Countdown: McCain, Gas Prices, and the Enron loophole
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Stumble ThisI never knew of the "Enron loophole". Also some worrying insight into the people around McCain and another reason for me to steer clear of BP stations.
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Countdown,Keith Olbermann,Enron,Loophole,Gas Prices Countdown: McCain, Gas Prices, and the Enron loophole
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I'm not even American, and I recognize the implications of this video (and the Enron Loophole) on the entire world.
McCain for Runner-Up 2008!
http://www.videosift.com/video/Enron-The-Smartest-Guys-in-the-Room
Thanks for the interest and promotes, though it doesn't seem like anything I submit will break 30.
Well, that was 31, so you'll have to aim higher next time.
thats some good solid journalism right there
Wait - so that bill passes - where's the 25% drop in oil prices?
I found the below article on CBS News ( http://www.cbsnews.com/stories/2008/06/19/politics/animal/main4197625.shtml )...not sure if there should be any concern that there was a big "Presented By ExxonMobile" near the top of the article. I would think it's going to take a while to make any impact and that whole time the speculators are going to do what they can to find workarounds. All up I think it's a good opinion piece and does raise a couple questions in my mind about the loophole and the oil industry. But for now I think we wait a bit and see what develops.
Jun 19, 2008 - (Political Animal) THINKING OUT LOUD ABOUT OIL....Is oil in a speculative bubble? There are a couple of memes making the rounds on this score: First, that the "real" fair market price of oil ought to be around $70/barrel or so, and second, that the speculative bubble sending the price up to $130/barrel has been fueled by the "Enron loophole," a measure passed in 2000 that exempted online energy commodity trading from federal regulation.
On the first issue, I'm confused: I have no idea how you'd figure out the "real" price of oil even in theory. I suppose you could make historical arguments about oil prices, or perhaps compare the prices of different forward contracts and look for inconsistencies, but those strike me as the kinds of strategies that can be used to prove whatever you set out to prove. So count me as skeptical that they can tell us very much. At the very least, claiming that $70 is the right price because that's how much it costs to pump a marginal barrel of oil is silly. If demand increases but nobody has any more oil to pump, then the price will get bid up regardless of the cost of production.
Now, that doesn't mean there isn't a bubble. Maybe the global savings glut, which powered the housing bubble, is now being redirected to oil. But unlike housing, where there are analytical tools and historical trends you can use to get at least a sense of whether prices are way above their fundamentals, oil bobs up and down all the time. And since there's no truly reliable data on how much production capacity the world has (hell, there's not even any truly reliable data on how much oil is actually produced on a monthly basis), there's no way of setting any kind of baseline. So who knows?
On the second issue, I'm also confused, though a little less so. But here's the thing: the Enron loophole has been closed. I can't quite figure out if it got closed last month or last week (there was a technical glitch with the farm bill it was attached to), but in any case, it's been closed. It will be several months before the CFTC can actually implement regulation and oversight of online trading, but if this is really a factor in driving up oil prices then even the prospect of near-term regulation ought to have a dramatic effect on speculative buying. But in fact, nothing much has happened lately. Oil prices are down today based on news out of China, but for the most part prices have just jumped around sort of randomly in the $130-140 range over the past couple of weeks. There's been nothing dramatic at all. So my initial feeling is that the Enron loophole theory doesn't hold water.
In any case, this is mostly a long-winded way of shrugging my shoulders and saying, "eh." I just felt like noodling over this stuff in public. Based on my general knowledge of the oil industry and its constraints, I've long believed that the steady rise in oil prices since 2003 has been basically driven by supply and demand. But I have to admit that the huge increase over the past five months has had a bit of a bubbly feel to it. Aside from a few interesting tidbits, though, I haven't really come across much solid evidence to back that up. But I'll keep looking into it.
Well written comment, dragon.
He definitely gave me info I wanted, but he didn't write it
>> ^MarineGunrock:
Well written comment, dragon.
He definitely gave me info I wanted, but he didn't write it
Yes, sorry to disappoint but Kevin Drum from Politcal Animal deserves credit for writing the aricle. Now if you're complimenting me on finding it, posting it here as follow up, and adding some quick thoughts at the top including the ExxonMobile bit - then thank you very much
Of course this is easier to say now then back then, but its easy to pull lessons from the 80s times of rampant wall street gaming, junk bonds and other financial warnings like the Asian economic crisis.
But remember finance and economics is a young inexact science (though don't tell this to economists they think everything in the world can be whittled down to scientific formulas and models). Laying the blame on McCain is a cheap political shot without the contextual information regarding the failings of the financial controllers who watch over such actions, such as the Federal Reserve and the SEC.
http://www.videosift.com/video/Gas-Prices-Not-Due-To-Oil-Shortage
It would be better if the profits from inflated oil prices went to public works instead of blood-sucking corporations, but I've nothing against inflating oil prices. It's the best way to reduce oil consumption.
One person tried to defend them, ... he failed epically.
PS This video sucks for buffer speed.