Tuesday, January 13, 2009

60 Minutes On Oil Prices

Sunday's 60 Minutes lead story delved into how speculation caused oil prices to soar. Well, duh.

Not so fast, Sunshine. The news is the very Wall Street investment houses that jacked up the prices of that sweet, sweet crude are in the oil business too:

Morgan Stanley isn't an oil company in the traditional sense of the word - it doesn't own or control oil wells or refineries, or gas stations. But according to documents filed with the Securities and Exchange Commission, Morgan Stanley is a significant player in the wholesale market through various entities controlled by the corporation.

It not only buys and sells the physical product through subsidiaries and companies that it controls, Morgan Stanley has the capacity to store and hold 20 million barrels. For example, some storage tanks in New Haven, Conn. hold Morgan Stanley heating oil bound for homes in New England, where it controls nearly 15 percent of the market.

The Wall Street bank Goldman Sachs also has huge stakes in companies that own a refinery in Coffeyville, Kan., and control 43,000 miles of pipeline and more than 150 storage terminals.

And analysts at both investment banks contributed to the oil frenzy that drove prices to record highs: Goldman's top oil analyst predicted last March that the price of a barrel was going to $200; Morgan Stanley predicted $150 a barrel.

Both companies declined 60 Minutes' requests for an interview, but maintain that their oil businesses are completely separate from their trading activities, and that neither influence the independent opinions of their analysts. There is no evidence that either company has done anything illegal.
(Emphasis mine)
Oil prices are one more way Wall Street's bigger players fucked us coming and going and coming again. When oil futures and everything else all went boom, they backed up the truck to the US Treasury and had Paulson load 'em up.

Where Goldman Sachs Keeps Their Oil.

When called on the carpet by Congress, big surprise, they lied their asses off:
Yet when Congress began holding hearings last summer and asked Wall Street banker Lawrence Eagles of J.P. Morgan what role excessive speculation played in rising oil prices, the answer was little to none. "We believe that high energy prices are fundamentally a result of supply and demand," he said in his testimony.

As it turns out, not even J.P. Morgan's chief global investment officer agreed with him. The same that day Eagles testified, an e-mail went out to clients saying "an enormous amount of speculation" ran up the price" and "140 dollars in July was ridiculous.
Yep, these fuckers sold us the "China, Russia, India and the Tooth Fairy caused an unbelievable increase in demand" bill of goods. I mean how many times were we fed that lie by the media? We just nodded our heads and sucked it up.

A new MIT study and US Government stats for that time period worldwide supply increased at the same time demand actually decreased:
A recent report out of MIT, analyzing world oil production and consumption, also concluded that the basic fundamentals of supply and demand could not have been responsible for last year's run-up in oil prices. And Michael Masters says the U.S. Department of Energy's own statistics show that if the markets had been working properly, the price of oil should have been going down, not up.
Ladies and gentlemen, we've been had.

I did have a major problem CBS' story. It seemingly let the oil companies off the hook. I'm sorry but if wordwide supply is up and demand is down, how do the Big Oil companies make record, almost exponentially greater, profits?