Today’s inflation number may contain a clue as to the next populist backlash initiated by desperate politicians.
Speculators must surely be next in line for the pre-election chopping block. Oil traders in particular can surely not be spared from growing public anger over petrol prices.
There is, I’m told, a glut of oil and petrol products in the markets. There is most definitely a glut in spare capacity from producers such as Opec. In fact Saudi Arabia alone has capacity of 4.3 million barrels per day lying idle. Spare capacity is at a peak. A glut should mean low prices, but in the strange world of oil futures and derivatives, it has not.
Today the motoring organisation the AA came out against speculators, telling Channel 4 News that there “absolutely” needs to be government action to rein in speculation. I have been told by one of the UK’s most senior oil executives that last year’s spike in the crude oil price to $147 (and subsequent crash to $34 by Christmas) was the result of speculation.
But what can be done about it, I hear you shout. Speculation increases liquidity in markets, doesn’t it? Helps them make markets more “efficient”, guv. As the FSA were recently quoted as saying, speculation is not manipulation of the markets.
Well next month the US regulator, the CFTC, is likely to adopt limits on the size of bets that any single commodities trader can make in oil and other markets. There had been some frustration in the US that much of the damaging speculation was routed through London, the so-called “London loophole”.
The FSA has denied this, but did sign an information-sharing agreement to share trading data between UK and US exchanges in August. And despite pressure from the G20 the FSA has so far played down the prospect of a US-style clampdown.
It’s worth noting that no one in the London has ever been prosecuted for manipulation or market abuse in the commodities markets. Perhaps it really doesn’t happen in London at all.
Commentsoldest first
Oil , and other commodities , namely gold, are rising because of dollar debasement. Speculators know this so they take their positions on the market accordingly. It’s a currency problem – INFLATION – but this fundamental fact seems to elude financial commentators.
By the way, I meant ” e.g. gold” rather than “namely gold” !
I watched your item on tonight’s programme about the price of oil. No doubt there is speculation just as there is in any commodity in this casino economy. But you managed to discuss this issue without once touching on the possibility that we might also be running out of the stuff & demand is outstripping supply. Many specialists in the field believe this to be the case. I am beginning to believe Shell or BP must be a major share holder in Channel 4. Only this would explain your refusal to cover this issue. Or do you naively believe that oil is inexhaustable & we can go on burning it as we please: it will always be there to supply our greedy needs. Maybe the earth really is flat as well!
Guardian 10 Nov
The economic establishment accepts the world soon won’t be able to meet energy demands, but wants to keep quiet about it
http://www.guardian.co.uk/commentisfree/cif-green/2009/nov/10/peak-oil-fear-economic-establishment?showallcomments=true#end-of-comments
http://www.telegraph.co.uk/earth/earthnews/6269455/Era-of-cheap-easy-oil-is-over-warns-study.html
Regards
William Methven
Its true. The markets need to be a lot more stable really, and it wouldn’t hurt to hand the Speculators a broom and get them to sweep the streets for a few days….
Wasn’t it speculators(gamblers) who bought the financial sector to its knees. We appear to be unable or unwilling to curb their practices.I see us just as unable to deal with oil speculators . The rich few will continue to manipulate the markets to their advantage and even if governments try to do anything , you can guarantee the man in the street will be no better off .The problem is, it is not a British problem , it is a worldwide one
The shocking truth is, there is a minority of people who have political connections, influence and bribe others, don’t give two hoots for society, live lives of utter gluteny & affluence, favour the rich and family members, control the media, have ’safe haven’ secret palaces/home hideaways abroad, and damage society in ways far worse than any so called ‘Terrorists’. This is Britain today, the eptimone of a Dickensian squaller & ruled by rich evil scum and corrupt government. It’s a beacon of hell from what was once the British Empire that’s now, the British Vampire.
The very fact that speculators act like Vulchers with total disregard and no morals, is indicative of Capitalistic greed & the selfish gene.
were it not for capitalists we would not be where we are to day with regards to technology.progress in health and welfare. The state did not provide the means for progress , rather it has squandered most of the benefits of capitalism.Many of the victorian capitalists priovided schools , libraries ,welfare , even towns and villages for their workers.
That is not to say that many of todays speculators(gamblers(call them capitalists if you must) are infact corrupt. That does not justify the accusation against all capitalist.If you can show a state system that works without capitalists, i might change my views
There is no question that technological advancements have been as a result of financial abilities but, for every advancement there are untold numbers of disadvantges, from the terrible terrilbe life screwing situation of unemployment to environmental impacts. I would not credit a system of Capitalistic greed with this. Let’s be very clear, Capitalism ‘rewards’ inovation and hard work but, when it is UNRESTRAINED it opens the floodgates to preditory dominance of the worlds resources, land and leads to slavery, inequality, hatreds and terrorism. All because the human instinct has no boundries to utter greed, corruption and evilness. This is why the world is such a mess today. Add to that an ever increasing populaltion and you see why the world is turning into hell.
Financial Times reports today (18th) that research by Gibson Shipbrokers reveals that 129 big tankers are currently in use as floating storage for crude and gasoil. That’s about 7% of that class of ships worldwide. Many are said to be at sea off Southwold and awaiting orders …!
Apparently this unprecedented volume of seaborne storage is the consequence of both very low interest rates and charter rentals.
So that’s part of the explanation…
Andrew i read the Daily Mail article this morning about tankers anchored off our coast .Surely it is not beyond the whit of governments to get cheaper oil in and make sure these speculators get their greedy fingers burnt
Re Adrian Clarkes comment “were it not for capitalists we would not be where we are to day with regards to technology.progress in health and welfare”
Lets be historically accurate!
Capitalism did NOT produce these benefits. These benefits were produced as a reaction to the negative impacts of naked capitalism & the realisation that the imbalance needed to be redressed. Capitalism on its own produced slavery, child labour, famine, dark satanic mills etc etc. It was the humanitarian reaction to these evils of capitalism that created a more caring society, but this was NOT capitalism – capitalism doesn’t give a sh*t about humanitarism, just LOADSAMONEY!!!
Youare absolutely correct. Those who support such a system of unrestained Capitalistic greed, are to me worse than any so called ‘Terrorists’, because the UNRESTRAINED capitalistic system leads to the hatred & acts of terror.
So,gluttony,greed,evil speculation,capitalism,speculation,ooh ! It’s been around for only a few thousand years (yawn !) oh by the way,if you really think it’s just too awful and you want to do your bit to hold these scandalous oil speculators at bay,why don’t you buy a 6 month put option ? Oh gosh,what have I just suggested – even more speculation !
…and the result? Terror attacts. People who support and CAUSE greed, dominance & slavery, get what they deserve.
The world is in the mess it’s in because of greedy corrupt people.
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