Wikileaks: Speculators Helped Cause Oil Bubble | Rolling Stone Politics | Taibblog | Matt Taibbi on Politics and the Economy. Didn’t Obama say he was about to “look into” the issue of gas prices and if people are “being gauged”? IF we are. IF??? And now another report from WikiLeaks cables shows what has been going on behind the scenes:
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.”
While there was less than $20 billion of speculative activity in commodities in the early 2000s, by 2008 that number had jumped up to well over $200 billion, with virtually all that money being “long” money, i.e. bets on a rise in prices. All of that new money turned into a battering ram pushing prices through the roof. We are seeing the same phenomenon this year.
OK, so i’m no economist. In fact I barely understood the one semester of economics I had to take in highschool (i’ve learned more since then, i promise)… but to me this sounds like people invested in prices going up.. which made prices go up. What’s interesting is part of the narrative we’re fed is that those Saudi Princes and Kings are living so rich and exploiting the world with their oil and reaping all the benefits. Weeelll….
An embassy cable from 2007 recounted a meeting U.S. officials had with Yasser Mufti, an Aramco planner. “The Saudi analysts indicated a link between higher oil prices and the influx of investor funds into the oil markets,” it read.
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. It also showed that some Saudi officials believed that speculation added as much as $40 to the oil price during the height of the bubble.
All of this is significant because both the Bush administration and the Obama administration have denied this narrative to various degrees.
So the Saudi’s told Americans to reform wall street because of what was happening… but we all know that nobody get’s to tell Amuurika what to do. We’re the boss. What a bunch of wankers! Greedy fucking Americans. Wall Street controlling more than they should… maybe we need to add in a fourth area of checks and balances which includes corporations and wall street.. because right now they have wayyyyy too much power.
Oh, and the fact that the Bush Administration AND the Obama Administration have both denied this really, so very clearly, points out that political parties don’t matter.. they’re both a part of the larger machine. I think a successful political campaign might revisit Harvey Milks vs. The Machine.