U.S. crude for October delivery fell $1.39 to $68.57 a barrel by 1:32 p.m. EDT (1732 GMT).

London Brent crude dropped $1.38 to $68.27.

U.S. stocks dropped as investors’ confidence in the economic recovery wavered.

“The dollar is strengthening and equities are coming off hard so (oil futures) did the same,” said Tom Knight, trader at Truman Arnold in Texarkana, Texas.

Meanwhile, the U.S. dollar rose as the slide in the U.S. stocks boosted the currency’s safe-haven appeal.

Oil futures had risen earlier in the day as the market focused on a report showing a jump in U.S. manufacturing and pending home sales.

“It looks like the whole complex is failing to sustain the gains … basically, the market’s not done yet on the downside,” said Tom Bentz, senior commodity analyst, BNP Paribas Commodity Futures Inc in New York.

Oil has risen from a low of $32.40 in December, helped by economic recovery optimism that lifted global stocks <.MIWD00000PUS> to 10-month highs last month.

U.S. DATA

Oil traders will look for fresh direction from U.S. weekly crude stockpiles data.

Analysts expect the data to show a 600,000-barrel fall in U.S. crude stocks following an increase in refinery utilization, a preliminary Reuters poll of analysts showed.

The American Petroleum Institute (API) will release its weekly inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday. The U.S. Energy Information Administration (EIA) will release its data on Wednesday at 10:30 a.m. EDT.

Adding to already high inventories, OPEC has reduced its compliance with agreed production curbs, a Reuters survey on Tuesday found.

OPEC supply in August rose for a fourth consecutive month as Saudi Arabia, Nigeria and Venezuela increased their production, taking overall output discipline to 68 percent from a revised 70 percent in July.

The Organization of the Petroleum Exporting Countries meets on Sept. 9 in Vienna to reconsider its output policy.

Sept 1 (Reuters)

So far over the past several columns, I have written to you about cars and tires. So today, let’s talk about something completely different. How about oil?

Damn it!

Okay fine: it’s the American obsession, and last I checked, my passport said I am an American too, so why should I be any different? Besides, there’s some interesting stuff happening with oil futures and energy stocks.

Crossing the Line

Let’s start with crude oil setting its 2009 high at $54.83 in New York intraday trading. For most of this year, $50/barrel has been one of those psychological “lines in the sand,” much like Dow 8,000 for a while there.

View Larger Image Here

Now that traders have firmly stepped across both lines, interest is perking up from all quarters, both in stocks and in oil. One really must follow the other for two reasons.

The Cost of Doing Business

First of all, there is the obvious: if the global economy recovers even in the slightest, the ensuing increases in manufacturing, shipping and travel will require energy, and despite the best of green intentions, for now energy still means oil.

Second, despite all the rumblings about finding a new world currency, oil is still priced globally in dollars. And while it may be taking Washington an agonizingly long time to actually disburse all the dollars it has promised, it is finally getting around to it.

Eventually, an increase in GDP might soak up enough of those dollars to make a difference. Just as eventually my wife’s dog will grow thumbs and learn to open his own food. Could happen: he’s a pretty smart little guy and all. Still, I am not holding my breath – on either front.

It’s Baaaack (cue the creepy music)

Yeah, yeah, I know: the Fed claims that inflation is actually “below rates that best foster economic growth and price stability in the longer term,” and plans to keep rates at or below zed for the foreseeable future. That’s their story and they are sticking to it.

Traders, on the other hand, are already starting to act on the idea that inflation IS creeping back into the picture. Taken a gander at 30-year T-Bonds lately? Last December, futures were hovering around 142 and change with yields under 2%. Now we were looking 122, a drop of some 14%, forcing yields to just about double.

Best part is, you really don’t have to say which argument is your favorite, as they are not mutually exclusive. Beyond that, they are value arguments: we could tussle over which one is driving oil futures up till the cows come home.

