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House OKs Penalties for Gas-Price Gouging
By H. JOSEF HEBERT
AP

WASHINGTON (May 23) - The House of Representatives, eager to do something about record high U.S. gasoline prices in advance of a holiday weekend, voted narrowly Wednesday to approve stiff penalties for those found guilty of price gouging .

The bill directs the Federal Trade Commission and Justice Department to go after oil companies, traders or retail operators if they take "unfair advantage" or charge "unconscionably excessive" prices for gasoline and other fuels.

The White House called the measure a form of price controls that could result in fuel shortages. It said President George W. Bush would be urged to veto the legislation should it pass Congress.

The bill needed the approval of two-thirds of the members of the House because the leadership considered it under an expedited legislative process. Thus, the 284-141 vote was only one over the threshold for passage. A similar measure is being considered by the Senate.

The bill would for the first time create a federal law making energy price gouging illegal. It would cover not only gasoline, but also other fuels such as natural gas and heating oil.

Rep. Bart Stupak, a Democrat and its chief sponsor, in urging his colleagues to support the bill said the issue was whether "to side with Big Oil (or) ... side with consumers who are being ripped off at the gas pump."

But Stupak was forced to soften the bill so that he could get it passed by requiring a president to first declare an energy emergency before the anti- gouging law could be enforced. Oil-state Democrats had wanted such limits.

The bill calls for criminal penalties of up to $150 million for corporations and up to $2 million and a jail sentence of up to 10 years for individuals found to be engaged in price gouging .
 

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I don't understand all of the hate and vitriol in those responses to the article, Coffee. So many blaming their president and/or the Iraq war; even though the majority of the USA's imported oil comes from Canada, and most of the imported Middle East oil is from Saudi Arabia, where there is no fighting. It's basic supply & demand. Why does it always have to be some elaborate conspiracy theory with these people?

:eek:hno:
bonk!
 

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2MuchCoffee said:
So, here's a decent view of the situation:

$4 gas – it's our fault

The 1970s energy crisis shocked us into action. Then we resumed bad habits.

http://www.csmonitor.com/2008/0529/p09s01-coop.htm

2Much
That article sums it up pretty good. I waited in those lines and several times the gas was gone before I reached the pump. We had three small children but eventually traded our Olds 98 for a small car (and got zip for the 98). Now here we are in our mid 60s driving a 4700lb vehicle that gets around 18-20 MPG (part city part highway) when we should be driving something that gets 30+MPG.
 

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bonk! said:
I don't understand all of the hate and vitriol in those responses to the article, Coffee. So many blaming their president and/or the Iraq war; even though the majority of the USA's imported oil comes from Canada, and most of the imported Middle East oil is from Saudi Arabia, where there is no fighting. It's basic supply & demand. Why does it always have to be some elaborate conspiracy theory with these people?

:eek:hno:
bonk!
And after all that oil is sent to the states,we pay $1.30/litre(loosely translates to $5.20/US gallon) for what's left in Canada.
Go figure.
Jawwco
 

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Jawwco said:
And after all that oil is sent to the states,we pay $1.30/litre(loosely translates to $5.20/US gallon) for what's left in Canada.
Go figure.
Hi Jawwco. Yes, that aspect does not make a lot of sense on the face of it, since Canada has its own supply; however, might refinement costs be higher in Canada? (If there are fewer refineries, then there is likely greater expense incurred in transporting the oil and the refined fuel to/from these facilities). And also, I don't how much fuel is taxed up there, but I get the impression that it might be on the rather high side... Just a guess.

bonk!
 

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http://switchboard.real.com/player/email.html?PV=6.0.12&&title=Washington Journal&link=rtsp://video1.c-span.org/project/energy/energy_wj052708_greenberger.rm
Michael Greenberger, Former Director, Commodities Future Trading Commission (1997-99)
Michael Greenberger discusses the role of unregulated oil speculators on the buying and selling of oil futures. He says legislation passed in 2000 created an environment where oil speculators influence the current day price of oil and other crude products.
5/27/2008: WASHINGTON, DC: 28 min.
The former head of the Commodities Future Trading Commission that oversees commodities trading in the US that was in the Clinton Administration from 1997-1999 was on C-SPAN the other day saying unequivocally that due to the "Enron Loophole" and changes in oversight regulations that occurred due to a 2001 law, speculation in the oil business has turned for the worse.

