Turning the Middle East into a Ball of Fire

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The consequences of an attack in Iran are that we could see 25 percent of the world's oil knocked off line because of the blocking of the Strait of Hormuz

Mohamed ElBaradei follows in the steps of Admiral Fallon.

Toking on the oil pipe

We have some traders that really don't know what they're doing

protecting the environment is simply a fig leaf for killing the competition to oil

Surging Dementia

Commentator 1 wrote:

``The gangsters have taken another hit, and Admiral Fallon deserves the credit. Meanwhile, the oil glut is intensifying as the U. S. miltary has been able to nullify Bush's laughable sabre rattling, increasing the probability of $40 per barrel oil before the end of 2008. The terror premium could soon evaporate, and the price of oil could drop to $70 per barrel ovenight.

What will the Oil Gang do about this?

``Commentator 1 wrote:

The gangsters have taken another hit ...

Commentator 2 wrote on Mon, 24 Mar 2008:

According to the scarce information which is available, the net out-of-pocket cash loss in these option trades, which are fully documented trades, is close to ten billion dollars from adding up all the reported loss of the two trading deadlines together. There is no indication that the two differing time periods were actually connected by a single person or group, however. The only thing that stands out as linking them is that the risk undertaken was so extraordinary as to be unthinkable in a normal economy.

The net loss from the anomalous trades could be much more, since we only know about the big trades which were reported only because they were so unusual in the risk which was undertaken that no bank or even no "rogue trader" would ever even consider them as remotely possible to succeed.

That is: many people play the options market and make large bets the wrong way on options, that is not unusual ... but without "inside" information of a major international incident (like 9/11 or a surprise attack on Iran) these were "out of the ball-park" in terms of risk and improbability. Even 9/11 would not have near enough of a financial impact on the markets (without a possible recession) to make such a improbably risk pay-off. The party or parties involved in the trades HAD TO BE convinced that war with Iran, or something on that same scale, was going to happen prior to last week [week of 10-17-08] ...

Commentator 1 wrote:

... and Admiral Fallon deserves the credit.

Commentator 2 wrote:

... the Wiki entry on this great patriot has been updated:

"On March 11, 2008, [Admiral Fallon] announced his resignation from CENTCOM [head of the Iraq war effort] and retirement from active duty, citing administrative complications caused in part by an article in Esquire Magazine, which described him as the only thing standing between the Bush Administration and war with Iran." ...''

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Commentator 1 wrote:

``The objective evidence is that our policy in Iraq has been an outstanding success from the view point of those in control of the U.S. government, namely the Oil Gang. In fact, the destruction of the Golden Mosque which started the Sunni - Shiite civil was classic imperial strategy: Divide et Impera.

Previously I wrote "The gangsters have taken another hit and Admiral Fallon deserves the credit. Meanwhile, the oil glut is intensifying as the U. S. military has been able to nullify Bush's laughable sabre rattling, increasing the probability of $40 per barrel oil before the end of 2008. The terror premium could soon evaporate, and the price of oil could drop to $70 per barrel ovenight.

What will the Oil Gang do about this?"

Well, now we know.''


TRANSCRIPT fom The Nightly Business Report, 6-6-08

``John Kilduff, Energy Analyst at MF Global Offers An Outlook on Oil

SUZANNE PRATT: Joining me now to talk about that huge move in oil prices today is John Kilduff, energy analyst at MF Global. John, welcome back to the program.


PRATT: So it was a crazy day in the energy market. Tell us what happened.

KILDUFF: Well, it was really one for the record books. We had never been lock ... limit up. Futures rose as much as they possibly could today, and the commodity markets are still a little old-fashioned with our circuit breakers and we reacted strongly to several of the things that you've been speaking about in this broadcast so far.

I think chief among them though was the shudder that was sent through the market from Israel and the comments from their transportation minister, who isn't just some transportation minister. This gentleman was a former defense minister, is seeking to succeed Ehud Olmert because of the scandal that's going on embroiling his administration, and he also made a comment that U.S. military had approved of this plan. [Israel's Transportation Minister Shaul Mofaz told a newspaper that Iran faced airstrikes if it did not abandon its nuclear program.]

So the oil traders didn't really want to stick around too long to get the details on that. They just bought with both hands because of the potentialities that exist and the repercussions that would come from such an attack.

PRATT: So is geopolitical risk now back on the table? It was sort of missing from the marketplace for a little while.

KILDUFF: We were, for a while, really just dealing with the economics of everything. From the -- from watching the value of the dollar closely, watching interest rate moves very closely, even hanging each day on the various data points to see if the economy was slowing or not, which would dictate future energy demand and whether or not prices were justified at the ever-higher levels. But, yes, this brought the geopolitical worries front and center once again.

PRATT: About a month ago I think I believe you were saying that you thought the top for oil prices would be somewhere in the $130s range. Now we're almost approaching $140. Are all bets off for you? What do you think? Where are we going in terms of prices?

KILDUFF: We're at a crossroads. I have to say the bias is towards the upside still now. We had called for $138 to be the top and when we hit $135 at the end of May, we thought that it might have been over. A lot of things are certainly coming together to argue for that. The dollar had stabilized and was rebounding. Some of the economic data points were sufficiently down ... not the least of which was U.S. motorists driving about 6 percent less and diesel fuel consumption down about 8 percent.

But now that is all out the window. I think you have to say it's going to go higher still before it can crack and go back lower.

PRATT: So today we had Morgan Stanley analysts saying $150. Weight in on this. Where do you think we're going?

KILDUFF: At this point obviously setting a new high. We are looking now at the next target is $142. You're going to need some help, some events of some import to get to that $150. The Israeli worry here today was one of those that needed to emerge. And, to be honest, to the extent that we see climb down from this by Israel and talking it down by the U.S. military, some of this worry could quickly come out of this market. So I think we will get a $140 print next week, but I would look for these prices to come down. I just cannot see how they're sustainable given the demand response that we are in fact seeing at least here in the U.S. and more and more globally.

PRATT: What about speculators, everybody has been talking about speculators in the market. Do you think they were a huge factor in the market today?