The Heart of the Matter

What truly matters is that oil futures are up, and are likely to keep moving up. While many analysts are having a blast tussling over the penny changes caused by weekly rises and falls in stored reserves, most all concede that crude will be in the vicinity of $65-$70 by year’s end.

With oil’s downside risk clearly defined by a rounding bottom, and a strong upside story playing out both in the news and charts, interest is also returning to oil and energy stocks.

Looking to the Energy Select Sector SPDR (XLE:NYSE) – which still contains the world’s most profitable companies – we see that investors have crossed that same line in the sand. The recent price recovery has put the XLE up over the resistance node at $46.65 and firmly on the path through $55.25 and $63.74 as it moves towards the attractive node at $74.32.

View Larger Image Here

Simply buying shares of XLE could net you a reasonably satisfying gain just shy of 50%. But if we are seeing the return of inflation and the demise of the dollar (and we really, truly are), then you might want to make your very own dollars multiply a tad faster than that.

If so, then you could consider speculating on the XLE January 2010 50 Calls (WHA AX). That same move would allow these calls to rise from $621/contract to as much as $2,091 for a gain of some 237%.

Source: What Bond and Oil Traders Know About Inflation – and How You Can Make 237% Off It

Oil prices now trade at a five-year low.

If oil prices overshot on the way up to US$147, then the opposite is certainly true today with prices at US$36 a barrel. At some point, crude oil will bottom; the odds of a spectacular bounce occurring is highly likely as global governments spend trillions of dollars at the same time to desperately boost economic growth in 2009-2010.

China, which is the world’s second-largest consumer of oil after the United States at 9.4 million barrels per day, is now importing the lowest amount of crude oil this decade amid a softening economy. U.S. demand has also declined sharply to less than 19 million barrels per day.

Did Crude Overshoot on the way down to US$36?

According to the International Energy Agency (IEA), oil consumption in 2009 will decline to its lowest levels since 1982.

The IEA cut its demand outlook last week as the global economy continues to deflate since the fourth quarter. The Paris-based agency now projects oil consumption will decline by 570,000 barrels per day to 84.7 million barrels. Just 12 months ago, the world sat on a net supply deficit of about one million barrels.

More than any other nation, China has seen the largest spike in net oil consumption this decade. Chinese oil consumption has increased by 3.2 million barrels per day since 2000, accounting for a third of the total increase in global demand.

The Chinese are also in the midst of their biggest expansion of credit in history following the passage late last year of a US$541 billion dollar stimulus package. That spending should at least boost short-term demand for oil assuming consumption in the United States is also supported by the government’s recent passage of the $878 billion fiscal spending package.

Even the biggest bears will concede that concerted global government spending will buy at least a few quarters of economic growth later this year or in 2010 – and that should boost oil prices. Combined with additional supply cuts by OPEC and a host of cancelled exploration and development projects over the last few months, oil prices are bound to bottom shortly.

The above chart shows oil prices dating back to 1997. In 1998, amid the tail end of the Asian economic crisis and the Russian debt default, oil prices bottomed at an incredible $10.50 a barrel. Ten years later, at its peak, oil climbed a cumulative 1,300%.

I think it’s highly unlikely we’ll see 1998 prices again, unless another major bank fails or worse, a major sovereign borrower defaults in this cycle. This remains a possibility in a brutal deflationary environment.

Yet, if the time to buy an asset is when prices are low and in near disrepute, then crude oil fits that bill right now. When the time comes to buy oil, look to the oil futures or oil futures related ETFs. They’ll give you much more bang for your buck than most oil stocks.

Source: Depressed Oil Prices Approaching Speculation of a Lifetime

U.S. oil futures rose towards $36 a barrel on Friday, snapping a five-day losing streak ahead of the expected approval of a $789 billion stimulus package by the U.S. Congress to help dig the economy out of recession.

The Democratic-controlled House of Representatives and Senate were expected later on Friday to approve the emergency package to create or save 3.5 million jobs and hand President Barack Obama a big political victory.

The United States is the world’s biggest oil consumer and the economic slowdown that started in the U.S. housing market more than a year ago has undermined energy demand, sending shock waves through the oil market.

