If the bastards could, and maybe in fact they will end up being able to, they’d reduce access to air to a commodity, payable, so to speak, online.
Lobbyists, of course, will supply politicians with ample amounts of hot air.

Posted by: Chuck Cliff | Aug 21 2008 19:40 utc | 3

The stuff in Laura Rozen’s piece fits.
Just as an aside about Arkan and his group “Arkan’s Tigers”. They became notorious and feared throughout the Balkans in the time when gangsters held sway. He exclusively used Nissan Patrol SUVs as his means of transporting his marauding murderers, eventually the sight of a Nissan SUV would have any law abiding Balkan resident running for cover. Towards the end of Arkan’s life, a tele journalist aquaintance who was working for one of the big trans-national tabloid news and current affairs shows, got sent to cover the war of the “unspellables versus the unprounceables” as it became known. Some local directed him to a torture house full of blood and body pieces. The journo decided to interview the neighbours as if this were suburban wherever back in the world. Finally he found an old lady with a little english prepared to talk. She said little other than a very fearful “Arkan’s Tigers, it was Arkan’s Tigers”. Of course the journo couldn’t let a claim such as that go untested so he said. “How do you know it was Arkan’s Tigers?” She looked at him as though he came from another planet which I suppose he did, from another world anyway, and said “they were driving Nissans, of course it was Arkan’s Tigers”. The most compelling piece of the story never went to air. Nissan was the show’s major sponsor that year. Ahh journalism…
Speaking of our wonderful capitalist system, Rozen’s article also explains why Vitol has been picked out. Thrown to the wolves more like. The Guardian story already made Vitol a pariah amongst the publicity conscious pols, but it was also a good patsy. Vitol only held 11% of the market for a short time and that means 90% of the NY market plus all the newly permitted offshore trading was being held by other speculators. The story dates back to 2001 and maybe Vitol was let in the game precisely because it would be a great fall guy when needed. Vitol will to go down eventually and in December 08 when everything is back to normal, pols have another four years covered. They can forget about oil speculation oversight and get their snouts back in the trough.

Posted by: Debs id dead | Aug 21 2008 21:05 utc | 5

rbv@4,
ralphieboy’s point @2 is very clear and his use of the word “inelastic” is very appropriate in the context. With a little patience, one day someone might suggest (in a similar context) that the consumption of mangos is inelastic. Then you would be right.
wrt to your comment on “pit locals”, first, b’s referenced comment is absolutely right. Traditionally, commodities exchanges place much fewer restrictions on activity related to actual physical goods than those that are simply chasing paper margins (i.e paper-speculators). You are also wrong about Glencore & Phibro. These traders actually do trade a lot of physical oil. Likewise Vitol. But it appears from the content b has provided that Vitol’s paper trading far exceeds its actual physical activity, which is the reason for the CFTC’s reclassification (of Vitol).
Also. how relevant is the data in your CFTC link ? This thread is focused on the effects of unreported data.

Posted by: jony_b_cool | Aug 21 2008 21:42 utc | 7

But it appears from the content b has provided that Vitol’s paper trading far exceeds its actual physical activity
Paper trading is often backed up (distantly) by physical flows — a cargo might change hands on paper many times before reaching a refinery — along the way this trading is sending price signals to other shippers, other refiners and everyone else who has an interest in the supply and demand for oil. The churn rate in currency for that matter is way larger than actual currency flows. it’s a silly measure of whether a market is manipulated.
And as you probably know, tiny proportions of traded commodity futures are ever delivered and it has always been thus.

Posted by: rbv | Aug 21 2008 22:55 utc | 9

the free market is anything but free
the barbarians in creating the myth of free markets hoped to hide all the horror it actually entails
the free market is a savage spectacle scripted by the senseless

Posted by: remembereringgiap | Aug 22 2008 0:09 utc | 11

Part 1
Related?
The Great Consumer Crash of 2009
by: James Quinn posted on: August 14, 2008
“It is easy to ignore the storm if you look at the opposite horizon. When the storm reaches your location there can be no more ignorance.”
I hate to tell you, but the storm has reached your location and it is a Category 5 hurricane. The levees are leaking. Ignore it at your own peril. The 6,000 sq ft McMansion buying, BMW leasing, $5 Starbucks latte drinking, granite countertop upgrading, home equity borrowing days are coming to an end. The American consumer will not go without a fight.
For the last seven years the American consumer has carried the weight of the world on its shoulders. This has been a heavy burden, but when you take steroids it doesn’t seem so heavy. The steroid of choice for the American consumer has been debt. We have utilized home equity loans, cash out refinancing, credit card debt, and auto loans to live above our means. It has been a fun ride, but the ride is over. We can’t get steroids from our dealer (banks) anymore.
Thus enters the : prison-industrial complex:

The continuing story: find out what the products are being manufactured via what amounts to slave labor for pennies on the dollar (everything from lingerie to bull whips). Our corporate propagandists also tend to recommend investing in prison stocks. There’s big money involved in putting your ass in the big house.