KILDUFF: There was a lot of buying that went through and there was certainly capitulation of all sorts. My point about the speculation is that it will stop -- speculation will stop once it stops making sense to speculate on these various issues.

The consequences of an attack in Iran are that we could see 25 percent of the world's oil knocked off line because of the blocking of the Strait of Hormuz just off Iran's shores. And that would argue for $300 oil, if I can even put a price on it.

So I think, again, the demand deterioration continues. Some of these geopolitical worries get pushed back again. Some of the speculation will come out of the market, but there is no room for error. We cannot make up any lost supply at this point. So that's what is driving these things. There is a rationale behind the speculation.

PRATT: Some very interesting comments. Thank you for joining us.

KILDUFF: Thank you.

PRATT: My guest this evening, John Kilduff of MF Global.''

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Commentator 1 wrote on 6-23-08:

Now Mohamed ElBaradei follows in the steps of Admiral Fallon.

Commentator 3 wrote on 6-20-08:

``If you would like to understand the irrational thinking that drives the policy with respect to Iran and Israel, read this article.''


``BLOG ENTRY from The Los Angeles Times, 6-19-08

IRAN: Stop nukes by bombing oil wells, neocons suggest

Why attack Iran's nuclear facilities when striking their oil infrastructure would be much more effective in the scope of a US-led preventive war? Sure, oil prices might skyrocket and the world economy might collapse. But, hey, that's the price you pay for security ...''



NEWS ARTICLE from The Sydney Morning Herald, 6-23-08, by Agence France Presse, Reuters

``Nuclear chief warns against strike on Iran

DUBAI: The head of the United Nations atomic watchdog has warned that an attack on Iran over its nuclear program would turn the region into a fireball.

Mohamed ElBaradei also warned he would not be able to continue in his role as director-general of the International Atomic Energy Agency if the Islamic republic were attacked.

"A military strike (against Iran) would in my opinion be worse than anything else. It would transform the Middle East region into a ball of fire," he said in an interview with Al-Arabiya television.

The New York Times on Friday quoted US officials as saying a big Israeli military exercise this month, involving more than 100 fighter jets in the Mediterranean, seemed to be a preparation for a potential strike against Iran's nuclear facilities.

In Athens, an official with the Greek Air Force's central command confirmed the substance of the report, stating that Greek units had taken part in "joint training exercises" with Israel off the Mediterranean island of Crete ...

Dr. ElBaradei said any attack would simply harden Iran's position in its row with the West over its nuclear program.

"A military strike would spark the launch of an emergency program to make atomic weapons, with the support of all Iranians, including those living abroad," he said ...''



NEWS ARTICLE from LPAC, 6-20-08

``Israeli Warns: "War Party" In Last-Gasp Push For Iran Attack

LPAC -- A senior Israeli source warned yesterday, in discussions with Executive Intelligence Review, that an intense policy brawl has erupted in Israel, over the issue of Israeli preventive strikes against Hezbollah, and bombing raids against Iranian nuclear sites, including the enrichment facility at Natanz.

The source reported that the Cheney circles in Washington have been putting tremendous pressure on the fragile Olmert government in Tel Aviv, to carry out preventive strikes against sites in Iran, and against the Hezbollah security infrastructure in southern Lebanon. These pressures come at the same time that progress has been made on a number of key peace negotiating fronts, involving Israel, Hamas, Hezbollah, and Syria.

The source, a U.S.-based Israeli with strong ties to the present Olmert government, reported that top officials of the Israeli Defense Force, including the current Chief of the General Staff, Gen. Gabriel Ashkenazi, strongly oppose both of the military schemes.

At a recent security cabinet meeting, the source reported, Gen. Ashkenazi bluntly warned of the dire consequences for Israel of strikes against either Hezbollah or Iran's nuclear facilities, calling such schemes "madness."

Nevertheless, hardliners in Israel, including Likud Party chairman and former prime minister Benjamin Netanyahu, and former Defense Minister Shaul Mofaz, Olmert's current deputy prime minister, are pressing for Israeli military strikes against Iran.

The source reported that when Prime Minister Olmert was recently in Washington to address the America Israel Public Affairs Committee (AIPAC) convention, he met privately with Bush and Cheney, and came under intense personal pressure from the Vice President to take action against Iran. He claimed that Israeli pilots are now covertly training on state-of-the-art U.S. fighter jets at locations in the Nevada desert, in preparation for an Israeli bombing of Natanz and other Iranian sites.

Today [6-20-08], the New York Times reported that, in early June, Israel conducted large-scale military exercises, involving more than 100 F-15 and F-16 fighter jets, as well as helicopters, over Greece and the eastern Mediterranean. The exercise covered a distance of 900 miles, which is also the distance between Israel and the Natanz enrichment facility in Iran.

The day after the exercises were completed, Mofaz gave an interview to the Israeli daily Yediot Aharonot, warning that "if Iran continues with its program for developing nuclear weapons, we will attack ... Attacking Iran, in order to stop its nuclear plans, will be unavoidable."

In response to the New York Times report of the Israeli Air Force maneuvers, and the threats from Mofaz, Russia's Foreign Minister, Sergei Lavrov, on June 20 [2008], warned against the use of force against Iran, and chastised both the United States and Israel for ``matter-of-factly" claiming that Iran was working on a nuclear weapon, when no evidence exists that their nuclear energy program is aimed at building a bomb.

While some U.S. military analysts have insisted that Israel does not have the capability of destroying the Natanz facility, unless they use nuclear weapons, a recent report by the Washington Institute for Near East Policy (WINEP), a rightwing Zionist Lobby think tank, claimed that it didn't matter whether a bombing attack succeeded or failed. The effect, either way, of an Israeli or American attack on Natanz and other sites, would be to deter Iran's pursuit of a nuclear weapon. Senior retired U.S. military officers, contacted by EIR and asked to comment on the WINEP report, denounced it as "extremely dangerous."''