Oil prices have fallen more than 70 percent from their peak at almost $150 a barrel last year as economic downturn has spread to all regions of the world.

U.S. crude for March delivery rose $1.84 to $35.82 a barrel by 1611 GMT, after falling $1.96 in the previous session to settle at $33.98 a barrel, its lowest since Dec. 19.

London Brent crude for the new front-month of April fell 73 cents to $45.30 a barrel.

The Brent March contract expired on Thursday at $44.65, extending its premium to U.S. crude to more than $10, mainly due to a glut at the main U.S. storage hub in Oklahoma.

But the Brent premium for the April contract was less than $4, and some analysts expect inventories to ease eventually at Cushing, Oklahoma, the delivery point for the U.S. futures contract, based on West Texas Intermediate (WTI) crude.

OIL DEMAND CONTRACTING

“It looks like a bounce on stimulus hopes, but only concentrated on the two front-months,” said Tom Bentz, analyst at BNP Paribas Commodity Futures.

The Organization of the Petroleum Exporting Countries said on Friday world oil demand would contract more sharply than expected this year due to the economic crisis.

Making a possible case for further supply cuts, OPEC said in its monthly report that global demand would fall by 580,000 barrels per day (bpd) in 2009 to average 85.13 million bpd. Its previous forecast was for demand to contract by 180,000 bpd.

OPEC, which pumps more than a third of the world’s oil, has agreed at meetings since September to cut its oil output by 4.2 million bpd, equal to 5 percent of daily world demand, to combat the slump in prices and demand.

The report said OPEC still had more to do in delivering existing output promises, suggesting OPEC met 65 percent of its pledge to lower output, according to a Reuters calculation based on the OPEC data.

U.S. oil prices have lost about 14 percent this week and are languishing at a three-week low, pressured by persistent demand worries and doubts over the efficacy of the U.S. government’s banks rescue plan.

Oil’s losses on Thursday were exacerbated by news that the number of people staying on unemployment benefits in the United States rose by 11,000 to a record of 4.810 million in the last week of January.

In the short term, analysts believe the market’s direction would be influenced by movements in stock markets.

European stocks rose on Friday, supported by reports of the imminent passage of Washington’s stimulus package. U.S. stock futures also signalled that Wall Street would open higher, also buoyed by the plan.

LONDON, Feb 13 (Reuters)

His logic is simple. Thanks to record high oil prices, sheiks and regulators will look to “fix” the oil market. This fix, while probably reducing prices, will actually help oil producers better determine true supply and demand.

This from Taipan:

Ride OPEC’s outrage to 70% gains

“I am shocked – SHOCKED – to discover that there is gambling going on here.”
– Captain Renault (Claude Raines, Casablanca, 1942)

That just might be my all-time favorite movie line. Bogart aficionados know it was exclaimed by Claude Rains’ jolly Nazi collaborator, as he simultaneously collected his ill-got gambling gains and closed down Rick Blaine’s casino.

The reason I love it is that it so well captures this sort of hypocrisy. The line is so perfect it’s downright archetypal. Take most any week’s news and you will read some dolt somewhere echo its sentiments.

The Fly in OPEC’s Ointment

For example, just yesterday, the secretary-general of the Organization of Petroleum Exporting Countries, one Abdalla El-Badri, called upon the regulators of the world’s futures markets to do something about all the rampant speculation on his client’s precious crude oil.

Prior to attending this week’s big confab in Davos, Switzerland, El-Badri opined via e-mail that “OPEC has repeatedly called for the need to reduce the role of excessive speculative activity in the market. Today, it is impossible to know who is actually buying and selling oil futures.”

In case you somehow missed it, allow me to sketch out a brief history of the events that have El-Badri so hot and bothered.

Some Is Good…

Oil had been making overall advances in price for most all the seven years that the folks in the Oil Patch held the White House (and perhaps more importantly, the Old Executive Office Building, from where Vice President Cheney appears to have been determining most of our energy policy). But even that steady creep didn’t hold a candle to the excesses of volatility we experienced in 2008.

