Oil Speculator Crackdown Cometh: Central Planner In Chief Announces Self-Promotion To Margin Hiker In Chief At 11:10AM

Tyler Durden's picture

When it comes to evil, evil speculators driving stocks higher on endless gobs of cheap zero-cost liquidity, one will hear nary a peep out of the administration: after all: wealth effect or bust. However, when someone hears oil speculators, run and hife. Indeed, now that Obama's uber-central planning mandate has proven completely powerless to redirect the flow of zero-cost money from acquiring real, as opposed to paper-based, assets (read crude), the Teleprompter in Chief will have a sit down with the nation at 11:10 am and in the latest sermon from the White House mound, will "confront" oil speculators once and for all. His plan: why encourage margin hikes of course - the same principle that crushed the spine of the gold and silver spike in 2011. Unfortunately, unlike gold and silver, whose trading is still dominated by the Comex, energy has numerous alternative venues, such as the ICE, and increasing exchanges in China, which also happens to be the marginal demand setter with 3 consecutive months of near record imports. Which is why we are 100% confident that just like every failed attempt at central planning, all Obama will achieve is another spike in crude prices, just in time for the next global reliquification cycle, just in time for 2012's debt ceiling scandal, and just in time for the reelection.

From WaPo:

The White House plan, which Obama was to unveil Tuesday, is more likely to draw sharp election-year distinctions with Republicans than have an immediate effect on prices at the pump. The measures seek to boost spending for Wall Street enforcement at a time when congressional Republicans are seeking to limit the reach of federal financial regulations.


Obama plans to spell out his $52 million proposal Tuesday at the White House, where he will be joined by Attorney General Eric Holder.


Republicans have been hammering Obama on his energy policies, recognizing the political cost of high gas prices on the president. Obama’s plan would turn the tables on Republicans by taking aim at Wall Street’s role in the oil price chain.

Eric Holder? Out of carbonite again? And no mention of Bernanke? Ah yes... can't have the curtain lifted on he who runs it all...

So back to the evil, evil speculators:

Senior administration officials who put together the proposal said it aims to detect and deter illegal manipulation by energy speculators, the type of practices that many Democrats blame for the high cost of gasoline. The officials spoke on the condition of anonymity to discuss the plan ahead of Obama’s announcement.


They would not go as far as to say that market manipulation is responsible for rising gas prices, but the officials said they wanted to curtail the ability of speculators to take unlawful advantage of oil price volatility.


At issue is the increasing role of investment in oil futures contracts by pension funds, mutual funds, hedge funds, exchange traded funds and other investors. Much of that money is betting that oil prices will rise. Analysts say it is possible that such speculation has somewhat inflated the price of oil.

And specifically, here is what Obama will do:

Obama’s plan this time calls on Congress to:


— Increase six-fold the surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation.


— Increase spending on technology to provide better oversight and surveillance of energy markets.


— Increase civil and criminal penalties against firms that engage in market manipulation from $1 million to $10 million.

And finally:

— Give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets.

That's right: Obama is about to become the Margin Hiker-in-Chief: a swiss watch plan if there ever was one.

And scene.

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holdbuysell's picture

The beginning of a form of cap controls?

GetZeeGold's picture



Stop the pipeline.....stop exploration in the gulf........HEY......stop your speculating!!!!


Oh regional Indian's picture

It's kind of ironic, and given how much the language is twisted, that first you speculate for oil, then someone else speculates on it.

America needs to realize that it's oil industry was one of the first to be outsourced. only the refiinieries were kept full bore.

There is no shortage of oil in the US.

Given all that is happening, perhaps he will announce the nationalization of BP for doing Deepwater H?

Or perhaps of Aarco? 

Hahaaaaaa......t'was a good thought.


It's Never Too Late

EscapeKey's picture

There is no shortage of oil in the US.

There definitely is a shortage of oil in the US at present prices. It's all about the price.

Yes We Can. But Lets Not.'s picture

Obama should be tarred with some petroleum product, and feathered, for imposing his feckless bozo self on the American people.

francis_sawyer's picture

 Obama’s plan this time calls on Congress to:


— Increase six-fold the surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation


He forgot to say that the staff 'monitors' would all be required to wear scary clown outfits for added deterrence...

Fuck, the next thing I expect to hear out of this nit-wit's mouth is that he's hiring Rumplestiltskin to spin straw into oil...

Pinto Currency's picture


For Barry to win, the Fed needs to jolt the money stock some more to temporarily stimulate the economy - the money supply has been flat since January 2012 but on a hellacious run for the past two + years.


