oil prices, markets and government

[kevinfromseattle]

with oil prices down to about 58 dollars a barrel from over 78 dollars recently--right before what looks to be a loosing election for the incumbent republicans, it is tempting to draw a relationship.

But is this realistic? It seems silly to think that even a government as powerful as the US could manipulate OPEC supply, market demand, and political strife that drives the price of oil...

On the other hand, "the market determines the price" is a great fallback explaination that has been given before.... in California during the rolling blackouts and power-shifting schemeing of Enron.

The question is then... is it feasible that oil prices are manipulated to such an extreme during the election season by incumbents?

[Ceedog]

Kevin,

Glad to see someone else is using their head. Do you remember what crude was trading at before Mar 03'?

I think their is manipulation in commodities, especially gold and silver. For example the amount of paper gold on the market dwarfs the actually available physical gold and the loaning(paper gold) out of loans on loans of loans of gold keep increasing while the physical price stays relatively stagnant. There was a runup this summer but we're in a correction right now that is at odds with the economy. Certain central banks were forecasted to sell off some 500 million ounces of gold this year. Guess what, they are not meeting their quotas, that should increase the price of gold by itself. Just when gold starts to peak these central banks will dump enough(begrudgingly) to make it appear as though confidence in gold has fallen and or profits are being taken. Now this helps our dollar by providing a cover for inflation.

Commodities have not been following their normal patterns in regards to the USD. I think some of what I said above also relates to oil. Also we could credit certain things like the CEO for Mobile was quoted as saying that peak oil is a farse. He said that there's plenty of oil, we just have to go further down to get it. this was after they found that new huge reserve in our gulf. Also a lot of scientists are now on board of the theory that oil is not a 'fossil fuel', but a naturally created substance from the interior of earth.

Back to your topic, I think markets are manipulated all the time. But to do this you need a lot of people 'playing ball'. I don't think this power comes from a guy who makes ~$300K/yr, neither is it being accomplished for the purpose of making him look good.

I think another thing to look at is how does everyone pay for oil. With USD of course, except for when bad players like Iraq, Iran, Russia, and Venezuela toy with the idea of selling it for other currencies. This is a very key point to remember. Our currency is a commodity just like oil, gold, copper, etc. Well, until Iran, Iraq, and Russia started planning to open bourses which trade oil for other currencies, the USD was the only(major) way to buy oil. This automatically made the dollar strong, because you had to acquire(just like a commodity) USD to buy oil. Keep in mind all the doom and gloom forecasted for the USD and news of foreign central banks divesting themselves of USD. This may be more of a reason to lower the price of oil, but the election thing could serve as admitting to a lessor sin. Lower oil prices help economies by decreasing inflation, why can't we do it all the time is a good question.

Sites for more info:

http://www.goldseek.com
http://www.financialtimes.com
[/url]

[thurgood jenkins]

The question is then... is it feasible that oil prices are manipulated to such an extreme during the election season by incumbents?

I wouldn't put anything past them....

The US government is pretty much capable of doing whatever they want. THey can pretty much invade any country of strategic or financial importance, aside from a major nuclear power and justify it as a pre-emptive attack to prevent an inevitable threat in the case of Iraq.

If a government is capable of starting wars that result of the deaths of thousands and thousands of people based on lies, and no existant threats than I think it's entirely conceivable and likely that they are manipulating the market for commodities for their own financial and political motives.

It's scary how much power the United States government actually has. Especially when you consider who's currently the man in charge...

[kevinfromseattle]

oh but there are clearly things that can exist beyond the power of a government... It seems that markets prices are based strongly on diffuse consumer sentiments, confidences and habits. The ability of the US government to invade militarily is overshadowed by the obvious failure to manipulate the sentiment, confidence and habit of the iraqi citizenship.
It is questionable however to the extent of success they have had manipulating our beliefs here at home...

[2tone]

Everyone gets maniputlated and if you think you are not being manipulated or are too savy to be manipulated, you are being manipulated to think that... ... and ya, I'm bitter and jaded.. among other things...

[kevinfromseattle]

It is questionable however to the extent of success they have had manipulating our beliefs here at home...

i meant this in the affirmative, i.e. half of americans polled still think saddam had a hand in 9/11

[thurgood jenkins]

Exactly, now that's power. TO be able to mislead an entire nation (well half of it but still what 150 million + people) into believing a blatant lie is just a huge demonstration of power....

