket.

Lo and behold, the CFTC found that index traders and swap dealers actually reduced their stake in crude oil futures as prices spiked. The number of contracts held by these investors betting that prices would increase -- the net long position -- fell by 11%, and more were shorting oil than going long over the six-month period. In other words, index traders and swap dealers were driving the future price of oil down.

Commodity index funds also have a much smaller share of the oil market than everyone thought: just 13%. Even if the figure was 70% or more, as some assumed, it wouldn't have mattered. In a futures exchange, trades are matched, so one trader's gain is another's loss. The overall volume is irrelevant.

The CFTC study is especially notable because it came in response to extraordinary political pressure. Congress held more than 40 hearings on "speculation" over the summer, and commission chief Walter Lukken was the pinata. Federal bureaucracies have been known to try to appease their Congressional funders, so the CFTC deserves special credit for debunking the speculator frenzy.

Don't expect this to stop both presidential candidates from blaming the boogeyman for high gas prices.


digg this
posted by Gabriel Malor at 10:54 AM

| Access Comments




Recent Comments
Your Decidedly Devious Uncle Palpatine, Booking Agent, Aero Pinochet: "Dear Santa - This year, I've been very good, for s ..."

Bear with Assymetrical Balls: "I still have my Charlie Brown Christmas LP from wh ..."

Miklos, not from Fusion anything: "Oh Lord. Now Palp has another fundraising oppor ..."

Cicero (@cicero): "We have all these eucalyptus trees in CA through t ..."

JAS: "OK shitheads. Here is the story of eucalyptus in ..."

no good deed : "I like the "they say" it translates to Caucasian. ..."

logprof: "Wow, a Herman Cain sighting. ..."

Northernlurker : "Stop with the mariaci music. ..."

ALH: "The news showed film of the California wild fires. ..."

Blanco Basura - It's OK, I'm with the banned: "[i]Middlin'. How are you?[/i]Sick, but better the ..."

Cicero (@cicero): "Is this the ONT? Like Shep Smith's sexuality, the ..."

logprof: "Mark Knopfler himself has self edited that song. S ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64