 | The High Speed Passenger Rail Act, Draft 1 | The Oil Drum | CNBC: Matt Simmons Discusses a Plateauing Oil Supply with Maria Bartiromo |  |
Search The Oil Drum with Google
Recently on TOD:World
TOD:Local
- Streets: Utilitarian Corridors or Livable Public Space
- Summer Streets a Success!
- Plan for Hydro-Fracture Drilling for Unconventional Natural Gas in Upstate New York
TOD:Europe
- Oilwatch Monthly - November 2008
- The 2008 IEA WEO - Production Decline Rates
- The EU Strategic Energy Review: maybe not so depressing after all
TOD:Canada
- The Round-Up: October 24, 2008
- Compressed Air Energy Storage - How viable is it?
- Oil Megaproject Update (July 2008)
TOD:ANZ
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- The Big Picture
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- David Strahan
- The Energy Blog
- Entropy Production
- European Tribune
- GraphOilology
- jeffvail.net
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Finance & Economics Blogs
- Calculated Risk
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.”
—Richard Feynman
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Prof. Goose, Heading Out, Stuart Staniford, Nate Hagens
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Gail the Actuary, jeffvail, JoulesBurn, Khebab, Robert Rapier
- TOD:Local: Glenn
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Technician: Super G
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
The bank of international settlements, (BIS) shows a $5.8 trillion derivative position in oil contracts held by central banks on its books. Since they would not be necessarily trading for a profit motive, you have to allow for this in trying to understand the market movements.
It is likely in my opinion that they are shorting the market at the moment, and that they can use the SPR and other worldwide storage as collateral in case they get called to deliver. There are also hints that the Iraqi oil production has been sold forward even though it is still in the ground with uncertain prospects of coming out in volume.
Francois.
The above are some good explanations of what may be happening. I'd just like to point out that if the price of oil was being intentionally held below its market clearing value, demand will not only exceed supply but malinvestment in the energy and transportation industry will occur as businesses and individuals make incorrect decisions based on the current price.
In addition, inventories would be run down. I don't think the use of the SPR would be a viable alternative in the long run to stop the inventory decline (within the US) because the oil could not be efficiently distributed through the country in a major emergency.
Less problematic is that if speculators alone were keeping prices down, then eventually market forces over time would cause their trading positions to reverse – and the market would go back near equilibrium.