Global Investing

Growth in oil futures outpaces oil consumption

June 6, 2008

oil_graph1.gif

Here’s a look at the average daily volume of oil futures on the NYMEX expressed in terms of global consumption of oil. As the chart makes clear, the number of paper barrels traded every day on the NYMEX is now over three times the number of actual barrels consumed every day worldwide. On Friday, as oil surged to a record $139 a barrel, the volume on the NYMEX was over 5.2 times average daily consumption. The chart gives some indication of the boom in oil and commodity futures in general.

Comments
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The analysis and comments of Ole Slorer of Morgan Stanley must be examined.
There is a funny oder here somewhere.
Who were the main traders a few minutes before his comments? Follow the money guys !!

Posted by Duane Barber | Report as abusive
 

Just another bubble forming here. When the traders/speculators get out of the market gas prices will return to a lower level. Until then the bigger the bubble, the bigger blood bath when it bursts. And it will burst. Hopefully many speculators are bathed in red.

Posted by Bruce S. Mitizk | Report as abusive
 

The Democratic Congress needs to approve domestic oil drilling where we have over a hundred billion barrels that they put off limits. By just approving it, you would see all those speculators start selling and the price would drop.Unfortunately Congress won’t do this because they want high oil prices. They know that the mostly uninformed voters will blame the president and probably elect more democrats.But we just gave them control of Congress in 2006 when gas prices were 2.26 a gallon which means they will most likely double in 2 years.Elect more democrats and we will soon see $10 a gallon gas.

Posted by Dave Pennypacker | Report as abusive
 

America Urgently Needs A National Discourse On Our Energy Crisis BEFORE Our Economy Implodes.

The average American is appalled at the ever escalating price of gasoline/transportation costs and the impact that these costs are having on the family budget. Further, as we’re well aware, transportation costs ripple through the entire American economy on every essential commodity that we’re required to purchase such as food. The latter being accentuated by an erroneous emphasis on an inefficient petroleum substitute, ethanol, which actually inhibits our attempts to achieve higher mileage standards. Although, it must be noted that the replacement of lead via the 10% ethanol blend was certainly a positive step. In an America with POTENTIALLY vast energy resources, why have we allowed ourselves to become willing victims of cartel energy piracy from highly unstable, unfriendly fanatical regimes, from whom we now import a substantial segment of our petroleum needs? Imports which continuously drain wealth from America in the form of an unfavorable balance of trade; and, conversely flow petro-dollars into the coffers of Islamofacists and others who would destroy America given the opportunity. Were it not for America’s dependence on these Middle-East petroleum imports, we could conveniently extricate ourselves from this cauldron of fanaticism; and, allow the fanatics to wallow in their self imposed misery and virulent hatred for Western culture.

The fundamental question is WHO do we blame for this self-imposed dilemma?

America originated nuclear power; and yet, we produce only 20% of our domestic electrical energy from the nuclear option while countries such as France produce 78%, and have programmed significantly more, dramatically reducing their dependence on fossil fuels. The safety issue on nuclear power is a non-sequitur given the hundreds of thousands of operating hours on U.S. Naval nuclear propulsion systems without incident. But yet, LEFT-WING FRINGE ELEMENTS in our society THAT COMPRISE A SIGNIFICANT PORTION OF THE BASE OF THE DEMOCRAT PARTY have for 30yrs. managed to bring America’s nuclear industry to a standstill.

Our Nation possesses an abundance of untapped petroleum reserves off our coastlines; in the Alaskan wilderness; and, in the form of hi-quality shale oil in the Rocky Mountain region where we have the equivalent of ten(10) Saudi Arabia’s in recoverable reserves. And yet, we have permitted LEFT-WING FRINGE ELEMENTS to inhibit our access to such deposits. The incredible irony is that the CHICOM are exploring for oil 45miles South of Key West, while we have prohibited ourselves from exploiting the same resources. Had Bill Clinton, in ’95, not vetoed the Republican controlled Senate approval of drilling in ANWAR, exploration which has been previously proven to be beneficial to the Alaskan Caribou herds, we would have had an additional one million barrels of domestic oil production on-line TODAY; and, a concurrent reduction in the at-pump price of gasoline of $1/gallon. Further, there is an inherent synergy to be exploited between Nuclear Power and Shale Oil Extraction. Concurrently, Hillary Clinton and Barrack Obama, ensconced in their own vision of scuttling fossil fuels, have both pledged to confiscate the profits of America’s Energy Companies. A move that would cripple our capacity to explore/develop additional petroleum reserves; greatly exacerbate our dependence on foreign sources; and, dramatically further increase the price of fuel at the pump.