M1 has just started to hop again (bears watching) and with Iran off the table in the media, the old standby distraction of blaming speculators will have to do.

Iran was so close.  They almost had the Cadillac and now they are stuck back in the beaten-up old jalopy.

Although Barry might get creative and add "haters" and gun owners to the list of those driving oil prices.


horseman's picture

Its funny he would need to increase the surveillance six fold since the only market moving speculators are his two untouchable friends, Jamie and Lloyd, since his other friend, Jon, stole all the other speculators money.

Vampyroteuthis infernalis's picture

Mmmmmm, I have an easier way to stop this. Make all markets open and transparent to participants. Everyone plays by equal rules. Make anything that is a financial product be put onto these fair markets.

Oh wait, I'm sorry. I once again am assuming that the markets are for price discovery and an efficient way to transfer wealth and not muppet killing. I apologize.

tok1's picture

thats good idea they do it in Singapore in the futures you can see who you traded with and size traded ect.. Problem for US is if they did that in the treasuries it would prob become apparent pretty quickly.. how much buying the Fed is acually doing.. via the banks and panic might ensue..

kralizec's picture

This assclown has to be kicked to the curb in November no matter what, nobody can screw us faster than this tool!

Oh regional Indian's picture

I'm an abiotic oiler. Shhhhhhhhhh.....here comes Flakmeister! :-)


Oh regional Indian's picture

:-) All good Flakster. Time always tells, eh?




there is less supply of oil due to the restrictions on drilling but we are actually exporting thousands of gas. Its price but the Fed is causing the price increase and exporting the inflation

slaughterer's picture

No wonder AAPL is being sold off: "speculators" will need more money to margin their oil futures.   

Levadiakos's picture

A margin hike on oil will crap the entire fee based managed ETF/mutual fund complex

GetZeeGold's picture



Ummmm........I vote yes?


Oh regional Indian's picture

Because, how these occultists play it, it will be 11:11 when it begins.

And that is powerful stuff, numerologically speaking.



aerojet's picture

What is the significance of 11:11?  All 1s?  These people aren't that weird, are they? Tell me they aren't that freaking weird.

Oh regional Indian's picture

It is a powerful number, nothinig weird there.

These folks though? Oh boy, un-bounded weirdness.

See this: https://www.google.co.in/search?sourceid=chrome&ie=UTF-8&q=11%3A11

And then just google Bohemian Grove for high weirdness.


Doubleguns's picture

Margin hike without position limits, keeping JPM and all the other nefarious creatures out there from cornering large segmants of the market, like silver, will be a minimalistic attempt to control prices and still leave us with no real price discovery.

Gully Foyle's picture

Once again. Someone with a FT account want to share the original?

Downstream Demand Destruction for Oil


One of the most pronounced trends in the Western world since the onset of the global financial crisis has been the plummeting demand for petroleum and the subsequent losses for the refinery industry, which has been squeezed by a combination of declining credit availability, higher prices for input crude and lower demand/prices for refined products (over-capacity). This ever-deepening trend was discussed on TAE earlier in Petroplus - The Tip of an Iceberg.

What we are witnessing within the refinery industry and the petroleum industry in general is a situation in which higher prices, mainly fueled by leveraged speculation, geopolitical tensions and rising demand in the East, are burning themselves out by destroying demand in a positive feedback spiral. Here is a portion of the conclusion reached in the post linked above:

As is the case with most analyses by official institutions such as the IEA, we can safely assume that the effects of credit contraction on refinery utilization are being under-estimated. Refineries forced to scale back or go off-line in the short to medium-term will negatively impact crude oil demand, and we should see this add to the pressure currently weighing on crude oil prices. Lower prices will then feed back into the marginal financial pressures facing the oil industry.

For those who think that oil prices can only go up, up and away from here on out, I am still waiting to hear how plummeting demand for crude oil from refineries, which are now dropping off like flies, will contribute in the short-term. Some may argue that the developing economies of the East will single-handedly keep prices elevated, but they are ignoring a) the speculative premium built in to oil prices and b) the fact that these emerging economies do not exist in a bubble that is isolated from the effects of demand destruction in the West, i.e. a decoupled global economy.

Demand for oil is certainly still rising in the emerging economies at a rate faster than demand is falling in the West, but the question is how long before the latter burns out the former. In our hopelessly inter-connected global economy, there is little doubt in my mind that it will happen, just like higher oil prices will burn themselves out by feeding back into downstream demand destruction in the refinery industry and businesses/households. Anyway, here is the latest on the Iceberg that has had its way with Western refineries, courtesy of the Financial Times:

Energy: Refined out of existence


Sunoco petrol stations are a fixture of the US eastern seaboard, their blue-and-yellow awnings touting the brand's status as official fuel of Nascar racing. But after July, none of the petrol they sell will actually be made by Sunoco.


