05.29.11

Oil speculation, discovered too late

Posted in Permanent Fail at 9:50 am by George Smith

The tragedy of WikiLeaks is obvious in the continuing news mined from CableGate.

One might now consider the agency as a big powerful animal driven by the cult of personality that’s Julian Assange.

But fame, that trouble with women and monetization through contemptuous big media killed it.

However, the carcass — due to the sheer volume of Cablegate — still has bubbles of gas in it. And the gas escapes from time to time, making a stink like a dead skunk in the middle of the road during high summer.

And such is the case with the news mined by the McClatchy chain from Cablegate, showing Saudi oil ministers informing the US government in 2008 that speculators were causing an oil bubble.

Midweek, Matt Taibbi wrote about it on the Rolling Stone blog:

When oil prices surged to a ridiculous $147 a barrel in the summer of 2008, conventional wisdom held that normal supply and demand issues were the cause. Both the Bush administration (in the form of the Commodity Futures Trading Commission) and most of Wall Street (through both media figures and market analysts) blamed such factors as increases in oil demand from the Chinese industrial machine, and the failure of Americans to conserve, for the surge in crude prices …

Well, thanks to Wikileaks, we now know that when the Bush administration reached out to the Saudis in the summer of ’08 to ask them to increase oil production to lower prices, the Saudis responded by saying they were having a hard time finding buyers for their oil as it was, and instead asked the Bush administration to rein in Wall Street speculators.

According to the McClatchy report, the Wiki cables show that Saudi ministers repeatedly told Bush administration officials that increasing production might be counterproductive.

The cables show that at the height of the bubble, in May 2008, U.S. officials met in Riyadh with the Saudi assistant petroleum minister, Prince Abdulazziz bin Salman bin Abdulaziz al Saud, who told the U.S. he was “extremely worried” that high prices would destroy the demand for crude.

“Aramco is trying to sell more, but frankly there are no buyers,” he reportedly said, referring to the Saudi state oil company. “We are discounting buyers.”

“The cables also show that the Saudis urged the Americans to enact reforms to rein in Wall Street, calling for speculative limits and other changes,” Taibbi adds.

The tragedy, again, is that this is emission from the dead dog.

Bank of America and its ecology of corruption was supposed to be next. That’s gone well.

Someone else was going to step in and replace WikiLeaks.

Public announcements and great enthusiasm followed.

Now the parade is over and all the bunting has come down.

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