NEWS ARTICLE from The Los Angeles Times, 6-23-08, By Sebastian Abbot, The Associated Press

``Saudi Arabia makes vague pledge to boost oil output

JIDDA, SAUDI ARABIA -- Facing strong U.S. pressure and global dismay over oil prices, Saudi Arabia said Sunday that it would produce more crude this year if the market needed it.

The vague pledge fell far short of U.S. hopes for a specific increase and may do little to lower prices immediately.

For now, the current "oil shock" leaves Western countries with little choice but to move toward nuclear power and change their energy-consumption habits, British Prime Minister Gordon Brown warned at a rare meeting of oil-producing and consuming nations.

Saudi Arabia -- the world's top crude exporter -- called the gathering Sunday to send a message that it too is concerned by high oil prices inflicting economic pain worldwide.

Instead, the meeting highlighted the sharp disagreement between producers such as Saudi Arabia and consuming countries such as Britain and the United States over the core factors driving steep price hikes. Oil closed near $135 a barrel Friday -- almost double the price a year ago.

The cost of gasoline also has become a sore point in the U.S. presidential race, with President Bush and presumed Republican nominee John McCain calling on Congress to lift its long-standing ban on offshore oil and gas drilling. Barack Obama, the presumptive Democratic nominee, has said such moves will do nothing to ease American consumers' pain short-term.

The U.S. and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar ...''

Commentator 1 wrote on 6-23-08:

``Stop using rock oil NOW: "Just say NO to petroleum."

The Kazakh War of 2020 will make the Iraq War look like a Sunday school picnic. There should be no more drilling for oil. Instead, a $100 per barrel tariff on foreign oil should be imposed. The U.S. should immediately convert to methanol and diesel made from coal for our liquid fuels.

Plug-in hybrid cars should be subsidized, to be charged up with electricity from coal, nuclear, wind, solar, and hydro power. There should be a major program to produce biodiesel, as well as programs to install commuter rail. How much more blood of young Americans are we willing to spend for oil -- not to produce it but to control it: The Oil Gang is in the oil shortage business.''

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Commentator 1 wrote:

As Thomas Friedman says below, the new Bush energy plan is "Get more addicted to oil." How is it possible that the Oil Gang thinks that the American people will buy this? Is it "the Bigger the Lie the Better it Works?" The novel "The Body Politic" by Lynne Cheny and Victor Gold is a window into the thinking of the current masters of the universe.

This hilarious book is based on Section 2 of the Twemty-fifth Amendment to the Constitution of the United States which says "Whenever there is a vacancy in the office of the Vice President, the President shall nominate a Vice President who shall take office upon confirmation by a majority vote of both Houses of Congress."

Lynne Cheny probably knows as much about the vice presidency as anyone, and also probably shares the same attitudes as the current incumbent, her husband (my fingers wanted to type "Darth Vader"). The plot is based on the President's plan to sell the Vice Presidency to each of several Senators in return for their support of his nomination at the convention. They are all told secretly from each other that the Pres intends to dump his current VP, who messes up the plan by dying in the arms of a leading journalist.

This untimely death, which could force the Pres to name one person prior to the convention, sets up a very funny situation comedy in which the VP's press secretary is given the task of hiding the body and keeping the VP's death secret. Ultimately, the dead VP, through the efforts of his press secretary, becomes the most popular politician in the country, ready to seize the nomination from the President.

The real fall guy in this comedy is the American public, which Lynne Cheny portrays as infinitely gullible. I think she, as well as Darth, sincerely believe this. So it is not surprising that the Oll Gang thinks that the Bush - McCain energy plan to drill in ANWR and off the shores of California and Florida will be swallowed by the American public hook, line, and sinker -- such suckers can easily be convinced that the U. S. addiction to rock oil can only be treated by swilling more oil.

Is it hopeless to remind our fellow citizens that we didn't leave the Stone Age because we ran out of stones?



COLUMN from The New York Times, 6-22-08, By THOMAS L. FRIEDMAN

[Toking on the oil pipe]

``Two years ago, President Bush declared that America was "addicted to oil," and, by gosh, he was going to do something about it. Well, now he has. Now we have the new Bush energy plan: "Get more addicted to oil."

Actually, it's more sophisticated than that: Get Saudi Arabia, our chief oil pusher, to up our dosage for a little while and bring down the oil price just enough so the renewable energy alternatives can't totally take off. Then try to strong arm Congress into lifting the ban on drilling offshore and in the Arctic National Wildlife Refuge [ANWR].

It's as if our addict-in-chief is saying to us: "C'mon guys, you know you want a little more of the good stuff. One more hit, baby. Just one more toke on the ole oil pipe. I promise, next year, we'll all go straight. I'll even put a wind turbine on my presidential library. But for now, give me one more pop from that drill, please, baby. Just one more transfusion of that sweet offshore crude."

It is hard for me to find the words to express what a massive, fraudulent, pathetic excuse for an energy policy this is. But it gets better. The president actually had the gall to set a deadline for this drug deal:

"I know the Democratic leaders have opposed some of these policies in the past," Mr. Bush said. "Now that their opposition has helped drive gas prices to record levels, I ask them to reconsider their positions. If Congressional leaders leave for the Fourth of July recess without taking action, they will need to explain why $4-a-gallon gasoline is not enough incentive for them to act."

This from a president who for six years resisted any pressure on Detroit to seriously improve mileage standards on its gas guzzlers;

this from a president who's done nothing to encourage conservation;

this from a president who has so neutered the Environmental Protection Agency that the head of the E.P.A. today seems to be in a witness-protection program. I bet there aren't 12 readers of this newspaper who could tell you his name or identify him in a police lineup.

But, most of all, this deadline is from a president who hasn't lifted a finger to broker passage of legislation that has been stuck in Congress for a year, which could actually impact America's energy profile right now, unlike offshore oil -- that would take years to flow -- and create good tech jobs to boot.

That bill is H.R. 6049, "The Renewable Energy and Job Creation Act of 2008," which extends for another eight years the investment tax credit for installing solar energy and extends for one year the production tax credit for producing wind power and for three years the credits for geothermal, wave energy and other renewables.