He stated that traders that used to work for Enron now work for commodities firms and create fake purchasing orders that artificially inflate the futures prices for oil. This would not have happened under the old rules he said.

It was an eye-opener for me.

TM
 

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Tin Man said:
The former head of the Commodities Future Trading Commission that oversees commodities trading in the US that was in the Clinton Administration from 1997-1999 was on C-SPAN the other day saying unequivocally that due to the "Enron Loophole" and changes in oversight regulations that occurred due to a 2001 law, speculation in the oil business has turned for the worse.
Greenberger actually says it was a law passed in 2000.

So, why does congress haul the CEO's of Shell Oil and ExxonMobile in to testify, raking them over the coals, when it's really these former Enron nogoodniks (were these people bred this way?!?) that have so much more to do with the problem than the oil companies do? Of course, this presumes that Greenberger is to be believed, which I am not necessarily saying is the case...

Are these the same former Enron employees that lost all of their pensions and whatnot?

Oh well. My weekend starts early this week! :beer:

bonk!
 

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bonk! said:
Greenberger actually says it was a law passed in 2000.

So, why does congress haul the CEO's of Shell Oil and Exxon Mobil in to testify, raking them over the coals, when it's really these former Enron nogoodniks (were these people bred this way?!?) that have so much more to do with the problem than the oil companies do? Of course, this presumes that Greenberger is to be believed, which I am not necessarily saying is the case...

Are these the same former Enron employees that lost all of their pensions and whatnot?

Oh well. My weekend starts early this week! :beer:

bonk!
Good question. I don't really know. But here's more:

Ready for the Oil Bubble? Source: http://www.star-telegram.com/104/story/651928.html
------------------------------------------------------------
One law is causing prices to go through the roof By Ed Wallace Special to the Star-Telegram
"There’s a few hedge fund managers out there who are masters at knowing how to exploit the peak [oil] theories and hot buttons of supply and demand and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self fulfilling prophecy." — National Gas Week, Sept. 5, 2005 as reprinted in the US Senate Permanent Subcommittee on Investigations’ report, "The Role of Market Speculation in Rising Oil and Gas Prices," June 27, 2006


Fiddling While We Burn

There it is in plain sight for everyone to see, exactly what I’ve been reporting for the past few years: Many individuals who are investing in oil and natural gas futures are going out in the media and trying to convince the American public that either we are out of oil or there is a serious supply shortage of crude against worldwide demand. The question is: Does it surprise you to discover that the US Senate investigated the rigging of the oil market by speculators in the summer of 2006 – and concluded that there was no supply and demand problem with oil? Did you know that their conclusion was that speculators were responsible for a 70 percent overcharge in the price of oil in the months leading up to the summer of 2006?

This from page 1 of the Executive Summary of that Senate investigation, there is this one troubling line: "Today, U.S. oil inventories are at an eight-year high, and OECD (Organization for Economic Co-operation and Development) oil inventories are at a 20-year high."

That’s odd because, in 2006, just like today, the media reporting covered the serious international shortage of oil and justified oil’s high price. Even more troubling is that the House of Representatives held a hearing this past December, ominously titled "Energy Speculation and Price Manipulation." How did it pass under the radar that both the Senate and the House studied the issue of price manipulation in our energy markets and both concluded that it was unregulated, massive trading in one futures market that was really driving up the price of oil and natural gas? And given that conclusion, why has Congress done nothing about it?