America has the largest reserves of coal in the world; and, a full 50% of our domestic electrical energy generation is dependent on this resource; and yet, LEFT-WING FRINGE ELEMENTS continuously attempt to restrict the use of these coal reserves; and, to impede attempts to develop technologies/facilities for the gasification of coal. Bill Clinton struck a major blow to America’s accessible coal reserves when he unilaterally, over the objection of State officials, placed the Red Hills of Utah with an estimated Four(4) Trillion $s worth of high quality coal assets off-limits. Fearful of mass protests, Clinton wouldn’t even go to Utah to announce his heinous restriction; but, rather chose to make his proclamation from the relative security of Arizona. Clinton’s actions represented a major financial windfall for his Riady Bros. bankrollers who were in competition with Utah to sell their Indonesian coal holdings to the CHICOM. Ever wonder why Clinton refuses to release the Donor list for his “Foundation”!

Even our Hydro-Electric potential has been brought to a standstill by LEFT-WING FRINGE ELEMENTS over such nonsense as the Snail-Darter. Water resources which could as well now be playing a major role in mitigating the effects of the drought that has recently griped the SouthEast.

Much of the hype over fossil fuels has again been exploited by LEFT-WING FRINGE ELEMENTS over the mythical impact of MAN MADE CO2 emissions on Global Warming. Such proclamations totally disregard the complete lack of correlation between recorded atmospheric CO2 levels and recorded Global temperatures. On Earth as on Mars, where no controversy of Man Made Global Warming factors exist, surface temperature variations precisely track the recorded fluctuations in Solar irradiance. Further, satellite observations, which are NOT influenced by proximity to ground based heat-sources, have confirmed that there has been NO global temperature increase over the last ten years. Ask our self-inflicted dyslexic friend, Al Gore, to explain these recorded contradictions to his Man Made Global Warming hype. The silence is deafening Albert!

Imposition of overly burdensome regulatory criteria and an application morass principally sponsored by LEFT-WING FRINGE ELEMENTS, have made the expense and reduced profitability of investing in additional refinery installations prohibitive. The inevitable result being that a new refinery has not been built in the U.S. since 1976 as corporations have shunned such capital projects creating a restrictive “choke point” in the availability of gasoline products. This “choke point” where refineries are continuously required to operate at peak capacities makes the availability/distribution of refined products within our Nation readily vulnerable to supply disruptions. Further, the dictated multiple blends of gasoline, frequently multiple blends within the same metropolis, have seriously complicated and inflated the time factor in the refinery task. Our entire Nation should express our gratitude and admiration to Union County, South Dakota for stepping forward to rescue America from such myopia with the programmed construction of the first refinery in 32 years; but, the LEFT is already circling the wagons, and looking for a liberal Federal Judge to obstruct.

To be certain, we CAN and we MUST achieve total energy independence; but, our Nation can only extricate ourselves from this self imposed dilemma by a broad-based, comprehensive NATIONAL ENERGY STRATEGY that BLENDS all of the elements of: conservation; major increases in transportation efficiencies, such as increased mileage standards; exploitation of our indigenous petroleum resources; fast-tracking of regulatory criteria; a significant expansion of our refinery facilities; major investments in nuclear energy; supplementation of our electrical grid with solar, wind, geo-thermal, and hydro technologies; and, a major investment in Research and Development to bring a Hydrogen and Fusion based economy to fruition. Unfortunately, to dig ourselves out of this self-created coffin-corner will require TIME. Time which simply means that, in the interim, we must protect our access to unstable Middle East suppliers until we bring our own assets on line. The latter exigency which could readily be scuttled by the Cut-And-Run crowd on Iraq. The regional chaos which would be precipitated by an Iranian regional hegemony subsequent to a precipitous American withdrawal from Iraq would make the current cost-escalation in energy supplies from the Middle East seem like the Golden Age of Yesteryear by comparison; and, most certainly would induce a much wider conflict/conflagration. The myopia of the Left on these circumstances is astounding. As history has repeatedly taught with grim consequences, PEACE and STABILITY are won only THRU STRENGTH; and, NOT THRU the nebulous psychosis of HOPE.

