Congressional Hearing on the Effect of Speculation On the Price of Oil

In summary, a hearing on the "Enron Loophole" was held with several big players testifying, including Dr. Mark Cooper, who discussed the issue of speculation in the market. The link to the hearing was provided, along with a summary of the segments to watch. The conversation also touched on the Democrats' attempt to blame the problem on free enterprise and the issue of domestic oil production. The discussion then turned to the role of speculators in driving up the price of crude oil, with some arguing that it is a speculative bubble. The potential impact of high crude prices on demand and willingness to pay was also mentioned.
  • #71
Sellers set limits on contracts. Government saying you can trade more contracts than sellers are willing to sell is nonsense. Who would honor these nonsense contracts or buy them in the first place?
 
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  • #72
Just saw this while checking me Yahoo e-mail...


House panel told curbing speculation could cut prices
Near-record oil prices could quickly fall by half if Congress were to rein in speculators, according to testimony Monday from a hedge fund manager and oil company adviser on Capitol Hill.

Michael Masters, of Masters Capital Management, told a subcommittee of the House Energy and Commerce Committee that - with greater regulation - oil prices could drop to $65 or $70 a barrel within about 30 days.

"That's half of where prices are today, and gas prices would reflect that," he said.

"If it is a bubble, then where is the evidence in the actual physical market?" asked Kevin Norrish, a commodities analyst with Barclays Capital in London. "There is an endless list of reasons why this argument is a very, very poor one - it will only make things worse."

http://biz.yahoo.com/cnnm/080623/062308_energy_speculation.html?.v=4
 
  • #73
From businessmen outside of the commodities trading sector -

Leaders from the trucking, airlines and heating industries testified before the panel that speculation in the oil market has harmed their bottom lines.
ref: yahoo article cited in previous post.

The problem is one of assessing/quantifying the portion of the cost which is actually based upon speculation.
 
  • #74
mheslep said:
The US is, now. Are you familiar with the sums of money being spent on renewable energy installation and research in the US?.[/I]

Yes and they are not nearly high enough. Fusion for instance is just barely limping a long. Given that 9/11 was basically a energy driven thing, I think we should be spending more.

mheslep said:
I think the chief beneficiaries of that import tariff would be oil companies with domestic reserves and leases.[/I]

They wouldn't be the only ones, but considering that 40,000,000 acres of federal leases have not been developed because of fear of Arab price uncutting, so what?


mheslep said:
The problem with most of the "renewables" people is that is all they want to do. They don't want to drill, they don't want to explore for more reserves, they don't want to do anything but research, research, research.

I guess that is a general fault of humans, no? However, look up peak oil. Exploring for more oil doesn't do any good after a point. My point is that after the Gulf shelf there ain't a whole lot more. The US and the World has been explored out. Yea there is a little field here and there but nothing like the Saudis or even West Texas (except maybe in Iraq).
 
  • #75
wildman said:
Yes and they are not nearly high enough.
You did not answer my question. How much do you think should be spent and why that number?
Something to keep in mind before committing to an all renewables energy program with a Man-on-the-Moon, no money limit program: Israel imports every drop of oil and gas, has an advanced technical capability, and has far more incentives that the US to become independent. They can't do it. Similarly, Japan imports all of its oil and gas, has in some areas a more advanced technical capability than the US. They can't do it.
Fusion for instance is just barely limping a long.
Fusion has been funded for 50 years. NIF is still fully funded.
Given that 9/11 was basically a energy driven thing, I think we should be spending more.
I'd say 9/11 was basically a fanatical religion driven thing. Still, everyone likes the idea of depriving Middle East autocracies of funds; I am certainly for it. But before taking extreme steps consider two data points:
1. I read, 911 report I believe, that the entire attack cost AQ $500k, flight training and all.
2. Now in 2008, if the US stopped importing any oil whatsoever, the Middle East oil states would still export vast amounts to the rest of the world; the Sheiks would not go begging.
They wouldn't be the only ones, but considering that 40,000,000 acres of federal leases have not been developed because of fear of Arab price uncutting, so what?
Says who? The leases may not contain any oil at all - they are mostly unproven; what they are is promising. They are leased because some geologist thinks the area is worth exploration, and they are being explored as far as I can tell. They are listed as non-producing until they start producing.
I guess that is a general fault of humans, no? However, look up peak oil. Exploring for more oil doesn't do any good after a point.
And that point might well be 70 years from now, use liquified coal and its maybe twice that.
My point is that after the Gulf shelf there ain't a whole lot more.
There has been no source presented in this thread even loosely demonstrating that there "ain't a whole lot more".
Recent finds:
20 trillion ft^3 gas in Louisiana near Shreve Port, probably.
http://uk.reuters.com/article/reutersComService_3_MOLT/idUKN1933908420080620
Tupi field of Brazil, expected output 500k bbl/day, 5B to 8B bbls w/ high confidence, possibly 70B bbls. Also note this discovery was in 7500ft water, total depth 29k feet. Most 'peak oil' analysis says there can't be any retrievable oil at these depths, so this find invalidates peak oil.
http://www.reuters.com/article/rbssEnergyNews/idUSN1231462720080612
 