The first half of the year saw crude oil surge some 46%, an incredible increase in view of the fact that there were no material events genuinely impacting supply or demand in that time. Sure there were the usual storms, strikes and minor military skirmishes that encumber most any trading season. But in the end, none of this actually impacted supply in any serious fashion.

Meanwhile, on the demand side, we now know that the U.S. economy was already well ensconced in recession. And yet, prices at the wellhead and gas pump continued to skyrocket.

But Too Much Stinks

If you want to find the mysterious driving force for this first-half-2008 spike, you need look no further than the trading floor of the New York Mercantile Exchange. By March of last year, speculators had racked up some 115,145 net-long crude future positions (as per those fine folks at the CFTC, who supposedly regulate this market).

Now, one would imagine those other fine folks at OPEC would enjoy seeing prices climb that high. $147 per barrel will buy you one heck of a new marble-and-gold palace, or perhaps even forestall a revolution amongst your eternally beleaguered poor another year or two.

And yet, this sudden largesse was making the folks at OPEC increasingly nervous. You see, they had been down this road a time or two before, and had learned a critical lesson along the way.

Waking Up Dead

Have you ever boiled a lobster? (Stick with me here: it’s germane. Really!) If you dump the wrigglers into boiling water, they thrash about and panic, supposedly spoiling their delicate flavor. (Not that anyone can really tell under all that butter.)

No, the trick is to place the live lobster into a pot of cold water, and then slowly raise the temperature. Little fella doesn’t even notice until he wakes up dead, as it were.

The same is true of crude oil consumers. Crank up prices an average of four bits a year for the better part of a decade, and no one says boo. Spike prices 50% in one season, however, and suddenly folks are looking to change their habits.

Change for the Better?

Last year, that’s exactly what happened. Miles driven were cut back to levels unseen since the 1940s. Thermostats were dialed back, electric lights turned off, and massive SUVs sat languishing on auto sales lots.

By mid-July, the folks at the NYMEX were forced to switch trading direction, with floor contracts showing a net short position for the first time in decades. By November, the CFTC showed 52,984 contracts speculating on further price drops.

And drop it did. By December, we were seeing crude futures in the high $30s – an astounding fall of nearly 75%. As anyone in any capital-intensive biz will tell you, this is no way to run a railroad.

Or a Turn for the Worst?

This whole affair drives the oil types nuts for a myriad of reasons. First of all, it makes it darned hard to plan. Exploration and development take years and billions to work out. A field that seems reasonably worth exploiting at $60 a barrel may be a windfall at $120/barrel, a tax shelter at $50 and a bankrupting boondoggle at $30.

But you know what I think really bothers the sheiks, et al.? It’s a fair guess that the trading floor was an exclusive insiders’ preserve for decades. Now guys like El-Badri complain that wild-eyed speculators are raiding their private cellars: “Today, it is impossible to know who is actually buying and selling oil futures.”

When El-Badri and his cronies ask for “more transparency,” what they really want is more exclusivity and control. And seeing as how Washington is somewhat inclined toward “centralized command and control” these days (that was a joke, albeit a grim one), I do believe that they will most probably conspire with the sheiks and oil companies to shut the speculators out of the market.

I’ll Take My Winnings Now, Rick

Seeing as how we can’t stop this juggernaut, I suggest we ride it instead. A smoothly operating oil patch will most probably benefit all the usual suspects, so let’s start by picking up shares of the biggest, meanest fellow about. That would be ExxonMobil (XOM: NYSE). Or, if you would care to leverage a bit, you might do as we suggested to WaveStrength Options Weekly readers and purchase mid-dated, at-the-money calls against the same, looking for some 60% to 70% over the next month or two

Call me cynical, or just a pragmatist like our dear Captain Renault. I’ll take my winnings now, thank you.