Investors Make the News, Literally

A week ago Goldman Sachs issued a new investor note, suggesting that somewhere between six months to two years, the price of oil could go into a "super spike" and prices jump as high as $200 per barrel. It became the major story of the night. Ignored in the reporting frenzy was that many legitimate and well-respected oil analysts dismissed Goldman Sachs’ prediction as groundless.
Get ready for the next shock to your system. In the past month we have added 11.9 million barrels of oil into our stock reserves, giving us 32.3 million more barrels of oil than we had on hand January 1. On May 5, we found out that for the second time in as many years, Iran was storing its excess crude oil on tankers in the Persian Gulf, because it had run out of storage space in the desert and was awaiting buyers for its heavy crude. That same day Saudi Arabia cut the discount price for its Arabian Heavy crude to $7.45, hoping to entice more buyers for immediate delivery. We didn’t hear that news, either.

While researching my third article for Business Week online about the world’s oil situation in 2008, I asked for the most current report from Oil Movements. Because the oil industry is not transparent, Oil Movements tracks every tanker at sea, from both OPEC and non-OPEC oil countries, along with their cargoes’ final destinations. Anne O’Shea responded immediately to my request with their report dated May 8, 2008. Just so you will know, oil shipments are up from a year ago in almost every class, including Middle East oil in transit and Non-OPEC in Transit. The only class of oil shipment that has declined is covered on page 3 of that report. That chart is labeled, "4-Week Changes in Westbound Oil at Sea."

That’s right, shipments of oil headed west have shown serious declines during the month of April, down 800,000 barrels per day in the week before the publication of the report. Now, let me give you the first line from under the Westbound Oil shipments chart: "In the west, a big share of any [oil] stock building done this year has happened offshore, out of sight."
Could this be true? Oil Movements, the unimpeachable source for finding the real world situation on oil transits, is saying that oil is being hidden offshore, not declared in inventories? Yes, that is exactly what they are saying.

That same week our refineries cut their production runs back to 85 percent, down from 89 percent a year ago, to trim more gasoline out of our stock reserves, to increase their profits per gallon.

National Short-Term Memory Loss

It’s amazing how quickly we forget our recent history. Congressional hearings in 2001, blasting certain Wall Street executives for using the media to sell the public on stocks in order to bid up the price – so their firm could divest of its shares without taking a beating. Meanwhile, other trusted advisers pushed stocks that were fundamentally worthless, because their affiliated banks had large loan agreements with those companies.

The year before Enron had been caught manipulating the California energy market, even forcing rolling blackouts across the northern part of their state apparently just for effect – to support their claim that there just wasn’t enough electricity to go around. Again, we now know that claim was untrue. It was Enron shutting down certain power generation plants, while placing bets on their unregulated energy futures market. The net cost to California consumers was almost $8 billion.

It didn’t end there. Amaranth Advisers, a hedge fund, literally was cornering the market on natural gas futures, to make it appear that there was a shortage of natural gas, when the Commodities Futures Trading Commission told Amaranth to liquidate its position on the NYMEX because its bidding had already moved natural gas prices far beyond the reasonable limits of supply and demand. Now, remember this name: ICE, short for Intercontinental Exchange – the "dark futures lookalike market."

Once the CFTC told it to back off its natural gas futures contracts, Amaranth simply shifted gears, got out of the NYMEX, placed its massive bets outside of government regulation in ICE and managed to drive natural gas futures to $8.50 per MBtu.
As the Senate investigation into the manipulation of the energy markets showed, "Amaranth – the day before they failed, natural gas was about $8.50; the day after it failed, it went to $4.46 MBtu." That’s right, one major hedge fund managed to double the price of natural gas simply by loading up on futures contracts; when the government told them their bets were unwarranted, they simply moved their monies to a futures exchange that was unregulated. Only when Amaranth failed did natural gas prices fall back to what was considered normal for supply and demand.

Sadly, like oil today, when this was happening we were being told that natural gas supplies were tight worldwide. That statement simply wasn’t true.