  • #76
Bryce v Zurbin debate

Here's an interesting debate between two energy authors, that nicely encapsulate some of the opposing camps on energy:
Robert Subrin, author Energy Victory. (Aerospace engineer, PhD Nuclear Eng w/ noted plans for manned Mars missions)
Robert Bryce, author Gusher of Lies, The Dangerous Delusions of Energy Independence
Audio Debate
http://www.thenewatlantis.com/publications/energy-debate-zubrin-vs-bryce
I'm more familiar with Bryce's arguments: 'energy independence', a silly cliche according to him, is impossible; the world is far to interconnected. Zubrin's big pitch is mandated flex fuel cars. I havnt thought that through, but it appeals to me far more than mandated CAFE standards. Other Zubin comments: "hydrogen, the fake solution for energy that can not possibly work"
 
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  • #77
mheslep said:
Are you familiar with the sums of money being spent on renewable energy installation and research in the US?

Greatly increase it to what? $500B/yr? $1T/yr?
Wildman was talking about government spending on Renewable Energy Research, which is not particularly close to those numbers.

The FY 2007 budget for the DOE Office of Science was $3.8 billion. Out of that, Energy Science and Fusion Research got about $1.6 billion. In comparison, about $15 billion remains unaccounted for in Iraq spending that same year. http://www.aip.org/fyi/2007/121.html
http://afp.google.com/article/ALeqM5ieRhHYX-NosV0VEguc06fs15a4Jg
 
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  • #78
Gokul43201 said:
Wildman was talking about government spending on Renewable Energy Research, which is not particularly close to those numbers.
He doesn't say government, he says only the 'energy sector'. And to consider only government R&D would be myopic. Industrial and private investment are quite large; venture capital is readily available for renewable energy companies.
-In house, for instance: General Electric's R&D budget was $5.7B in 2006, surely a significant part of that going to make better wind turbines, more efficient generators, gas and hydro turbines, etc.
http://www.ethicalshopper.com/electronics/appliances/ge-ups-green-r-d-budget.html
- VC dollars: "The overall numbers are up, though the mix is shifting. VC money pouring into clean tech rose to $2.2 billion in 2007, from $1.5 billion in 2006. The big winner? Solar power, which took $600 million. The big loser? Biofuels—VC funding dropped to $291 million last year from $462 million the year before."
http://blogs.wsj.com/environmentalcapital/category/alternative-energy/clean-tech/venture-capital/
Gokul43201 said:
The FY 2007 budget for the DOE Office of Science was $3.8 billion. Out of that, Energy Science and Fusion Research got about $1.6 billion.
Well the entire DoE budget is ~$22B which includes other indirect research on issues like nuclear waste disposal. I am also fairly sure the NIF is not funded out of the Science office - the weapons modeling and test angle. Then there's the other government agencies, esp DoD:
-Navy alone, for instance, funded a multi-billion R&D project on batteries a few years ago for quieter subs.
-USDA R&D $2.3B with "increases funding for high priority bioenergy research aimed at improving the efficiency of converting cellulose to biofuels."
http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2008/02/0030.xml
-DARPA
In a move that galvanized biofuels entrepreneurs, the federal Defense Advanced Research Projects Agency (DARPA) in November launched a major research program to enable the cost-competitive production of military jet fuel from both cellulosic and algal feedstocks. The director of the program, Douglas Kirkpatrick, says he thinks major questions about algal fuels' technical feasibility will be answered in "the next three to five years."
http://www.biodieselnow.com/forums/t/20938.aspx
-And though its not direct R&D, let's not forget the colossal subsidies going into Corn and Ethanol.

