Nice try bud, but the facts don't agree with your position. I'm sure you won't deny the traders created their own market by selling the futures back and forth among themselves and in the case of JP Morgan even owned "oil" companies - exactly like Enron. In case you forgot, Enron went so far as to use these "energy" companies to restrict supply thereby creating various short term crises. Remember, these are the people we just bailed out. Let's take a look at who we are talking about: 1) They have defrauded every American hundreds of dollars at the gas pump. 2) They have nearly bankrupted the Airline industry. 3) They have brought Detroit to their knees. 4) they created the credit derivative crisis (not to be confused with the fake sub-prime crisis - which if you're smart enough to use a calculator you can figure out CAN NOT be in excess of 450 Billion dollars 110 million houses X 5% default X 75,000 overvalued = 412 billion and that's only if EVERY house that they say is "at risk" eventually defaults). 5) We just gave these crooks billions of dollars in a bailout to save the very people that have been swindling us for the past 5 years. WAKE UP I don't know who paying you, but something is very wrong here.

ONCE BUSH IS GONE WE NEED TO FOCUS THE FULL ATTENTION OF THE JUSTICE DEPARTMENT ON THIS ISSUE AND MAKE ROOM FOR THE CEOs OF Morgan Stanley, Goldman and AIG etc... next to the Enron cell.

I'm confused by "Who" wrote this column. Barry Ritholtz is taking credit on his blog. See http://www.ritholtz.com/blog/2009/01/oil-speculation/

I want my money back~~

You missed the entire point of the 60 Minutes story. They did not try to explain what happen throughout the decade in terms of the price of oil. The question being addressed was that the price of crude more than doubled during a time, which economists now acknowledge, was a recession.

The key thesis: in 2007 and 2008 the price of oil was not purely dictated by supply and demand...or inflation for that matter. There WAS market manipulation.

1. Oil is priced in US Dollars. Since 2001, the Dollar fell 40% (from 120 to 72); Oil rise nearly 5 fold over the same period. And Oil’s collapse occurred over a period when the dollar formed a short term bottom; it has certainly had its most significant rally in years (72 to 88).

The Dollar hasn’t been gaining strength so this is not a valid argument for oil’s price collapse.

2. Over the same period that Oil prices were rising, the US was fighting two major wars in the Middle East, Iraq and Afghanistan. These impact prices via psychology and risk of supply disruption — especially at a time when producers were running flat out.

We are still fighting those wars so once again, this argument is not valid since oil prices should still be high today.

3. Energy prices rose during a global economic expansion (fueled by low rates and cheap money); Oil fell during a period that marked the beginning of the US recession and the start of a global slowdown.

This is a valid point, the price of oil would decline since not as much is being used, however, a decline from $145 a barrel to under $45? Has that many people around the globe stopped using that much oil?

4. Since 2001, Commodities of all sorts rose significantly: Steel, aluminum, cement, cotton, soy, livestocks, foodstuffs, precious metals, etc. Were they all driven by speculation, or was something else going on?

Of course they were, speculation is all about driving up prices to make more profit. As long as consumers are willing to pay for it, speculators will keep on driving the prices up.

5. Since the 1% Fed funds rate of 2002-03, inflation has had a dramatic impact on ALL prices — from medical costs to insurance to education to health care to transportation to housing to food and energy. That 60 Minutes failed to even mention inflation in a piece on Oil prices is a terrible oversight on their part.

Has inflation suddenly gone in the opposite direction? I don’t think so. If anything, inflation has gotten worse and the price of oil should have risen due to the printing of more dollars.

6. Throughout the 1990s and 2000s, cars were increasingly replaced with SUVs and trucks in the United States. Not only did these get appreciably worse gas mileage, that fleet transition took place as the total US miles driven rose. Over the past 20 years, people have lived increasingly further away from their jobs. Hence, increased US demand for energy accompanied (and increased prices).

This is still true today is it not? What changed in the last year? Did everyone suddenly stop living so far from work? Demand has dropped somewhat due to people losing their jobs and driving smaller vehicles but to say that it dropped 75% (the drop in oil prices from their high) is ridiculous.

7. Since gas prices hit $4 a gallon and the recession began, total US miles driven fell significantly, by several billion miles. As expected, the drop in driving was followed by a fall in prices.

See 6 above.