These critical tax credits for renewables are set to expire at the end of this fiscal year and, if they do, it will mean thousands of jobs lost and billions of dollars of investments not made. "Already clean energy projects in the U.S. are being put on hold," said Rhone Resch, president of the Solar Energy Industries Association.

People forget, wind and solar power are here, they work, they can go on your roof tomorrow. What they need now is a big U.S. market where lots of manufacturers have an incentive to install solar panels and wind turbines, because the more they do, the more these technologies would move down the learning curve, become cheaper and be able to compete directly with coal, oil and nuclear, without subsidies.

That seems to be exactly what the Republican Party is trying to block, since the Senate Republicans, sorry to say, with the help of John McCain, have now managed to defeat the renewal of these tax credits six different times ...

Our future is not in oil, and a real president wouldn't be hectoring Congress about offshore drilling today. He'd be telling the country a much larger truth:

"Oil is poisoning our climate and our geopolitics ... And we're also going to go on a crash program to dramatically increase energy efficiency, to drive conservation to a whole new level and to build more nuclear power. And I want every Democrat and every Republican to join me in this endeavor."

That's what a real president would do. He'd give us a big strategic plan to end our addiction to oil and build a bipartisan coalition to deliver it. He certainly wouldn't be using his last days in office to threaten Congressional Democrats that if they don't approve offshore drilling by the Fourth of July recess, they will be blamed for $4-a-gallon gas. That is so lame. That is an energy policy so unworthy of our Independence Day. ''

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TRANSCRIPT from The News Hour, 6-24-08

[We have some traders that really don't know what they're doing]

``Concerns over high oil prices continue as lawmakers struggle to find production solutions. Two energy consultants discuss the factors behind the ongoing price jumps and analyze the trajectory of fuel costs for the near future.

RAY SUAREZ: Oil sells for over $135 a barrel, more than double what it was a year ago. Some on Capitol Hill are asking whether market speculators after a fast buck are partly to blame for record high prices ...

This past weekend, Saudi Arabia, the world's largest oil exporter, convened an emergency meeting on the issue of supply. Saudi King Abdullah addressed the assembled delegates.

KING ABDULLAH, Saudi Arabia (through translator): There are several factors behind the unjustified swift rise in oil prices. And they are: speculators who play the market out of selfish interests ...

RAY SUAREZ: And we look at what drives higher oil prices with energy analysts who report on this field in their own newsletters. Peter Beutel is president of Cameron Hanover, an energy risk management firm in New Canaan, Connecticut.

And Stephen Schork is the president of The Schork Group. He also consults for major oil firms, OPEC member countries, and hedge funds.

So, gentlemen, if I ask you first, Peter Beutel, to give me a quick tour of petroleum economics, why is the price of oil now so high?

PETER BEUTEL, President, Cameron Hanover: Well, there are lots and lots of factors. I would have to say that, since August or September [2007], probably the biggest single factor was the fact that the Fed tipped its hand and let everybody know that it was going to cut interest rates. That put selling pressure on the U.S. dollar.

And since commodities are denominated in dollars, that has made all commodities cheaper for Asians and Europeans. And it's meant that Americans have had to bid the price higher ...

We have had lots of problems in Nigeria, ongoing now for about a year. We've had lower refinery runs, a curious little thing. Gasoline prices are not as strong against crude oil as they were, say, a year or two ago. And that's meant that independent refineries or people without oil in the ground have not been able to run as much.

So it's a combination of factors, but if you ask me, who is the biggest culprit in the last 12 months? Curiously enough, it's been the Federal Reserve.

RAY SUAREZ: Stephen Schork, first, do you agree with that analysis? And how would you explain a doubling over the last year?

STEPHEN SCHORK, Energy Analyst: Absolutely. I am on board with Peter with the Federal Reserve's decision in August [2007].

We have to remember that, in January of 2007, crude oil was below $50. Now, we moved from $49.90 back in January to on the cusp of $80 by the end of July 2007.

Now, if you look at the net length held by large traders, quote, unquote, your "speculators," your large hedge funds, they were holding record length at the end of July.

Well, what happened last August? You had the credit meltdown. And, therefore, you had all these hedge funds that also had large positions in the commodity markets who also had large positions with exposure to the credit meltdown.

Therefore, when those markets began to get hit and the margins started racking up, these hedge funds had to sell. We know they sold because, at the end of July, like I've just said, they were holding record length, the net obligation to own 127 million barrels of oil at some point in the future.

Four weeks later, at the end of August, these funds were holding only 21 million barrel obligations. They sold the equivalent of 100 million barrels inside of four weeks. Therefore, that drove the price down of oil from about $80 to back below $70.

Now, in September [2007], as Peter just said, the Fed tipped its hand. They were going to cut interest rates. That meant a cheaper dollar. So these hedge funds that liquidated all that selling back in August started piling back into the market back in September. And prices have doubled since then.

RAY SUAREZ: Well, Stephen Schork, you used the word "speculators." That was a word in great use on Capitol Hill this week. Who is it that we're talking about? Who is it that trades notions about what oil is going to cost three months, six months a year down the road?

STEPHEN SCHORK: Well, the speculator is a very broad term. They've been in the futures markets. Without the speculator, you would not have futures markets. You would not have someone telling you about the disconnect between supply and demand. And this is what the speculator is telling us.

So this speculator is, hey, it's Goldman Sachs, it's Morgan Stanley, it's the 97 hedge funds that have been created over the last year that focus specifically on hedge funds. It is also the doctor, the lawyer that has the disposable income that's plowing money into the index funds. And this is because, first and foremost, great returns ...

PETER BEUTEL: ... What has happened now that is different than, say, what had been going on for 100 years is that now we have some traders that really don't know what they're doing. A lot of them are union pension funds, college foundations, people we normally think of as good guys.

They have been buying and holding commodities, unlike most speculators, who buy, then sell, then sell, then buy, who are equally as comfortable selling things they don't have as they are buying things they don't want.

These guys, the new investors, have been buying and holding. And this has created a different signal. The market interprets it as long-term end users. These people are really speculators, only I'd be willing to bet many of them don't even know it.

