10-25-07 by dugan
As Shell announced its 3rd quarter results (down a little because U.S. refining profits finally fell below pirate level), chief financial officer Peter Voser broke some new ground. He became the first top Western oil executive to say flatly that oil prices are being driven by speculation and world politics, not lack of supply:
"We find it hard to explain oil at $100 a barrel. I don’t see anyone queing for fuel and nor are there any physical shortages. The price seems to be driven by some speculation and also has a political premium in it, rather than actually some of the fundamental drivers."
Sure sounds like what Enron and other energy traders were doing to electricity markets eight years ago, as OilWatchdog has argued for months. The question now is whether U.S. regulators, through whose markets most oil trades move, will do anything to add transparency to this largely unregulated mess.
Even the Wall Street Journal is starting to blame pure speculation for the push to $100 oil. Left unchecked, that will surely translate to $4.50 or $5.00 gasoline at the pump.
Sen. Dianne Feinstein of California has a bill (S. 577) to add oversight to energy futures trades by closing the "Enron loophole" in federal market regulations. Maybe a flat statement like Voser’s will add some push to get it moving toward passage.