René O'Deay gBlog

Suppose that major suppliers in the oil industry are the manipulative speculators.

Two Stanford students explained how in the article 'Are Oil Prices Rigged?' in Time Magazine, last August 22, 2008, (Ari J. Officer studies financial mathematics at Stanford University. Garrett J. Hayes studies materials science and engineering at Stanford University.)

All about the Futures Market, the 'driving force in the pricing oil.'

What if the oil suppliers, instead of selling oil futures, were buying oil futures?

Thanks to margin in the futures market, you can trade ten times more oil than you could otherwise afford. For only $9,000, you could control more than $140,000 of oil at recent highs.

The futures market is much smaller than the real oil market. When you consider margin, the amount of money actually invested is even smaller. Indeed, one dollar invested in a long-term position in the futures market carries the leveraged weight of more than $300 in the physical oil market.
The point is, it would only take about $9 billion to control the entire long position in oil.

Major players in oil with the swag to do this (just a few):

• Sultan Hassanal Bolkiah Muizzaddin, of Brunei Shell Petroleum, is worth about $23 billion;


• Saudi Prince Alwaleed Bin Talal Alsaud is worth about $21 billion;


• Russian Vagit Alekperov of LUKoil is worth about $13 billion.

But who is actually playing the oil futures market to drive the price up is hidden, behind the hedge funds.

The futures market that serves as a price discovery mechanism for the physical oil market is open only to the elite. We trust these elites to determine the prices, but who are they? Who are the so-called experts? Hedge funds, oil companies, OPEC — the very people who profit from massive, consistent increases in prices. Notice a conflict of interest?

All an oil supplier would have to do to raise prices is buy up futures contracts.
It's not even that risky.

They use other people's money to control these markets.

Prices in the futures market — and, indeed, any real-life market on a standardized good — do not form where actual supply meets actual demand; they form where perceived supply meets perceived demand. Participants in the futures market merely represent the world around them. A veil has been placed over the public's eyes, and they accept this illusion of a fair price.

The black gold standard.

Market needs to have more transparency, not just the price of futures but the names of participants. Hiding behind the hedge funds these manipulators profit and are attempting to bring down America.

Notice that oil price on the market are not reflected in the price of gas at the station?

Oil Prices Rigged? You betcha.

NowPublic

Tags: USA | Markets | Oil | prices | economy | World | gas | MIDEAST | speculation | Stanford | futures | Suppliers | hedge funds