Source: A Transparent Call for Control Over Oil Futures

So far today, crude prices have jumped by near double-digit proportions, creating at least a temporary layer of support around the $40 per barrel level. As tensions increase along the Gaza Strip and Israel threatens with a strong and sustained ground attack, futures traders have all the ammunition they need to send prices higher… at least temporarily.

For fast-moving investors, the action has created a trading opportunity. Shares of the world’s largest oil producers opened higher thanks to a jump in crude prices. Exxon Mobil (NYSE:XOM) is up by just under two percent. Chevron (NYSE:CVX) and BP (NYSE:BP) are up by similar proportions.

A move of one or two percent may equate to hundreds of millions of dollars in increased shareholder equity, but for the average trader, it spells little in the way of profit opportunity. That is why smart investors will turn to index-based ETFs like Ultra Oil and Gas ProShares (NYSE:DIG). It is trading close to 4% higher today, giving investors the extra leverage they need for strong profits.

They fight, you win

If increased profits through leverage are what you are searching for, turn to the options market. Shares of the Oil and Gas ETF may be up by just a handful of points, but investors holding the ETF’s options are sitting on overnight gains of25% and more.

Although call options are jumping in value today, trading activity for puts remains strong. It is a signal that many investors believe today’s spike will be a temporary one. After all, conflict between Israelis and Palestinians is nothing new.

This is a conflict worth watching very closely. Thanks to a global recession, tensions are high. Oil-producing countries like Iran and Russia are desperate and would love to see a large-scale battle send prices higher. You can bet they will do all they can to nurture increased conflict and hostility.

If any foreign governments step foot into the region, be prepared for trouble in the oil market. That means hedge your portfolio against a strong turnaround in crude prices.

The best way to accomplish the goal is through the options I mentioned above. If you are sitting on sizeable profits, use a short-term collar position to protect your gains. If you are positioned to benefit from a further slide in crude prices, get your hands on some call options to hedge against a short-term jump in valuations.

The options market offers great opportunities for times like these. Take advantage of the situation and profit as the world’s governments fight for power.

Source:Mid-East fighting leads to trading opportunities

Light, sweet crude for January delivery fell $3.54 to settle at $40.06 a barrel on the New York Mercantile Exchange – the lowest level since 2004. Oil futures actually traded as low as $39.88 during the day yesterday. The slide came in spite of an announcement by OPEC that the cartel would cut its production quotas by 2.2 million barrels per day (bpd), a record amount.

“The Conference observed that crude volumes entering the market remain well in excess of actual demand: This is clearly demonstrated by the fact that crude stocks in OECD countries are well above their five-year average and are expected to continue to rise,” the group said in a statement. “Moreover, the impact of the grave global economic downturn has led to a destruction of demand.”

Since September, OPEC – supplier of 40% of the world’s oil – has issued three production cuts totaling 4.2 million bpd, or nearly 12% of its capacity. Still, the cartel has failed to establish a floor for oil prices, which have tumbled more than 70% from their July 11 peak of $147 a barrel. Oil has now given up all of the price gains it has made since 2004, in just the past five months.

The main reason for the decline is that the global recession has curtailed demand significantly, leaving many developed nations, as well as the cartel, with a significant buildup of inventories.

The U.S. Energy Information Agency reported yesterday that crude oil inventories increased 500,000 barrels from the previous week, while OPEC’s commercial inventories now stand at 57 days’ worth of supplies. OPEC President Chekib Khelil, said that his group wants to push inventories down to 52 days’ worth of supply and lift prices back up to $70-$80 a barrel.

However, OPEC may find it difficult to achieve those goals without help from non-OPEC nations, which balked at efforts to make a coordinated global production cut. After rumors circulated prior to the meeting that Russia and Azerbaijan might take part in the cuts, their contribution to OPEC’s effort came out flat.

“Russian oil companies have already made a decision to cut deliveries to the market… approximately equivalent to 350,000 barrels per day,” Russian Deputy Premier Igor Sechin told The Associated Press. Sechin added that the cuts had already been implemented in November.