Gokul43201 said:
In comparison, about $15 billion remains unaccounted for in Iraq spending that same year.
However unfortunate and wasteful, note that is a one time loss, not a yearly budgeted item unlike these examples above. Its also good reason to be weary of crash government programs, which is basically what the Iraq reconstruction project amounted to.
 
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  • #79
mheslep said:
He doesn't say government, he says only the 'energy sector'.

Here's a more complete quote:
Wildman said:
Then greatly increase spending for research and development in the energy sector. This can come out of some of the money we are spending for defense right now.
Sounds like he meant Government spending. Besides, we can't really tell the Private Sector what they ought to be spending money on.

The $24 billion DOE budget is split up roughly as follows:

Renewable Energy, Nuclear Power, Fossil Fuels & Energy Efficiency = $3 billion
Military budget = $9 billion
Environment & Radioactive Waste = $7 billion
Science = $4 billion
Corporate Management = $1 billion
 
  • #80
Gokul43201 said:
Here's a more complete quote: Sounds like he meant Government spending. Besides, we can't really tell the Private Sector what they ought to be spending money on.
Sure we do. When the government pours $B into ethanol subsidies, wind and solar tax breaks, a great deal of private R&D capital breaks lose to create businesses that can profit from those markets. And that is just R&D. Land and other assets are committed in a larger way. Further, one could argue that we can't really tell the Government exactly how to spend either, especially for the esoteric goal of 'cheaper, greener, more independent energy'. Many examples - the Congressional DoE cuts of the administration's budget for one; in sum much of the process is controlled by some Congressman out to get money for his district and the result is a drastic distortion of original intent.
 
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  • #81
Finally! Iraq's oil fields open to bidders. And I was beginning to worry that the war may not be worth it after all, what with the lazy Iraqi legislature unwilling to pass an energy bill that satisfies all parties. Go Maliki! Go Shahrastani!
BAGHDAD, Iraq (CNN) -- Iraq's oil minister Monday opened international bidding on six oil fields that could increase the country's oil production by 1.5 million barrels per day.

But the oil ministry continues to negotiate short-term no-bid contracts with several U.S. and European oil companies -- a step recently criticized by two U.S. lawmakers.
...
Last week, Sen. Charles Schumer, D-New York, and Sen. John Kerry, D-Massachusetts, sent a letter to Secretary of State Condoleezza Rice expressing concerns about those no-bid contracts.

The senators, who released the letter, said they are worried that unfair distribution of oil revenue could inflame the violence between the warring religious and political groups of Iraq.

"We urge you to persuade the (government of Iraq) to refrain from signing contracts with multinational oil companies until a hydrocarbon law is in effect in Iraq," read the letter from Schumer and Kerry.

"At this time, the (government of Iraq) currently does not have in place a revenue-sharing law that could fairly allocate any revenue gained from Iraq's lucrative hydrocarbon fields between the three major ethnic groups in Iraq," read the letter. "We fear that any such agreements signed by Iraq's Hydrocarbon Ministry without an equitable revenue-sharing agreement in place would simply add more fuel to Iraq's civil war."
Boo Kerry! Boo Schumer!

An extra 1.5 million barrels a day, in 5 years or less - that's twice as much as ANWR would give, and 4 times sooner! Surely this will drive down oil prices, as Rep. Don Young promises.
Oil prices pushed back above $142 a barrel Tuesday on worries about tight supply and possible armed conflict between Iran and Israel. In the U.S., gasoline edged to a new record high.
Okay, obviously the silly speculators aren't reading the right news yet. It's just a matter of time...we'll soon be down to double-digit prices again.
 
  • #82
You don't think this could have any adverse affetcs do you? The Iraq has not been under heavy scrutiny in the media because I think US has done a good job having tribes sign contracts to take certain concessions under their "jurisdiction". It would be an entirely different thing to have this new 1.5 million bbl/day flowing and creating cash money for tribes who have otherwise not been...the friendliest to American troops.

Of course, they had to fight for all this, so I have no doubt they will continue to fight if some kind of elected official is not brought in. Some tribes may be more powerful than others, but no one is bigger than the others combined, that's why Maliki must rule with an iron fist.
 
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