The ability of a LEFT-WING minority, that has repeatedly demonstrated the ability to whiplash the Democrat Party, to dictate such onerous/debilitating restrictions in the energy sector of the American economy has been made possible ONLY by the passive acceptance of these militant’s demands by the more rational majority of the American electorate. The RATIONAL MAJORITY: that believes in the 2nd Amendment to our Constitution; that is proud of our Country; that daily expresses such pride by the furling of an American flag on their property, or the wearing of an American Flag lapel pin on their chest; that proudly places their hand over their heart at the singing of our National Anthem while even shedding a tear or two; that is unashamed to actively recognize the Judeo/Christian heritage of America; that believe that Judges should NOT legislate from the bench; and, that proudly proclaims the unparallel contribution of America to the protection and sustenance of democratic values throughout the pages of world history, as opposed to LEFT-WING FRINGE ELEMENTS that believe America to be the greatest EVIL in the world. As the Pope so eloquently proclaimed on his recent visit to our homeland, “God Bless America”.

However, with the current composition of the U.S. Senate, our Nation doesn’t stand a prayer of extricating ourselves from this self imposed dilemma. Simply review the recent Senate action on HR 3121 where Harry Reid and his minions such as Clinton and Obama, in sync with the Left-Wing Fringe Elements in our society, voted AGAINST the opening of a miniscule portion of ANWAR; AGAINST shale oil extraction of which America has the equivalent of ten Saudi Arabia’s in recoverable reserves; and, AGAINST accelerated efforts to facilitate the gasification of America’s abundant reserves of coal.

The task then for the RATIONAL MAJORITY in our Nation is SIMPLY to recognize the SOURCE that sustains and provides the base of support for the LEFT-WING FRINGE ELEMENTS in our society; and, to undertake a decisive role at the ballot box to isolate and relegate these FRINGE ELEMENTS THAT COMPRISE A SIGNIFICANT PORTION OF THE BASE OF THE DEMOCRAT PARTY to a decibel level that is barely audible. ANY TIME you vote for a Democrat, ANY DEMOCRAT, you’re unmistakably multiplying the capacity of these LEFT-WING FRINGE ELEMENTS to continue to promote their radical agenda, and to bring our Nation to its knees. A circumstance that no external power ever could have accomplished.

The ability to restore our Nation’s status; and, to sustain this Sacred Land that the RATIONAL MAJORITY so proudly calls AMERICA, resides in your hands at the ballot box.

GREG NEUBECK

Posted by Greg Neubeck | Report as abusive
 

I have one thing to say about Greg Neubeck’s commment. AMEN!

 

Greg Neubeck ==> frustrated, insecure republican strategist

Posted by Tom Kyle | Report as abusive
 

Vote People! The reason you are paying what you are at the pump is due solely to greed. A government agency, the CFTC (Commodities Futures Trading Commission), is not policing the very laws that have been enacted to prevent this speculation in commodities markets that have produced prices that are not supported by the rules of “supply and demand.” (If we are using 25% less gasoline than a year ago as a country, why is the price climbing above $4 a gallon?) Simple greed, coupled with media mis-representations of “what the problem really is…” (China & India energy “demands”), are steering all of us away from the fact that a monetarily influential group of investors, with money, of course, are forcing prices upward, by way of illegal investments, in the commodities market. Read more, folks….the investment banks and pension funds are now squealing about being “restricted” in their movements, at your expense. BusinessWeek.com has published several articles about how our livelihoods are being negatively impacted by this speculation. Why else would Morgan Stanley say “oil per barrel is going to reach $150 a barrel” if they were not one of the major players in this particular part of the problem….C’mon folks, its your lives, and wallets, being negatively impacted. Read, folks, read…