Russia’s lack of involvement did nothing for an oil market that was crying out for a coordinated global effort. In fact, the statement came off as a thinly veiled attempt to repackage the already apparent decline in Russian oil production that has resulted from a lack of investment.

Even before Sechin’s comments, analysts had forecast a 1% decline in Russian oil output for this year, and a 2% drop in 2009.

Azeri Energy Minister Natik Aliev said it would back OPEC’s move by cutting production by 300,000 bpd, more than a third of its total capacity. Still, analysts estimate that an accident that took place on the country’s main pumping platform in October had already cost the country 500,000 bpd in output.

“We want non-OPEC countries to contribute, and not just benefit from the impact of our cuts,” a frustrated Khelil said after the meeting in Oran, Algeria. “It’s in their own interest as well as in ours.”

A lack of foreign cooperation will put even more pressure on OPEC, and could force the group to call another “extraordinary” meeting before its next scheduled gathering, set for March 25, 2009.

“I hope we surprised you,” Khelil said when asked whether the size of the cut would provide enough of a spark to ignite oil markets. “If you’re not surprised we need to so something about it.”

Source: OPEC Production Cut Fails to Inspire Oil Market; Oil Drops to Four-Year Low

• General Growth Properties Inc. (GGP) warned it is on the brink of bankruptcy, as slow retail sales have forced many of its mall vendors to close their doors, CNNMoney.com reported. The nation’s second-largest shopping mall operator said in a SEC filing that it has more than $950 million in property and corporate debt, and is facing another $3.07 billion in debt that matures in 2009.

• Sales fell 7% in the third quarter for Macy’s Inc. (M), leading to a $44 million loss, or 10 cents a share. As a result, the Cincinnati-based retailer said it is cutting capital spending by as much as 45% in 2009, MarketWatch reported.

• Oil continued falling faster than it rose, as December futures for light sweet crude slid $3.08 overnight to $59.01 a barrel in electronic trading on the New York Mercantile Exchange. The sharp fall is blamed on concerns that global growth next year will clock in slower than expected, the Associated Press reported.

• October retail sales in China rose a robust 22%, sending a strong signal that its powerhouse economy could stand tall amidst global recession. The sales growth is nearly its fastest pace in nine years, Bloomberg reported.

• Yum Brands Inc. (YUM) said yesterday (Wednesday) that it would cut “several hundred” jobs as it restructures its U.S. business. The company plans to reduce the percentage of Pizza Hut and KFC restaurants it owns to from 20% to 10% by selling units to franchisees. The company will continue to own 20% of all Taco Bell restaurants.

• Anheuser-Busch Cos Inc. (BUD) shareholders yesterday (Wednesday) approved the $52 billion takeover offer from Belgian rival InBev NV. More than two-thirds of the Budweiser brewer’s shareholders voted, with 96% voting in favor of the deal. Anheuser-Busch and InBev will form the world’s largest brewer if and when federal regulators clear the deal.

Source: Global Investing Roundups Thursday, November 13th, 2008

• Crude oil for December delivery declined 1.4% yesterday (Monday) with a 93-cent drop to close at $63.22 a barrel on the New York Mercantile Exchange. Oil futures are down 57% from the July 11 record of $147.27 and 31% down from a year ago, Bloomberg News reported.  “With all of the stock markets going down, there’s going to continue to be downward pressure,” said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. (MF) in New York. “There’s not a lot that can be done to stop this downward spiral right now.”

• Shares of German automaker Volkswagen AG (ADR OTC: VLKAY) skyrocketed over 120% yesterday (Monday) with a gain of $64.75 to close at $118.00. Porche SE (PINK: POAHF) announced late Sunday that it would increase its stake in Volkswagen to 75% in 2009, The Wall Street Journal reported. The sudden price spike was due in part to Volkswagen’s relatively small free float, as Porche is just shy of a 75% ownership stake and the German state of Lower Saxony controls 20%.