Posted by: Uncle $cam | Aug 22 2008 1:42 utc | 13

rbv writes – “Originally only people connected to commodities, producers and consumers like farms and airlines plus a few middlemen, were allowed big trades at the commodity exchanges.”
Totally false. Pit locals are all ‘middlemen’ and most of them have never touched a drop of crude oil. Same with investment houses like J. Aron, Glencore, Phibro etc etc etc.
From the WaPo piece I linked above:

“When the CFTC granted the 1991 hedging exemption to J. Aron (a division of Goldman Sachs), it signaled a major shift that has since allowed investors to accumulate enormous positions for purely speculative purposes,” said Rep. Bart Stupak (D-Mich.)

Posted by: b | Aug 22 2008 5:20 utc | 15

If oil companies cannot access their sources,
oil companies can always access their sources. even the 73 opec embargo lasted less than a year with no military effort from the usa.
if you mean that tankers are threatened in international waters (as they were during the 80s) then any country has a right to defend them by force… as civilian infrastructure these attacks are grave war crimes …just like attacks on power stations which you may agree also have “strategic significance.”
b,
stupak is wrong. as noted j. aron does have physical exposure and so do other investment banks/middlemen. theyve also been speculating heavily since well before 1991, the existence of swaps or the ICE. so have oil majors like stasco & bp. contra stupak, no paper trade ever results in an oil delivery. they are all side bets, and they affect the underlying market no more than a bet on weather impacts the temperature.
if j. aron buys a bunch of physically sttled futures against its swaps and can’t sell them to a physical buyer in advance of the delivery date, they are screwed. this is in fact what gives both futures prices their integrity (that physical buyers and sellers can force the hand of speculators)

Posted by: rbv | Aug 22 2008 11:49 utc | 17

platts swaps are a great example of a physical hedging product that never results in ANY physical trade. even worse, a lot of platt’s trades are to hedge oil-indexation ..(japanese lng, german tolling agreements, inflation indexed bond issues yadda yadda) congressman stupak demands an inquiry… this speculation must end! lol.

Posted by: rbv | Aug 22 2008 16:25 utc | 19

– i wrote for an open thread but don’t see one so will just post here, as it is relevant in the sense that it indirectly pertains to the question of ‘tightness’ (real or imagined, peak oil, etc.) of oil supply –
In 2003, many were convinced that the Iraq invasion was primarily for oil. Some, like Chomsky, continue holding that opinion. Others, the contra-oil crowd, seeing the Iraq invasion through other prisms, point out that Iraqi oil production is not doing too well, not as well as expected in any case, and that neither the US or ‘foreign’, that is global actor oil companies have taken it over or in hand in any kind of robust or lucrative way (possibly just because Iraqi resistance thereto, but I find that hard to credit).
I remember reading somewhere in 2003 that the plan was to send oil to Israel through that defunct pipeline whose name I have forgotten; and to send it clandestinely to Saudi Arabia. Large amounts of Iraqi oil have always been smuggled (see sanctions, oil for food, and the various scandals.)
Paul Chefurka discusses the shunting to KSA idea and lists the evidence:
snippet: The one feature of this hypothesis that makes it attractive is the extent to which it can accommodate all the odd and otherwise inexplicable events of the last six years. 
link
This hypothesis would also explain the very mysterious ‘terrorist’ attacks against oil installations / oil workers in Saudi Arabia. (Al Quaida! When these are the designated perps you can be sure hidden hands are at work.) Remembering the name Yanbu, not more, I thought and so if one follows Cherfuka that would have been in a refinery…and yikes, wiki says..”petro chemical plant.” Possibly, meaningless.
This article reminds that it was KSA that suspended the Iraqi pipeline flow (Gulf war I). Iraq is demanding compensation for losses via the UN.
The Iraqi part of the pipeline was rehabilitated in 2001 (and/or 2002) MEMRI 02
EIA 07 states the Saudis use ‘their’ part of the pipeline to transport natural gas. Same info in MEP
A poster on KOS (found near the end of my search) takes up the same original post, and does a good job laying out the info: kos For anyone reading that, I can’t judge the Basra Light Crude statements.
It is strange that the info. about that pipeline is slim and contradictory; yet, it is oil, it is the underground (we have maps of the surface of the earth, but our maps of below are missing), it is secretive KSA, it is translations from Arabic, etc.
To sum up, it is seductive. Interesting, even if only that it represents the kind of ‘answer’ to the Iraq invasion one would like to see. As over-interpretations in favor of rational explanations in terms of money, power, the life blood of ‘modern’ society – oil – and geo- politics framed in terms of nation states, still a strong organizing principle, aren’t that frequent, it was worth a look and most of my Saturday morning.
Fuck consensus reality and it’s corny cop show script: Create your own. from Uncle Scam.

Posted by: Tangerine | Aug 23 2008 16:20 utc | 21