Posted by Craig McMahon | Report as abusive
 

Greed, irresponsibility and the incomprehensible actions of the Congress. The Pelosi, Reed and the Democrats took over the Congress in 2006 and have done absolutely nothing to help this country. All the left wing media talks about is the President’s approval rating and how low it is. Well, Congress’s approval rating is half of the President’s, but you never here about that. This past May, the Senate made it illegal to produce oil from the largest shale deposit in the world-contained right here in the good ol USA-ILLEGAL. With the new technology available it would cost well below the current overblown market value of crude. We cannot drill of our own coastline but Cuba and China can?!!!! WE ARE IN THIS POSITION BECAUSE OF STUPID DEMOCRATIC POLICIES OF THE PAST AND PRESENT. Something has to be done. They all need to be fired. The country needs an energy plan and we need it now. DRILL HERE. DRILL NOW. PAY LESS!!!

Posted by Brian | Report as abusive
 

Left wing – Right wing. What are you people talking about, duck parts. The lot of you are too arrogant to see we need smart thinker, not more polerizations. Stop being pundants and start being AMERICANS.
There’s a lot of work to be done and time is running out. DCs Dumbo’s and JackAsses are not helping. We need to vote for our country this November, not a freaking party line.
If we could channel our resources to finding an alternative (Hydrogen, Electric, Coal to Liquid)and find or partner with a non-OPEC supplier (Iraq, Canada, Brazil)we might get through the tough times, a little easier.
Keep fighting, party lines and get nowhere.

LETS BE AMERICANS

Posted by Eric | Report as abusive
 

are we going to see another “pass the buckett” round??? Regulators should intervene in these futures market just like they are doing it with short naking of securities. Speculators are playing on a commodity they do not own and for which they don’t even have the money to finance physical delivery.

Posted by cyrille emery | Report as abusive
 

Flag lapel pins? Judeo-Christian ethic?

What tripe. What political opportunism. No wonder the rats are scurrying away from the republican party as fast as possible.

Posted by Noah | Report as abusive
 

Brian-

Do your homework before you spread more misinformation. Jeb and George Bush blocked drilling off of Florida’s coast. I suggest you also RESEARCH the facts about unused leases owned by Exxon in Alaska and in the Gulf of Mexico. There are literally hundreds of new leases that are not being exploited but are cited as unused assets on the books to push stock prices. Not only that, but for three consecutive years ’00,’01,’02, the US State Department was offered $12 Billion USD to implement refinery paperwork and certifying and other pre-construction costs to help private oil companies justify their investment. The State Department never responded to the surprise of the Saudis who offered the money with no strings. China, on the other hand, did respond to the offers.

Posted by Centerpunch | Report as abusive
 

FYI:This would be great!

Secretly behind closed doors the final resolutions are being put together to set the next phase of Energy Independence for the US.
This Month the motion is being put forth to set standards on auto production / numbers for alternative requirements for all Auto Manufactures selling Light Trucks and Cars in the US, a specific time line will be imposed on all. This will send significant waves through the Oil Market as need for crude oil will significantly be reduced / the US market could even at the 2025 Mark support its own demand.
2015 – 25% of all Light Trucks and Autos sold in the US must run on alternative fuels.
2020 – 50% -
2025 – 75% -
2030 – 95% -

Would not hold onto my Oil stocks too long!

Posted by bruce | Report as abusive
 

Greg Neubeck, I have never seen a guy use so many capital letters and so many words to say stuff that made so little sense. If you tried to reduce your reliance on the “left wing fringe elements”, and maybe tried to use fewer words, (which means trying to find the core of your arguement) then your line of reasoning might start to make a tiny bit of sense. But right now, it doesn’t.

Posted by Keren Lowell | Report as abusive
 

Mr Nuebeck is correct. Government interference in the energy market place restricts supply, Government budget fraud, government bookeeping fraud, government inflation and looting of the taxpayer by both parties has destroyed the value of our currency. Both parties are ardent socialists, hate the very voters they must pander to for votes, and will use high energy prices to increase their power and extract ever more of the national income. All socialists have a death wish. American socialists are no different.

Posted by Randall Harrell | Report as abusive
 

Everyone rolling in black gold around the time it was $140 per barrel should have sold out. The oil companies tried to make a killing by raising prices, but transportation businesses ground to a halt.

 

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