Dark Future

Likewise, British Petroleum was busted for manipulating the propane market in the winter of 2004 and fined $373 million. Of course, in Texas, under deregulation of our public utilities, our electric rates can be set using the futures market for natural gas, so the manipulation of the natural gas market spelled trouble for us. Consider this, by 2006, according to www.powertochoose.org, electricity rates for us had climbed to 15 cents a kilowatt-hour due to the high cost of natural gas. But, that was the exact same time period that Amaranth was proven to be manipulating the market and sending natural gas futures through the roof. Two months later the hedge fund collapsed and natural gas prices fell. Therefore, most Texans paid higher electric bills for Amaranth’s manipulation of the natural gas market.

Professor Michael Greenberger of the University of Maryland, a former board member of the Commodities Futures Trading Commission, testified in front of the House Committee on Energy and Commerce on December 14 of last year. Under discussion that day was the manipulation of the energy markets and prices, but Professor Greenberger added these comments: "Three, four months from now, you’re going to have a hearing on the subprime meltdown, and you’re going to find that the very same legislation [deregulating energy] deregulated something called collateralized debt obligations, CDOs." That legislation, friends, directly ties the mortgage meltdown to the high price of energy today.

It was called H.R. 5660, the Commodities Futures Modernization Act of 2000. At first this bill went nowhere in the House, not even up for debate. Then, a few months later, late one night a 242-page bill written by Wall Street lawyers, with the exact same name as the former House bill, was quietly added to an 11,000-page appropriations bill, and the Enron loophole was created. The power behind that bill was one Texas Senator, one Texas Congressman and their wives. Next week: How the unregulated futures market pushes the price of oil, natural gas and gasoline far beyond those commodities’ market value, thanks to the creation of the Intercontinental Exchange. Worse, Congress knows this, but does nothing.
I believe the original bill was introduced in 2000 but was enacted under another bill in 2001, hence the confusion with the dates. Congressional record reading gives me a headache: http://www.govtrack.us/congress/bill.xpd?bill=h106-5660

TM
 

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Crazy. And according to what I've read this Warner-Lieberman bill that is to be debated next week will only make matters worse (price goes up, up, up!).

bonk!
 

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There is something being done:
http://www.nytimes.com/2008/05/31/business/31cftc.html?_r=2&oref=slogin&ref=business&pagewanted=print&oref=slogin

May 31, 2008
Commodity Policies Set for Revision
By DIANA B. HENRIQUES
The chief regulator of the nation’s commodity markets will unveil early next week a set of policy changes to address public and political concerns that market malfunctions may be contributing to rising food and energy prices, according to people who have been briefed about the agency’s plans.

The new regulatory steps will be announced by the Commodity Futures Trading Commission, which oversees exchanges that play a central role in establishing worldwide prices for commodities ranging from corn to crude oil.

The announcement may also shed some light on a commission investigation into a sharp spike in cotton prices this year, these people said. They discussed the proposal on the condition that they not be named, because the agency is still completing its plans.

The agency has been wrestling for more than a year over farm industry demands that it examine the role that new financial investors are having in the futures markets, especially those who are investing through commodity index funds.

As commodity prices have risen over the last several years, these funds have become an increasingly large player in the commodity futures markets, rising from a stake of roughly $13 billion in 2003 to an estimated $250 billion this year.

Unlike traditional commodity investors or balanced hedge funds, these index funds do not both buy and sell commodity futures — they only buy, reflecting investors’ desire for a stake in a rising market.

That lopsided trading pattern has generated complaints — most recently at a hearing last week before the Senate Committee on Homeland Security and Governmental Affairs — that index investors are artificially driving up commodity prices at the expense of consumers. One Senate witness even proposed that federally regulated pension funds, a major source of index fund investments, should be forbidden from investing in commodities because of their impact on consumer prices.

The CFTC has already taken steps to gather more market data about the role of index funds, and it has held off approving several rule changes that would have given those funds more leeway to invest in commodity futures contracts. It was considering relaxing its rules for index traders early last year before the sharp run-up in commodity prices.

But against a backdrop of growing political pressure, it is expected to outline additional measures to address this burgeoning mode of investment — although those steps may fall short of the more sweeping measures sought by the index funds’ critics.