But you're right consumerism plays a huge part in the price of everything it's all supply and demand. What concerns me though is that I believe that we're not getting the honest answer when it comes to supply. We all know the demand is there, and the supply remains relatively constant. It's perceptions, notions, and fear that cause the prices to go up ie: hurricane season, turmoil in the mid east etc.

The oil doesn't go anywhere when it suddenly reaches 75 bucks a barrel there's just as much oil to be had as when it's 55 bucks a barrel it's just the spin that's put on the situation. Essentially 9-11 had nothing to do with how much oil people needed but the results and panic were enough to drive costs up.

It's kind of like the terror alert level. Is there really any more likely hood there'll be an attack when it's at red as opposed to green? I don't really think so but when the very notion of a threat is perceived it spreads panic which snowballs and effects everyone.

So yes I think the government does manipulate world markets, possibly for political gains, maybe for monetary gains. Probably for both. Or it may just be coincidental as a reaction to other things. It doesn't have to be directly it can be through policy, perception or actions. Like going to war, that caused Gold to double in price over 2-3 years. Did they go to war to make money off of gold, not likely but I am sure they knew that'd be one of the results.

It's scary though how a mere perception can affect so many people but I guess that's globalization for you. We're all much more connected than we used to be.

[wawaverider]

I believe that much of the Republican party is controlled by the oil companies, but it is quite funny that many of the democrats are also. I understand that we don't get all of our oil from OPEC. I just think this is a little to much of a grab in the dark to demonize the Republicans as full of sh$% as they are, this is one of the problems in politics nowdays. Hmm we don't like this party so lets scheme as to why they are doing this, do you think that the newsprint released the findings on Foley 5 weeks before an election (when they knew about it long ago) because they are controlled by the Democrats?

[Sparky]

I just want to know why Iowa is paying $1.95 a gallon while we are still over $2.50

[wawaverider]

taxes is the major reason sparks, at least p-town isn't as expensive as seattle (due to their higher tax rate on gasoline, of course they can afford it, since the omniscient Bill Gates is there right kevinfromseattle?)

[Fish]

The bad thing is, is that it's not just the republicans.

[Ceedog]

We get most of our oil from Canada, Mexico and Venezuela. Next might be saudi or don't forget this: Columbia.

Oil is being manipulated as a way to keep the saudi's in cheap gold(too much too explain now). It also props up the USD for many reasons. When the price of oil goes down, the relative figure for our inflation follows. 2tone, you are wise to be skeptical, market manipulation is nothing new. The only time Jesus was portrayed as aggressive in the bible was when he kicked the moneychangers out of the temple. This was because the Jews had to pay a temple tax, this tax was only payable in the silver quater scheckel. The moneychangers soon learned how to corner the market and artificially drive up it's value as a commodity. So don't think that manipulation is a new phenominan. Makes me wonder when Jesus himself got mad, must have some meaning.

Another thing about oil, don't think that the real money maker is finding and bringing oil into the market. People make a lot more by CONTROLLING the amount, or dropping supply. This may be a reason why gas spiked after Mar 03'.

They drove oil through the roof to an absurd level, now they will drop it down some(nowhere near what it was) and we the people will be SO glad that the price has finally come down. Nice trick, huh.

[2tone]

money man... It's all about money... Money is what makes the world go round..... Love just makes it go up and down a little...

Queen of cliche,
2T

[fossilgrom]

I find it unlikely that the markets are being manipulated prior to the elections. On the other hand, we have been lied to by our governmment so much that we have become jaded, and in that environment conspiracy theories can thrive.

It makes you think when...

All the major players in power now have very strong ties to the oil industry and have introduced legislation that has allowed oil companies to reap record profits. It would seem possible that some timely price fixing by major oil companies and oil producing nations could occur to allow this high profit environment to continue. The bush family ties to the Saudi Regime are well documented and the saudis wield the big stick in OPEC.

There you go - more fuel for the conspriracy fire....

[kevinfromseattle]

I highly doubt that the market is being manipulated.
Our nation will continue to need energy, whether republican or democrat, and I highly doubt that any company would sacrifice it's earnings for ANY period of time.
Just follow the most myopic strategy for the greedy and that is most likely the actual course of action for a corporate culture driven by the bottom line.