Once they started going long on oil it was fairly easy to perpetuate the run… all they have to do is buy at the ask price and oil just keeps going up and up.

Here’s a quote from the New York Times:

“The price of oil this year will turn on several developments around the world, among them the rise of China’s economy, whether the United States dollar continues falling as many in the industry expect and political uncertainty in nations with substantial oil reserves: Iraq, Russia, Venezuela and Saudi Arabia.”

Here’s the paragraph that followed that one:

“Major developments in any of these areas could cause the price of oil to rise from its current $32.52 a barrel for light crude on the New York Mercantile Exchange. Barring any unexpected or calamitous events, many analysts say it is even possible that the price will slip slightly, possibly to $27 to $30. But the price is expected to remain relatively high.”

Oh yeah, that quote is from a story The Times ran on Jan. 4, 2004.

Now, try this quote on for size. It’s from Time Magazine:

“And just as oil is seen driving American foreign policy, so too are China’s geopolitical strategies increasingly influenced by the country’s inability to meet its energy needs solely through domestic production. Last week Russian President Vladimir Putin began a state visit to China, during which Chinese President Hu Jintao was expected to press for the swift approval of several proposed billion-dollar, oil-and-gas joint ventures between the two countries, including a pipeline to connect Russia’s oil fields with China’s main domestic distribution network.”

Ripped from today’s headlines, right?

Nope. It’s from Time’s, Oct. 18, 2004 issue.

And, by the way, the New York Times was wrong. The price of light crude didn’t drop in 2004. By Oct. 18, it was making big news when it edged to $55 a barrel.

Of course, sooner or later, you know I am going to use a quote from fresh story. Maybe it’s this one. After all, it’s about the President’s reaction to something that’s been in the news as recently as last week.

“President [Bush] rejected suggestions Wednesday that he release oil from the government’s strategic reserve in a bid to ease the price of gasoline, accusing Democrats of “playing politics” over soaring gas prices.

“Bush said he “fully understands” how the rise in prices “affects American consumers, how it crimps the budgets of moms and dads who are trying to provide for their families, how it affects the truck driver, how it affects the small-business owner.”

But, guess what? That’s old news, too – Los Angeles Times May 20, 2004.

You see, my point is this – look around your world and ask yourself what’s really changed in the past four years… what’s really driving the price of oil up?

From where I sit, the answer is pretty much “not much that I can see,” unless you also consider how vast the leadership vacuum in Washington has become. Or, you consider oil company CEOs as national leaders.

And, before you Presidential apologists get all scrunchy nosed at the mere mention of Washington and leadership vacuum, I picked 2004 just to be fair. It represents four years of President Bush and fours years of a Democratic controlled Congress… four years that flashed by since these quotes were published.

Four years of zip, zilch, zed, zero on the leadership front when it comes to oil policy. That is, unless you call it leadership when oil executives whine to Congress on a regular basis about how their hands are tied when it comes to prices and anyway, “we’re always concerned about shareholder value.”

I love that last one by the way, like we’re so dumb that when they say “shareholder” they think we hear stakeholder.

The Truth Will Bust You Flat Broke

But, sometimes those oil executives do tell the truth, though blaming global demand is not part of that truth.

You see, the US burns about 21 million barrels of oil a day, of which close to 12 million barrels are imported. China only goes through about eight million barrels a day, of which four million must be imported.

But, the truth is that oil executives were correct back on April 1, when they told congress that the price of a barrel of oil should be about $55 (it was mere $100 then).

According to the oil executives, the price discrepancy – one that continues today – is due to oil futures speculators running the price up.

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