The 126-year-old company's decision to quit the refining business is the latest sign of the tumult in downstream fuel markets that is accompanying a global shift in oil use. As consumption flags in developed economies and grows in emerging markets, refineries are dying from Japan to Pennsylvania, the Sunoco home state where oil wells drilled in the 1850s begat the petroleum age.


The upheaval highlights the challenges facing policy makers as rising petrol prices endanger growth in the world's biggest economy. Washington has floated largely predictable responses: drill more, punish speculators, work harder towards energy self-sufficiency. But global trading on markets for petrol, diesel and heating oil highlight the persistent fact of America's energy interdependence.


Half the refining capacity on the populous US east coast is set to disappear. Sunoco has pulled the plug on two refineries already and warns that another in Philadelphia will close in July if no buyer steps forward. ConocoPhillips is trying to sell a refinery in Pennsylvania, idle since last year. On May 1, it will spin off its refining business. More than 3m barrels of daily refinery capacity have closed in western countries, since the financial crisis, says the International Energy Agency, the west's oil watchdog. Emerging economies have meanwhile added 4.2m b/d in capacity, with another 1.8m b/d coming this year. "It's really a tale of two markets," says Toril Bosoni, IEA senior oil analyst. "You have very contrasting pictures for economic growth and demand, and refining is reflecting what's going on elsewhere."


A good vantage point is Marcus Hook, a borough of 2,400 people squeezed into Pennsylvania's industrial south-east corner. J.N. Pew, founder of the Sun Oil Company, built a refinery there in 1901 to process crude borne by ships from the legendary Texas gusher known as Spindletop. It was one of many refineries to line the wide Delaware river. "If you were a child who grew up in this region, the refineries have been part of [its] fabric ... from the first moments of awareness," says Patrick Meehan, a Republican congressman who represents the area. Among his memories: "The smell."


Late last year, Sunoco put the Marcus Hook plant on the auction block and stopped feeding it crude after losing nearly $1bn in the past three years at its east coast refineries. The problems began at the docks. Marcus Hook relied on foreign oil delivered by tanker including 34.6m barrels from Nigeria, 5m from Norway, 3.3m from Angola and 3m from Azerbaijan last year, government records show.


Low in sulphur and yielding lots of high-value products such as petrol, this was some of the most expensive oil on the planet. Nigeria's Qua Iboe, a representative variety, averaged $114 a barrel in 2011. For several weeks, a barrel of Qua Iboe cost more than a barrel of reformulated gasoline blendstock, ensuring negative margins for refineries such as Marcus Hook. West Texas Intermediate crude, similar in quality, averaged just $95 last year. Texas oil production rose 25 per cent to top half a billion barrels for the first time since 1998. But Marcus Hook could not buy it, as no pipelines link it with Texas.


"You've got crude oil in this country. It's just a question of getting it to where the refineries are," says Denis Stephano, labour union president at ConocoPhillips's mothballed Pennsylvania refinery. In his union hall, Mr Stephano points to a map of the US's piecemeal pipeline system, which hangs next to a placard reading "Save refineries, save lives!"


In Washington, the signature energy battle of the past year has been over the Keystone XL pipeline, which a company wants to build to connect Alberta's oil sands with Texas. This would be likely to raise depressed Canadian prices but would do little to save refineries such as Marcus Hook. Most Canadian oil is too heavy to be processed there.


Crude oil prices soared back above $100 a barrel last year as the revolution in Libya halted production. The gains for crude outpaced the rise in petrol prices, which began to rally in earnest only after news of the latest refinery closures in the US and Europe. Petroplus, Europe's largest independent refiner, filed for insolvency in January and has been lining up buyers for five plants.


Keeping a lid on refined fuel prices has been weak consumption. US petrol demand has fallen steadily since 2007 as cars became more fuel-efficient, fuel marketers blended more corn-based ethanol into their product and high unemployment kept highway travel light. This wedged refineries between high input costs and a poor appetite for their fuel. "The downstream industry is the flywheel in the oil system," says Kevin Lindemer, an oil industry consultant. "Right now we're seeing big changes on both sides of the flywheel."


The US story is echoed throughout the west. Oil demand in Europe contracted by 320,000 b/d last year, the IEA says. Emerging-world demand more than offset these falls, led by countries that Barclays has nicknamed "Bics" – Brazil, India, China and Saudi Arabia. In the past five years their oil demand has grown by 5.1m b/d, while demand everywhere else has declined by 1.4m b/d, says Paul Horsnell, head of commodities research at the UK-based bank.

