$2.5T oil scam?

[Xtrema]

http://www.ngoilgas.com/news/25-tril...llar-oil-scam/

[scat19]

Wow.

I don't know what to think. Everyone should to start to write to their MLA's or something to get Canada behind this. If the americans all start to contact washington like the article suggests perhaps we could get answers.

This is no joke IMO.

[eg_eric]

What the hell...??? If this is real this could be huge. This is something to look into.

[cycosis]

If its true, what could we do?

[chkolny541]

Originally posted by cycosis
If its true, what could we do?

bend over. Nothing.

[kertejud2]

Originally posted by cycosis
If its true, what could we do?

We don't need to do anything. The invisible hand of the free market will fix the problem.

[Jlude]

crazy story, true or not

[ZenOps]

Free market rules.

You can sell something that you don't really own, to a buyer who really doesn't want to own it...

As long as each end knows exactly what is going on - I don't really see the problem.

I mean really - is the way the market works. IE: A rock star going to a strip club probably doesn't have to pay anything for a lapdance. A balding businessman with bad teeth - probably does. That the rock star fakes paying the girls - to get the other patrons to pay more is just regular business sense?

Oil is no different in that manner. Creating artificial demand is a cornerstone of the free market.

[Smartiepants]

I'll be passing out tinfoil hats later.

[ZenOps]

Originally posted by scat19
Wow.

I don't know what to think. Everyone should to start to write to their MLA's or something to get Canada behind this. If the americans all start to contact washington like the article suggests perhaps we could get answers.

This is no joke IMO.

Thing is - this benifits Canada and is detrimental to the US. Canada is the rockstar

So if you are patriotic, SsHHHH!!!!

[Canmorite]

Uh, Oil is also traded on NYMEX and DME. If ICE is doing this, the others have to be in on it. Otherwise like kertejud2 said, the invisible hand would correct it.

Nothing changes hands unless you are holding the contract on the settlement date (End of Dec. 09 contract, for example). That's why most people start rolling over into the next month's contract before settlement date.

[freshprince1]

After reading this, I contacted by good friend who is an Energy Trader at an Oil and Gas company here in town. He buys and sells on ICE everyday.

Here is what I learned:

Basically, the article is typical media bias towards hype and atten-grabbing.

Round trip trades happen but they don't do anything to the price; they are pretty shady and usually only used to boost individual tade volumes

He did point out that sometimes a real round trip happens between acquaintances in different companies. One example he pointed out was if he buys a commodity, realizes it was a bad move, and needs to back out. This happens, but on rare occasion.

FERC (Federal Energy Regulatory Commission) oversees the trading, so esstentially, Washington is monitoring what is going on. The whole thing is heavily regulated.

They are describing futures contracts in the article which happens with every commodity on the planet. That is where traders dictate the cost of the commodity and doesn't always change hands


Not sure if relayed all this very well, as I am typing in a hurry in order to leave the office and go home. Hope this helps. Hope some of it makes sense.


Forbes link to Round-Trip trading definition:
LINKY

[The_Rural_Juror]

That article is a load of horseshit. The author obviously does not have a grasp on introductory finance, accounting, and economic concepts.

First off, the Enron scandal was mainly the result of its mark to model valuation method, which grossly inflated its enterprise value. In the case of round trips, both the revenue and expenses are overstated, thus having no effect on EV. Double-entry bookkeeping 101.

Futures contract happen all the time, and almost never result in physical commodity delivery. They are usually closed out with an offsetting deal or with cash. Finance 101.

Just because a certain derivative has been traded multiple times doesn't mean that it is fraud, nor does it mean that its value has increased. Economics 101.

Let me put this in layman's terms:

Transaction 1: Bruins Trades Kessel to the Leafs for their 1st round 2nd overall pick.

Transaction 2: Bruins trade the same pick to the Flames for Rene Bourque.

Does the fact that the 2nd overall pick being traded twice increase its value? Will the Hurricanes trade their 1st overall pick for the 2nd pick? No matter how many times that pick changes hands, it is still worth a 2nd overall pick.

I also suspect that the quote about Rubin attributing the recession to the price of oil was taken out of context. Everyone with half a brain knows that oil was not the originating cause of the recession.

The article is quite short-sighted. Oil nose dived to $30.28/bbl last December. Where were these manipulators? Furthermore, being the energy town that we are in Calgary, why would we care if the oil prices go up?

The author is just another alarmist trying to make a name for himself.

[DRKM]

Whlie I am not sure about the regualtions on the ICE I do know round trip trading does infact drive the price up of securites. Think about a pump and dump schemes.

As a commodities trader: One thing that everyone is failing to remember is the nature of traders. When they see a large volume of something traded (ie: India buying gold from the IMF, the rouge trader in france who bought 80mill of oil in a night, ect) the market reacts to it. And generally there is movment in whatever direction. AKA: artificially inflating or deflating the price of the security.

It is true that in the end the invisible hand will move the market back to a correct place, (ie, oil at 30 dollars this year).

On a side note the invisible hand gets real fucked up when free money gets handed out.


So basically it is possible to move the market in a direction by faking demand/volume. It happens all the time.

Oh and on the enron thing they had the Arthur Anderson (accountants) making there shceme possible. But they did create fake supply issues by shutting down power plants and driving the price up...

[mx73someday]

Originally posted by kertejud2


We don't need to do anything. The invisible hand of the free market will fix the problem.

Lets make a bigger government and pay more taxes, that will surely fix it!