And I'd be willing to bet that, if you went and told some of these people, one, that they're helping to push the price higher and, two, what incredible risks that they're taking on, that they'd be mortified that they were actually doing this.

RAY SUAREZ: Stephen Schork, you've both cited dollar weakness and supply and demand as factors, along with speculation. This week, both the House and Senate heard testimony that there was a sizable portion sitting on top of that $135 price of oil -- the estimates went anywhere from $30 to $65 a barrel -- that was pumped into there strictly by speculation.

Is it possible to separate out that part of the price that's being created by the way the market mechanism is working right now?

STEPHEN SCHORK: The only way you can really do it is look at the current price path ... from the start of this bull run in the fourth quarter of 2001 up until about the third quarter of 2007. Prices moved from $20 to ... $80, a $60 move. [From 9-07 through 6-08] We have moved another $60 above and beyond that.

Now, a commodity generally ... grows at a discounted rate of growth, plus a small convenience yield for the right of holding that. If you based on these formulas and the current price path that we have seen ... the estimates are that oil right now [should be] about $95 a barrel.

This is essentially why all the major Wall Street houses back in December, when they were given us their 2008 forecast, all their average ranges ranged between $85 and $95.

So anything above and beyond that, if you want to call it a balloon, you want to call it speculation, you certainly could lop that off and said what is above and beyond now what this, quote, "fair value" is essentially this speculative bubble.

RAY SUAREZ: So you're estimating about a third of the entire price, quickly, before we go?

STEPHEN SCHORK: Oh, absolutely. This market has been moving in a linear function, but in the last two months a parabola has been drawn into this price path and prices have gone virtually straight up.

There is no doubt what we are seeing now is long-term bullish prognostications; 2, 5, 10 years down the road are being compressed into the prompt market. This has created a panic. People are moving in this market.

And it's -- hey, this is nothing unlike what we saw in the dot-com market in the late 1990s. When this bubble bursts -- and it will burst -- we're going to go right back to where we started from, below fair market value, below $95, back towards $70, when this all began last August.

RAY SUAREZ: Stephen Schork and Peter Beutel, gentlemen, thank you both.


PETER BEUTEL: Thank you.



NEWS ARTICLE from WSJ Digital Network, 6-24-08, By Stephen Power and Ian Talley

``Panel Cites Surge in Speculative Oil Trades

WASHINGTON -- Speculative traders' interest in crude oil has grown to the point that they now account for roughly 70% of all trading in West Texas Intermediate crude on the New York Mercantile Exchange, compared with 37% in 2000, according to an investigation by a congressional subcommittee ...''

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NEWS ARTICLE from The New York Times, 6-27-08

"... Faced with a surge in the number of proposed solar power plants, the federal government has placed a moratorium on new solar projects on public land until it studies their environmental impact, which is expected to take about two years.

The Bureau of Land Management says an extensive environmental study is needed to determine how large solar plants might affect millions of acres it oversees in six Western states -- Arizona, California, Colorado, Nevada, New Mexico and Utah ..."

Commentator 4 wrote:

``I'm hopefully not given to apoplexy, but this just about did it for me:

How asinine can government be. Let's see, on one hand we have a few hundred square miles of desert, on the other we have survival ... hmmmmm ... yep, we need a two year study to weigh that one.''

Commentator 3 wrote:

``Every "normal" person is in favor of protecting the environment [but it is] the hypocrisy shown by the administration that is so stupid. For example, drilling in the coastal waters or in Alaska is all right even though the harm to the environment is obvious. But, covering areas that are unused and out of sight by equipment that will eventually be removed has to be debated.

Meanwhile, it is ok to rape the land in Canada for oil shale while we are encouraged to use more oil. Even the ethanol idea was a cruel hoax that is now too expensive to continue because energy is too expensive to be used to raise corn for that purpose. Given the basic approach this administration has shown, it is easy to think that protecting the environment is simply a fig leaf for killing the competition to oil.''

Commentator 1 wrote:

``"Stupid" is the wrong word. We should admire the genius of the gang running our government. They are masters of deception in convincing a lot of people that they are "stupid". They are not stupid; they are fiendishly clever; and they are robbing us blind as they destroy the economy and the environment. We must not forget that their product is rock oil, and that THEY ARE IN THE OIL SHORTAGE BUSINESS.''



NEWS ARTICLE from The Seattle Times, 6-7-08,

By Steven Mufson and Neil Irwin, The Washington Post

[On Friday, 6-6-08, Israel's Transportation Minister Shaul Mofaz told a newspaper that Iran faced airstrikes if it did not abandon its nuclear program.]

``More bad news on jobs, fuel prices and investments:

Labor: The loss of 49,000 jobs in May [2008] increases the unemployment rate by one-half percentage point to 5.5 percent, the biggest monthly increase in 22 years.

Oil: The price of a barrel of crude soars a record $10.75 to $138.54, raising the prospect of even higher gasoline prices.

Wall Street: The Dow Jones industrial average plunges 394.64 points, or more than 3 percent.

A soaring jobless rate, an unprecedented jump in oil prices and a sliding dollar cast fresh doubt Friday on how soon the U.S. economy would be able to break out of a pattern of feeble growth and financial instability.

The unemployment rate shot skyward to 5.5 percent, the biggest leap in 22 years, and crude oil prices rocketed up $10.75 a barrel, sending stock markets tumbling and shaking the economic and political landscape ...

Oil prices hit a trading record of more than $139 a barrel before settling at $138.54. This more than erased a drop earlier in the week and promised further increases in gasoline prices. The average for a gallon of unleaded in the Seattle area Friday was $4.24, according to AAA ...

The one-day increase in oil prices was almost double the biggest ever in dollar terms ... [and] more than the cost of an entire barrel a decade ago.

Meanwhile, the jobless rate for May was up 0.5 percentage points from April, the Labor Department said, the largest swing in a single month since 1986. The number of jobs on employers' payrolls fell by 49,000, the fifth consecutive monthly decline for an economy that has shed 324,000 jobs this year ...

[Ohio lost 7,800 manufacturing jobs the first four months of 2008.]