Flakmeister's picture

Did it ever occur to you that the capacity for refining light sweet crude is larger than the supply of light sweet crude?

Or did you think that oil was truly fungible at the refinery level?

LawsofPhysics's picture

Come on Flak, don't shatter that window, the FT propaganda is usually pretty good.

Al Huxley's picture

What!?  You mean all oil isn't the same?

AustriAnnie's picture

You give us a good reminder that the majority of people don't know the difference.  And since mobs act on what they THINK is true, rather than on what is true, we can expect absolutely irrational responses to our oil problems.

If the sheeple think all oil is the same, investors treat all oil the same, as well as the media and politicians, then we can expect price volatility, government takeovers, shortages, and every other ill that results from misunderstanding and mismanagement of resources.

Tarheel's picture

Fuck Obama. He is the most inept president we've ever had.

Flakmeister's picture

You really should read up on your American history... that claim is absurd...

transaccountin's picture

$52 million proposal - ilaughed

GetZeeGold's picture



Well it's just a tiny problem........we sent most of the money to the new Solendra.


Levadiakos's picture

Cramer tyold me to buy FSLR First Solar at $320

GetZeeGold's picture



Best get on that then little man.


jus_lite_reading's picture

Actually Leo Kakalakas told me to buy First solar at $400 because everyone is jumping on the energy wagon!!

Moneyswirth's picture

So today's diversion from rising gas prices and a flailing Presidency is "market manipulation"

That's fantastic.

He's pandering to the left-wing loon wing of the Democrat party base here, which means one thing---the internal polling data must be horrible. 

brewing's picture

stupendous observation.  every move he is making right now is political because things aren't looking good...

Sauk Leader's picture

This will never happen. Every issue this guy is talking about is a diversion from what his policies are doing. The MSM will take the text from the TOTUS and report it with no depth to the proposal and the stupid public will use it as a talking point. This guy has done everything to get people to talk about non existant causes of problems and how he proposes not to fix them. Maybe they will announce that Eric Holder has found that oil speculators have crossed the border into Mexico where they have killed 300 mexicans and 2 border control agents.

Moneyswirth's picture

The agitator in chief needs a villain, and to tack his opponents to said villain.  This is a prime example.

POTUS:  "Today I come out against eeeevil market speculators.  Surely, nobody likes the eeeevil market speculators and the high price of gas that comes with their manipulation.  What's that? You oppose my plan to rout the eeeevil speculators?  Then you side with them."

Same thing happened with the Buffett Rule.  Don't like the plan (even though its a completely useless)?  You must side with rich greedy fat-cats.

Lather rinse repeat. 

alangreedspank's picture

Actually, the Buffett Rule IS a plan made by the "greedy fat-cats". No wonder why the President pushes for it.

Caviar Emptor's picture

hehe. Beat ya to it, Tyler :)

Yes, this is a delayed reaction. But it will only pour water on a grease fire that will help it spread further. Why? Because the cheaper we make it the faster we burn it. Make it artificially low for a while and watch the slack in supply get gobbled up at an even brisker pace than last time. At the end of the day only the long-term view with conservation measures will keep prices under some measure of control. Otherwise it's just a YoYo

holdbuysell's picture

Yes, that stockpiling country in Asia is most thankful for such cheap prices.

GeneMarchbanks's picture

These triple digit numbers are seriously impeding on zAmerica's ability to sprinkle the seeds of democrazy globally.

Oh regional Indian's picture

And yet they do these crazy "exercises" that burn hundreds of thousands of gallon's of refined stuff.

Did you see the air exercise pictures recently Gene? Looked out of WWII, when you'd see a 100 Spitfires lined up on a huge runway.

SO .mil has more than enought o burn around the world. Always.

This whole oil story has such a tangential and hidden hold on us and a history, it's quite stunning.


q99x2's picture

'Obama is about to become the Margin Hiker-in-Chief.'

He's nothing to me I tell you--nothing. And, those kids and wife that he brings to your site all the time...they're immigrants too.

Taterboy's picture

This what happens when you let a welfare baby grow up to be President.

firstdivision's picture

...aaaaannnd WTI surges on this news.

FubarNation's picture

WTF does Holder have to do with this? 


I'm so sick of seeing that Dirt Stache slmeball walking around without even a slap in the wrist for F&F or sitting on his ass while Corzine walks.


End of rant.  Thanks for listening.