• The Japanese yen hit a 13-year high versus the dollar yesterday (Monday), trading at just under 94 yen to the dollar. Fear of the effect the strong yen would have on exports sent the Nikkei 225 to a 26-year low of 7,162.90 after losing 6.4% for the day. The key Japanese benchmark is down 53% year-to-date, BusinessWeek reported.

• Verizon Communications Inc. (VZ) announced yesterday (Monday) third-quarter earnings were $1.67 billion, or 59 cents per share, up from $1.27 billion, or 44 cents a share, for the same period the year prior. But Chief Executive Ivan Seidenberg cautioned that economic weakness and poor consumer demand would have an effect in the fourth quarter. “For the Christmas season, consumer spending will be somewhat lighter, and business spending will be somewhat curtailed,” Seidenberg said in a conference call, The Associated Press reported.

• New home sales posted an unexpected increase in September, the Commerce Department reported yesterday (Monday). New, single-family home sales rose 2.7% in September to a seasonally adjusted annual rate of 464,000 homes. Sales were still down 33% from a year ago and off almost 68% from the peak reached July 2005.

• Wal-Mart Stores Inc. (WMT) said yesterday (Monday) that it is slowing the pace of U.S. store openings and cutting back on capital spending in the face of economic headwinds, The Associated Press reported. The company plans to open 191 stores in the current fiscal year and between 142 and 157 stores in the next fiscal year. Wal-Mart opened 218 U.S. stores in fiscal 2008. Wal-Mart also plans $5.8 billion to $6.4 billion in capital expenditures this fiscal year for its U.S. division, down from $9.1 billion last year.

• Goldman Sachs Group Inc. (GS) Chief Executive Lloyd Blankfein called Citigroup Inc.’s (C) Vikram Pandit last month about a possible merger, but Pandit rejected the proposal, a source familiar with the situation told Reuters yesterday (Monday). Blankfein’s call was made shortly after Goldman got the approval to become a commercial bank on September 21 and with the knowledge of regulators, the source said.

Source: Global Investing Roundups Tuesday, October 28th, 2008

The US’s minority party routed American taxpayers Tuesday when it mopped the floor with citizen-related issues by blocking a vote that would have:

• Killed corporate oil’s $17 billion tax break.
• Taxed excessive corporate oil profits, unless big oil poured the excess into exploring alternative energies.
• Forced oil futures speculators from big investment banks, hedge funds and brokerages to have a lot more than 5% cash in the margin accounts they use to bet on oil. Such a move would have dramatically cooled speculation, which even oil company executives admit makes a barrel of oil (today) $70 to $80 too much.
• Made it a federal crime to price gouge oil and gas.

On the first two issues, Republicans ignored the minimum $17 billion in taxes that would once again flow to US coffers. Instead, they accused Democrats of merely wanting to punish oil companies as a way of expressing the seething anger most American taxpayers feel over gas prices that have skyrocketed for no apparent reason.

Democrats said, “Yup, making oil companies pay their fair share and punishing them for excessive profits while Americans suffer is exactly what we wanted to do.”

“Why that’s un-American,” screamed GOP senators. All while they rushed to call John McCain in order to congratulate him for admitting that, if elected president, he’d continue a program that secretly wiretaps domestic phone calls made by American citizens.

GOP senators made no comment on the bill’s increased margin account provision. What could they say? Big investment banks, hedge funds and brokerages won. Taxpayers lost a huge one. Best to pretend it never happened.

But, Senator I.M. Forsale did applaud the effort. He said the move is part of an effort to make gas so expensive that “poor people won’t have the gas to drive to the bank to cash welfare checks… perverted homosexxxxxuaaaallls can’t afford to drive to city hall to get married and godless whore women are economically prevented from driving to Planned Parenthood clinics.”

He added, “$5 and $6 gas is finally going to shake the losers, the sinners and the old out of the American family tree.”

Republican leader Mitch McConnell of Kentucky acknowledged that Americans are hurting from the high-energy costs. But, he strongly opposed the Democrats’ response and ridiculed those who “think we can tax our way out of this problem.”

“Republicans by and large believe that the solution to this problem, in part, is to increase domestic production,” McConnell said.