The increase Friday [6-6-08] comes on top of a nearly $6 increase the previous day, for a two-day jump of $16.24 a barrel, or 13 percent. Morgan Stanley analyst Ole Slorer predicted that crude oil would reach $150 by the Fourth of July, in time for peak driving-vacation season ...

The sharp rise in oil prices ... was fueled in part by supply fears. Israel's Transportation Minister Shaul Mofaz -- a former defense minister and contender for the post of prime minister -- told a newspaper that Iran faced airstrikes if it did not abandon its nuclear program.

On stock markets, all of this looked grim. High oil prices have drained money from consumers' pockets and boosted costs for businesses. They also have siphoned about $1.5 billion a day out of the U.S. economy and into oil-producing countries.

An almost forgotten element of Friday's chaos was the U.S. dollar's continuing slump ... it plunged again Friday against the euro, which now trades at $1.568 ...''


NEWS ARTICLE from The Plain Dealer, 7-3-08, by Adam Schreck, Associated Press

``Jittery traders push price per barrel above $144, closing at $143.57

NEW YORK -- Oil prices shot to a new trading record above $144 a barrel Wednesday [7-2-08] as the government reported a bigger-than-expected drop in U.S. supplies and the threat of conflict with Iran weighed on traders' minds.

Light, sweet crude for August delivery rose as high as $144.32 on the New York Mercantile Exchange shortly after the regular trading session ended. The contract also notched a new closing record, settling at $143.57 - a full $2.60 above the previous high from a day earlier.

Oil first traded above $100 a barrel in January [2008]. It hit the previous trading high of $143.67 Monday ...

"It's a combination of things," Phil Flynn, analyst at Alaron Trading Corp. in Chicago, said of the run-up. "People are buying oil because they're worried about tight supplies, the weak dollar, war breaking out in Iran. It doesn't look like any of this stuff is going to settle down any time soon."

Ongoing rhetoric about possible attacks on Iran, the world's fourth-largest oil producer and OPEC's second-largest exporter, left the market jittery.

Traders are worried Tehran could try to halt shipments and seize control of the strategically important Strait of Hormuz if attacked by Israel or the United States. About 40 percent of the world's tanker traffic passes through the Middle Eastern choke point.''

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NEWS ARTICLE from The New York Times, 7-24-08, By MICHAEL COOPER

``Senator John McCain was chiding Senator Barack Obama for 'a false depiction of what actually happened' in Iraq in a television interview this week. But in giving his chronology of events in Iraq, Mr. McCain gave what critics said was his own false depiction ...

Mr. McCain bristled in an interview with the CBS Evening News on Tuesday when asked about Mr. Obama's contention that while the added troops had helped reduce violence in Iraq, other factors had helped, including the Sunni Awakening movement, in which thousands of Sunnis were enlisted to patrol neighborhoods and fight the insurgency, and the Iraqi government's crackdown on Shiite militias.

"I don't know how you respond to something that is such a false depiction of what actually happened," Mr. McCain told Katie Couric, noting that the Awakening movement began in Anbar Province when a Sunni sheik teamed up with Sean MacFarland, a colonel who commanded an Army brigade there.

"Because of the surge we were able to go out and protect that sheik and others," Mr. McCain said. 'And it began the Anbar Awakening. I mean, that's just a matter of history." ...

The Anbar Awakening began in the fall of 2006, several months before President Bush even announced the troop escalation strategy, which became known as the surge ...''



POST from The Tribune Interactive, 7-23-08, by Mark Silva

``Sen. John McCain, ``staking his candidacy entirely on the surge in Iraq,'' has shown ``that he does not understand one of the fundamental facts about the surge,'' MSNBC's Keith Olbermann was reporting of the Republican candidate for president last night - ``getting the basic timeline and history of the surge entirely wrong.''

The commentator's assertion stems from an interview that McCain conducted with CBS News, in which anchor Katie Couric pointed out that Sen. Barack Obama, who has just traveled through Iraq, has maintained that, while the increased deployment of troops there had contributed to security, a Sunni awakening and the Shiite government going after the militia also contributed - and that security might have improved even without the surge.

McCain replied: "I don't know how you respond ..."

The commander, now-Gen. Sean McFarland, briefed the media on the Anbar awakening on Sept. 29, 2006, months before the surge was even announced by President Bush in January 2007, a point that Olbermann noted in calling McCain "wrong'' on his Countdown broadcast and bloggers have noted as well.

The report ... takes a deep dig at CBS News for not including this segment in the parts of the interview that aired, but rather displaying it on its Website - perhaps not knowing the story it had in its hands:

"The colonel in question is now a one-star general, and his name is Sean MacFarland," the Washington Independent notes. "He was commander of the 1st Brigade Combat Team, 1st Armored Division, based in Ramadi in 2006 and early 2007 and is a key figure in embracing the Anbar Awakening before it even had that name."

Here MacFarland is explaining what was going on to Pam Hess, then of UPI, on September 29, 2006, at least two months before Bush decided upon the surge, and about three [months] before he announced it to the public:

"With respect to the violence between the Sunnis and the al Qaeda -- actually, I would disagree with the assessment that the al Qaeda have the upper hand," MacFarland said in September 2006. "That was true earlier this year when some of the sheikhs began to step forward and some of the insurgent groups began to fight against al Qaeda ...

"This is a different phenomena that's going on right now. I think that it's not so much the insurgent groups that are fighting al Qaeda, it's the ... fence-sitters, the tribal leaders, are stepping forward and cooperating with the Iraqi security forces against al Qaeda ..."


... In the interview that CBS aired, they inserted a different answer to the same question. The answer was a response to a completely different question. Almost, like they were protecting Mcain. Hmm

Posted by: chicago truth squad | July 23, 2008

The Old Boy is slipping ... What good does all his "experience" do him if his ability to reason and keep track of important facts keeps diminishing?''