At the Senate hearing last week, Jeffrey Harris, the commission’s chief economist, cautioned that the agency has not found any empirical evidence to support the view that financial speculators are systematically driving food and energy prices higher.

Mr. Harris noted that there have been sharp price increases even for commodities that are not included in commodity indexes and are therefore not affected by index trading.

The percentage of index trading has remained relatively constant even as prices have increased, he said, and the two products whose futures trading is most dominated by index trading, live cattle and hog futures, have actually experienced declining prices over the last year.

Nevertheless, the commission is clearly under pressure to demonstrate that it is actively watching for any manipulative trading that may be affecting the prices of products that are part of the household budget for most Americans.

One way it can do that is through its investigative and enforcement operations.

While the commission typically does not announce ongoing investigations, few people in the cotton market would be surprised to learn that a probe is under way.

At a commission hearing on April 22, cotton industry executives repeatedly demanded that the agency examine the sudden price spike that hit the cotton market at the end of February, despite developments that were widely expected to put downward pressure on those prices.

The commission confirmed on Thursday that it has been holding a six-month investigation into potentially manipulative trading that affected energy prices, in tandem with a set of regulatory steps that expand its ability to oversee energy trading on domestic exchanges and in London.
 

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Not a great news to start the weekend.What will the gas prices at the pumps be now with this HUGE PRICE JUMP? My Enclave is staying in the garage this weekend.

NEW YORK (CNNMoney.com) -- Oil prices shot up nearly $11 a barrel and settled Friday at a record $138.54 on geopolitical jitters, a dollar decline and a forecast that oil would hit $150 by July 4.

Friday's spike in the July contract for light crude on the New York Mercantile Exchange marks the largest singe-day increase in oil prices on record. The contract hit an intraday record of $139.12, breaking the previous trading record of $135.09.

"The bulls are running rampant and the bears have panicked," said oil industry analyst Stephen Schork, editor of the Schork Report. "It's pure hysteria, absolute panic," he added.

The rally highlighted concerns that retail gas prices, which have surged near a nationwide average of $4 a gallon, will continue to crimp consumer spending and fuel inflation.

Stocks fell more than 400 points Friday due to the rally in crude prices and a report from the Labor Department that showed the unemployment rate rose to 5.5% in May from 5% in April, the biggest monthly jump in more than two decades. The economy lost 49,000 jobs, marking the fifth straight month of job losses.

Meanwhile, the dollar continued its slide versus the euro on the weak jobs report and comments Thursday that the European Central Bank could potentially raise interest rates. The dollar also tanked versus the yen.

Concerns about instability in the Middle East flared after hawkish comments from Israeli Deputy Prime Minister, Shaul Mofaz, about possible attacks on Iran.

Also contributing to the surge: Morgan Stanley (MS, Fortune 500) analyst Ole Slorer released a report saying that he expected a "short-term spike in oil prices," as high as $150 a barrel by July 4
 

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Kman63 said:
NEW YORK (CNNMoney.com) -- Oil prices shot up nearly $11 a barrel and settled Friday at a record $138.54 on geopolitical jitters, a dollar decline and a forecast that oil would hit $150 by July 4.

Also contributing to the surge: Morgan Stanley (MS, Fortune 500) analyst Ole Slorer released a report saying that he expected a "short-term spike in oil prices," as high as $150 a barrel by July 4
It always perturbs me when I hear an oil price spike forecast by a financial pundit, since this simply sparks more speculative exuberance and becomes a self fulfilling prophecy to the benefit of the wealthy while at the expense of the general public. :mad:
 

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GoldEnclave said:
It always perturbs me when I hear an oil price spike forecast by a financial pundit, since this simply sparks more speculative exuberance and becomes a self fulfilling prophecy to the benefit of the wealthy while at the expense of the general public. :mad:
Well said, but the "general public" owns a lot of these growth funds through their 401k's and the traders themselves believe that the money will go back into the economy anyway. This of course doesn't make the vested interests of these brokerage firms in predicting higher prices at all acceptable.

TM
 
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