A GOP energy plan, rejected by the Senate last month, calls for opening a coastal strip of the Arctic National Wildlife Refuge in Alaska. Drilling in the ANWR would net the US about 454 days of oil, at its current 22-million-a-day burn rate. And, it would take eight to ten years bring the first of this oil to market.

INTERNAL ENDORSEMENT

Just this Once
BELIEVE THE HYPE!

It was the email that shocked the investment world.

One noted investment authority told his readers to take seven huge stock market gains on one day… SEVEN HUGE WINNERS on one day that ranged from 526% to 102%… seven, and on stocks… not options.

But that was just the beginning! It now looks to be setting up to happen again this year, too.

That’s why you must check out the whole story right here.

I actually believe that oil field technology is advanced enough that it would be fairly safe to drill there.

Of course, there’s the human element to consider… as in shortcuts and corrupt contractors. And, with so much at stake, some people might try to cover up mistakes.

Then, I did some research and discovered just how little oil is in ANWR… modest predictions are 5.5 trillion barrels… best-case predictions suggest 10 trillion barrels.

And, that is quite literally – even at the 10-trillion level – a drop in the bucket.

You see, the US Energy Information Agency reported that if Congress gave the go-ahead to pump oil from ANWR, the crude could begin flowing by 2017. It would reach a peak of 876,000 barrels a day by 2029.

But even at peak production, the EIA analysis said, the United States would still have to import more than two-thirds of its oil.

That’s 21 years until peak. And, that peak would be less than one million barrels a day. That’s less than 1/20th of our daily burn.

And, this is a front-burner issue. For whom?

Now, I rarely share with you the thoughts I send in private to my Asia Business & Investing subscribers… but a bit of what I wrote to them on Wednesday is an extension of my thoughts here.

This is what I wrote

Here in the United States… apparently no one in charge is to blame for the state of the economy… fuel and food prices… except, of course, consumers who pay the prices.

Ron Reagan was known as the Teflon President because trouble didn’t stick to him. Today, US leaders in Washington eschew the Teflon, because no one is throwing anything at the White House or Congress.

It’s you and I that need the Teflon.

After all, it was greedy homeowners who created the credit crisis… not nominally regulated banks and lenders.

It is SUV drivers and soccer moms in mini vans who have run up the price of oil – not totally unregulated oil futures speculators (Google “Enron Loophole” for the whole story) or the threatened veto of a farm bill that included a provision to close the seven-year old crooked loophole, which is well known among Washington highest echelons at both ends of Pennsylvania Ave.

…if you’re like me, when you look around don’t you occasionally wonder who led us to the state we are in today… and why everyone in Washington has escaped blame… or worse, won’t accept responsibility?

Instead, what we get is the Mitch McConnells of the world saying “we know Americans are hurting but there’s not a thing Congress can do about it – except to open up oil drilling in the Alaskan Nation Wildlife Refuge…”

See, there it is again… Washington is not to blame… it’s those pesky, do-gooder, unpatriotic, environmentalists who are pissing in the soup.

So, how about this for an idea?

If this oil is so freekin’ critical to the US’s way of life, then we open up the ANWR for oil exploration, but with two huge restrictions.

They would be that ExxonMobil is not allowed to participate in the ANWR.

And, oil company profits would be capped at 6%.

You see, the US Geological Survey estimates that at $30 a barrel, oil company profits would be about 12% on ANWR oil… but, the Department of Energy, on Thursday, said that oil prices will be $129 a barrel in 2009. It should be $86 in 2010. And it should be back over a c-note at $107 in 2015.

So, who knows how high profits would fly on ANWR oil by 2017 when its initial oil came to market.

But, under my restrictions, every penny beyond a 6% profit would evenly flow directly to the Social Security Trust Fund and Medicare.

And, I am certain that as patriotic Americans with the ability to help sustain the American way of life, US oil companies would rush to accept that deal.

Have a great weekend.

Andy

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Source: Kiss Your Gas Goodbye