Posted by: kg123 | July 23, 2008



The Carpetbagger Report, 7-23-08, by Steve Benen

``CBS covers-up humiliating McCain error, misleads national audience

McCain's confusion on Iraq goes from embarrassing to scandalous

... Whatever the source, the bottom line remains the same: when it comes to Iraq, John McCain is hopelessly incoherent about the basics. To be sure, geo-political crises can be complicated, but McCain isn't flubbing policy minutiae at an advanced seminar on foreign policy. As of yesterday, he doesn't seem to even know what the surge is:

Kate Couric: "Senator McCain, Senator Obama says, while the increased number of US troops contributed to increased security in Iraq, he also credits the Sunni awakening and the Shiite government going after militias. And says that there might have been improved security even without the surge. What's your response to that?"

McCain: "I don't know how you respond ..."

Remember, according to McCain, he's an expert on foreign policy. The basis of his entire presidential campaign is his ability to handle matters like the war in Iraq, and the notion that his unparalleled expertise makes him uniquely qualified.

Except the man is shockingly confused, and embarrasses himself more and more with each passing day.

These comments to Couric may be the single most striking mistake any presidential candidate has made in years. In 1976, Gerald Ford said, during a nationally televised debate, 'There is no Soviet domination of Eastern Europe.' It was a bizarre error that contributed greatly to his defeat.

And McCain not understanding what the basics of the surge is at least as dramatic.

The surge has, after all, become the raison d'etre of McCain's entire presidential campaign. Why would he announce his belief that the surge prompted the Anbar Awakening' McCain wasn't on the campaign trail in late 2006 and early 2007. He was in the Senate, presumably paying attention to current events, and helping push the Bush administration's policy.

As has become far too common lately, McCain has the entire story backwards.

In 2006, Gen. Sean MacFarland, the commander of the 1st Brigade Combat Team, 1st Armored Division, explained in September 2006, months before Bush even decided to launch the surge, that the Awakening was already underway.

Spencer Ackerman, noting MacFarland's remarks, added, "For McCain to say that the Anbar Awakening is the product of the surge is either a lie or professional malpractice for a presidential candidate who is staking his election on his allegedly superior Iraq judgment."

Ilan Goldenberg also explained:

``This is not controversial history. It is history that anyone trying out for Commander and Chief must understand when there are 150,000 American troops stationed in Iraq. It is an absolutely essential element to the story of the past two years. YOU CANNOT GET THIS WRONG.

Moreover, what is most disturbing is that according to McCain's inaccurate version of history, military force came first and solved all of our problems. If that is the lesson he takes from the Anbar Awakening, I am afraid it is the lesson he will apply to every other crisis he faces including, for example, Iran.

This is just incredibly disturbing. I have no choice but to conclude that John McCain has simply no idea what is actually happened and happening in Iraq.''...


``On July 23rd, 2008, Racer X said:

We've reached the point at which it's reasonable to wonder if McCain genuinely understands what's going on around him. This is, by any reasonable measure, the kind of mistake that should ruin his chances of winning the White House.

I thought we reached that point when he said (repeatedly) that the radical Shiite nation of Iran was actively supporting the radical Sunni terrorists in Iran. That should have been enough to get the press corpse to wonder ...

Couric/McCain Interview:


On July 23rd, 2008, brent said:

The fact that CBS edited this out is truly the most disturbing element of this story ... There is nothing complicated about this. It is not a matter of opinion and there is no alternate or nuanced explanation. CBS was covering for McCain. They made a deliberate choice to hide a pretty salient detail demonstrating the candidate's abject incompetence.''



McCain's Mixed-Up Timeline

Posted by Douglas Watts | July 23, 2008

``To repeat something mentioned below, John McCain told Katie Couric that the surge caused the Anbar Awakening ... And yet here's an article McFarland co-wrote which makes it clear that not only did the events he was involved with predate the surge, but he was out of Anbar by February 2007 -- just as the first surge forces were arriving. The term "surge" doesn't so much as appear in his account. Seth Colter Walls notes that McCain himself understood the chronology correctly at one point.

Posted by southpaw | July 23, 2008

... Just to step back a second from the bare facts, think about what CBS did tonight. John McCain was asked a question about a crucial issue in our national politics, and he gave an answer that was -- as we've seen -- factually inaccurate and embarrassing even to right wing trolls. CBS suppressed that answer. They played the question being asked and then substituted something else entirely, rather than what McCain actually said in response.

That's really astonishing conduct for a news organization. I'm not sure I can recall anything like that ever happening before ...

Posted by Arun | July 23, 2008

four thoughts:

1. McCain's answer to the direct question was wrong, as usual. The old man is brain dead.

2. Katie missing the mistake, not calling him on it ...

3. CBS' edit addition of a different answer ...

4.The key is the NEW answer. It was the McCain attack on Barack's patriotism ... McCain's sound bite attack on Barack, the new "lose the election, lose the war" sound bite.''



POST from The Moderate Voice, 7-22-08, by ELROD

``More distorted Iraq history from McCain

... I criticized the tendency of McCain to claim all credit for security improvements in Iraq. The surge was a part of that improvement, to be sure, but the majority of the solution came from events outside the control of US troops: the Anbar Awakening that began months before the surge, Sadr's ceasefire and, sadly, the ethnic cleansing of Baghdad. I hoped that the media would start to challenge McCain on this assumption.

Oddly enough, CBS's Katie Couric apparently posed this exact question to John McCain. The answer was shocking - perhaps so shocking that CBS actually scrubbed the answer from the final production. But as Keith Olbermann noticed on the CBS website, the original response is still there. Here's how the section went:

``Couric: "Senator McCain, Sen. Obama says, while the increased number of U.S. troops contributed to increased security in Iraq, he also credits the Sunni awakening and the Shiite government going after militias. And says that there might have been improved security even without the surge. What's your response to that?"

McCain: "I don't know how you respond ..."

As Olbermann ... mentions, the McFarland statement on the Anbar Awakening was issued in September of 2006. The beginning of the Anbar Awakening actually dates to August 2006 when dozens of tribal leaders met in Anbar to plot out an anti-Al Qaeda strategy. The surge did not begin until January 2007 and did not reach fruition until about June 2007 ...

