trading now

Your readers undoubtedly recall that in mid-July, 2008, we all were experiencing record high gasoline prices, with some of us paying as much as $5 a gallon, the result of crude oil prices which reached $147 a barrel by July 11, 2008. I wrote a series of articles during this period complaining that this crude oil price surge was due largely to speculative trading by Wall Street investors. Thereafter, the price of crude oil crashed, reaching a low in the high $30s a barrel range, and many of us were paying under $2 a gallon earlier this year.

But over the past five months the price of crude oil jumped again, and gasoline prices rose 54 days in a row, causing the largest five-month retail gasoline price advance in this century, according to the AAA. Why? Demand is at a 10 year low, and there is a 10 year high in crude oil supplies. However, crude oil prices are up 60 percent for the year.

The answer is Wall Street speculation. Two supposedly unrelated stores recently caught my attention. One, an employee of Goldman Sachs stole a computer program as she left the company’s employment. The program was a Goldman Sachs proprietary method of making computerized, high volume trades in commodities such as crude oil, still largely unregulated in the futures markets.

Two, Goldman Sachs just reported a second quarter 2009 profit of $3.4 billion, the largest quarterly profit in the firm’s 140 year history. This from a company which took federal TARP bailout money last fall, as well as $13 billion in further bailout money from AIG to cover its counter party exposure. So here we go again. It looks like Goldmine Sucks has again been pumping billions of dollars into computerized trading in crude oil futures to drive up the price of crude oil, then dumping it after the firm’s second quarter profit has been realized. In the first 10 days of the third quarter, the price of crude oil has fallen to under $60 a barrel. Remember this the next time you fill up your gasoline tank. Pick up the phone and call the White House to ask the Obama Administration and Congress to speed up the tougher regulation of the commodities markets which they pledged they were going to accomplish this year.

Ted Vaill