8. 60 Minutes interviewed Mike Masters, a hedge fund manager who had testified before Congress that speculation was driving prices. They omitted to mention he was talking his book. His holdings in energy sensitive stocks — with large positions, the vast majority in call options, in AMR Corp (AMR), the parent of American Airlines, Delta Air Lines (DAL), General Motors (GM), UAL Corp (UAUA) and US Airways (LCC) — were responsible for his fund losing 35% of its value before the Fall 2008 market collapse.

9. China boomed~! More and more global manufacturing outsourcing saw factories being built throughout China. They also went through a wild process building out the nation in preparation for the 2008 Olympics held there. Oh, and China, like the US, also began filling its Strategic Petroleum Reserves. Another small country, India, was booming over this period also.

Did China and India un-boom? They are still using oil and will continue to use more and more oil in the coming years, recession or not.

10. The rise of extremist terrorist groups like al-Quada, the hostility of Iran towards the West, supply and political disruptions in places like Nigeria, and overt hostility to the US by oil producers like Venezuela President Hugo Chavez also contributed to drive prices up. The political factors were also omitted.

This is still true today is it not? Prices should still be high due to these issues still being as relevant today as they were last year when prices were $145 a barrel.

Except for your argument that the US consumer is using less oil due to the recession and driving less, all of your points are invalid. This still does not explain the huge decline in oil prices. The percentage decline in oil usage is no where near the same percentage decline in oil prices. You also forgot to mention the valid points in the CBS segment that investigations were underway to determine the cause of the spike in oil prices and that energy companies like Enron wanted the deregulation in 2000 so that they could control energy prices.

My guess is that you are paid for by these same crooks who have brought the American economy down.

This article is as blatant a piece of economics propaganda as the corporate media can churn out.

"Hence, increased US demand for energy accompanied (and increased prices)."

Oil/barrel was priced around $65 in 2007; in June 2008, that price increased to $124. So demand suddenly increased by 90% in half-a-year's time??

Readers: don't cave in to the type of Wall St./corporate apologetics that people like Jay Hancock (or Thomas Friedman or Larry Kudlow) perpetuate. They are paid to pull the wool over your eyes.

The difference between oil futures and spot prices is a distinction without a difference, and to argue they are different raises a false argument. This is because futures prices ARE THE BENCHMARK for actual physical prices, for both NYMEX and Brent futures. This is from the NYMEX
Web Site:

"Because of its excellent liquidity and price transparency, the contract is used as a principal international pricing benchmark."

http://www.nymex.com/lsco_pre_agree.aspx

Wow, to the author, youve been publicly discredited on nearly all of your arguments. I wouldnt be suprised if you held strong positions in MS. Fact is, market manipulation, with zero oversight, is what caused the defrauding of millions of americans. And our Gov continues to print more money for these crooks.

When the price of crude started to go above $40.00 a barrel the oil companies reinvested their profits in their own stock. Over and over again. They didn't reinvest their ludicrous profits in more r & d or new fields (where would they refine it?), they drove up the value of their own stock artificially. Keep pouring our gas money into their value, self sustaining. The sheiks went along. And Wall Street. Until the crash. The price of a barrel of crude is high at $40 and should be between $10-20 without interference. Period.

Bert Jones & T Right on target! This guy is giving the same doublespeak as the speculators (see ICE or InterContinental Exchange) who stuck it to us in 2008.

Ritholtz reminds me of those who claimed that the California electricity price surge of 2000-2001 was due to increased energy demand from computers. Some of the factors he listed exist, but are highly unlikely to have more than a marginal impact. Take the inflation for example: from January 2005 (when interest rates started to go up through August 2008, the CPI went from 190 to 219 - a 15% rise - and a large component of that was energy.In fact, during a period of declining real wages and slack demand, almost the only things which went up were underegulated markets -- either because of manipulation (as in the case of ICE) or because the markets were relying on fraudulent accounting (as with NYSE). ICE bears too many ressemblances to the Enron energy trading market for this to just be a coincidence.

You must remember. Oil usage is tremendous per day throughout the world. There isn't that much elasticity in demand when you are talking tens of millions of gallons per day. So why the price swings? Oh yeah, that poor chinese fellow and his family got a gas powered stove. I think speculation has more to do with it than supply ever will.

Enron energy marketing and trading capabilities were at the root of a 5 month run up in the price of a barrel of oil. There were employees who left Enron and went into commodities trading - can't this be checked out. We need to find some of these guys and shine a bright light on what they did - if it is the cause.

Does anyone remember the Sixty Minutes broadcast on May 6,2010. About the oil spill in Mexico? I'm trying to get some information on an article that I'm writing for college. I can't seem to find any information on the oil spill at all. Any help would be appreciated.
Mary