Petraeus was astute enough to back the Anbar Awakening and try to replicate it in Baghdad. He did, in fact, support the sheikhs, although Petraeus's predecessor did too. Still, the surge did not lead to the Anbar Awakening. That is getting the chronology completely backwards.

It would be like saying that the 9/11 was a retaliation for the removal of Saddam Hussein. It would be as if the US Civil War was caused by the Great Depression of the 1930. It is completely wrong.

Why did McCain say this? Was it just another gaffe like the Iraq-Pakistan border? I think not. The Iraq-Pakistan border reference was a classic slip of the tongue - totally innocent. But this is not innocent as McCain even referred to the whole notion of the Anbar Awakening preceding the surge as a 'false depiction of what actually happened.'

I can't stress enough how infuriating this is. The only word that describes this is that John McCain is lying. He is stating something he knows not to be true. He is so desperate to accentuate the value of the surge that he actually ascribed events predating the surge to the surge itself ...''



NEWS ARTICLE from The Associated Press. 7-23-08

``... McCain flubs on Iraq timeline

WASHINGTON (AP) -- ... Asked about Obama's contention that a Sunni revolt against al-Qaida combined with the addition of thousands of U.S. combat troops that were sent to Iraq contributed to the improved security situation there, McCain scoffed.

"I don't know how you respond ..."

In March 2007, before the first of the additional troops began arriving in Iraq, Col. John W. Charlton, the American commander responsible for Ramadi, a city in Anbar province, said the newly friendly sheiks, combined with an aggressive counterinsurgency strategy and the presence of thousands of new Sunni police on the streets, had helped cut attacks in the city by half in recent months ...

Obama, who opposed the war from the start and says he will pursue a 16-month timetable for withdrawing combat troops if he is elected, toured the war zone this week ...''



NEWS ARTICLE from The Associated Press. 7-23-08, By STEVEN R. HURST, Associated Press Writer

``Obama: ... Israeli security paramount

WASHINGTON -- Democrat Barack Obama, bidding to prove his statesmanship, waded into the thicket of Mideast politics Wednesday, sitting down with Israeli and Palestinian leaders whose bloody disputes have defied peacemaking by American presidents for decades ...

Ehud Barak and met with Israeli President Shimon Peres.

"I'm here on this trip to reaffirm the special relationship between Israel and the United States and my abiding commitment to Israel's security," Obama said during the Peres meeting.

It was a day packed with meetings and travel across Israel and the Palestinian territories during which he was holding talks with Israeli Prime Minister Ehud Olmert in Jerusalem and Palestinian President Mahmoud Abbas in the West Bank town of Ramallah.

After Obama met with Abbas for about an hour, aide Saeb Erekat told reporters Obama was willing to engage immediately in the protracted conflict ...''



NEWS ARTICLE from The Plain Dealer, 7-23-08, by David Espo, Associated Press

``Obama unmoved by Petraeus on Iraq

AMMAN, JORDAN -- Democratic presidential contender Barack Obama declined on Tuesday [7-22-08] to rate the Bush administration's troop surge in Iraq as a success despite a reduction in violence, and he expressed understanding of Gen. David Petraeus' opposition to a timetable for the withdrawal of U.S. combat troops ...

Obama made his remarks at a news conference shortly after arriving in Jordan. "But keep in mind, for example, one of Gen. Petraeus' responsibilities is not to think about how could we be using some of that $10 billion a month to shore up a U.S. economy that is really hurting right now," Obama said. "If I'm president of the United States, that is part of my responsibility." ...

The Illinois senator voted against 2002 legislation that authorized military action in Iraq, and he has long called for the withdrawal of U.S. combat troops.

He said he would consult with military commanders to determine how many troops to keep in the country to protect diplomatic and humanitarian operations, to train Iraqis and to conduct counterterrorism operations against al-Qaida in Iraq.

He also opposed President Bush's decision to add 30,000 troops more than a year ago, saying it would not succeed ... [none of the political objectives of the surge have been achieved, in particular the oil law giving equity to U.S. companies in the Iraqi oil fields and the status of forces agreement allowing an indefinite U.S. occupation of Iraq]

Asked for his current assessment, he said, "I believe that the situation in Iraq is more secure than it was a year and a half ago." Yet he added, "I think that the definition of success depends on how you look at it.

"Originally, the administration suggested that the key measure was whether it gave breathing room for political reconciliation. So far, I think we have not seen the kind of political reconciliation that's going to bring about long-term stability in Iraq," he said.''


NEWS ARTICLE from The Plain Dealer, 8-2-08, by Tom Feran, Plain Dealer Reporter

``Barack Obama ad responds to John McCain commercial about high gas prices ...

Announcer: "Have you seen John McCain's TV ad?"

Voiceover from McCain ad: "Who can you thank for rising prices at the pump?"

Crowd chant from McCain ad: "Obama, Obama, Obama!"

Obama ad announcer: "John McCain is blaming Barack Obama for gas prices? The same old politics.

Barack Obama thinks high gas prices deserve serious answers and a serious plan:

Crack down on oil speculators,

raise mileage standards,

and fast-track alternative fuels." ...''

To reach this Plain Dealer reporter: tferan@plaind.com

Read the whole Obama energy plan at www.newenergyforamerica.com

Commentator 1 wrote on 8-2-08:

``Just as with his claims about the success of the surge, John McCain is either lying or displaying deep mental confusion. With the U.S. importing 70% of the rock oil it uses, there is no possibility of drilling our way out of dependence on foreign oil. This means that we will continue to send enormous amounts of money to our enemies.

See www.pickensplan.com/theplan/

We must use alternative fuel for transportation, as proposed by The Pickens Plano (methane), because the only way to get off foreign oil is to get off oil. Do we want to send young Americans to die for oil in Central Asia in the Kazakh War of 2020? A war in Central Asia will be worse than Viet Nam and will make the Iraq War look like a training exercise.

Getting off rock oil is the highest priority for American national security; and McCain's failure to recognize this is frightening, especially since the majority of Americans seem to have bought his line that we can cure our oil addiction by drilling for more oil.''

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