The $2.5 trillion global oil scam

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Ed Archer
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The $2.5 trillion global oil scam

Apparently, there's a global oil scam making Bernie Madoff look like a petty thief.

If serial entrepreneur and Seeking Alpha columnist Philip Davis is to be believed, the world is being scammed out of $2.5 trillion, 50 times greater than the sum Madoff took from the duped investors.

According to Davis, the scam starts in 2000 with the formation of the ICE - the Intercontinental Exchange. The ICE - founded by Goldman Sachs, Morgan Stanley, BP, Total, Shell, Deutsche Bank and Societe Generale - is an online commodities and futures marketplace that exists outside the US and operates free from the constraints of US laws.

After a Congressional investigation into energy trading in 2003, the ICE was found to be facilitating "round-trip" trades. This is where one firm sells energy to another, and then the second firm sells the same amount of energy back to the first company, at the same time and at the exact same price, as told by Davis.

 

Link to the rest

Does anyone know of the quality of information from this site btw?

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Re: The $2.5 trillion global oil scam

Phil has been going after big oil for years - I'm in no position to refute him, but his mania

discounts his credibility from my personal perspective - he's a bright guy I should add

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Re: The $2.5 trillion global oil scam

As crude climbed to $147 a barrel last year, Simmons won lots of converts. But prices have since fallen 75%; OPEC has slashed output; oil companies are laying off workers and mothballing drilling rigs at a rate not seen in a decade. The market signals oodles of oil. Can't we put Peak Oil to rest?

No way, says Simmons. In the library of Simmons & Co., the Houston investment bank he founded 40 years ago, he insists we've already passed Peak Oil--but the world won't realize it until economic recovery stimulates oil thirst anew. When that comes, gird for shortages and $500 a barrel. "There's no logical reason for the price to be this low. If it doesn't reverse itself soon, it will destroy the industry," he says. If Simmons ruled the world, he'd order an oil price floor of at least $150 a barrel to stimulate exploration and to combat rust, which he says is the biggest threat to the oil supply. He figures it could cost $100 trillion to replace aged pipelines, rigs and platforms. That's quite a sum--70 years of oil industry revenues, at present rates.  Matt Simmons.  http://peakenergy.blogspot.com/2009/02/forbes-on-matthew-simmons.html

 

So you see, a "scam" that only involves 2.5 T is simply derisory.....

Mike

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Re: The $2.5 trillion global oil scam

Quite frankly, DMT, it you are concerned about global warming: $5.00 a gallon gas will stop it, and alternative fuel will be developed.  Alternatives just can't compete with cheap gas.

 

And yes I do believe there is an oil cartel conspiracy to raise prices just long enough to get alternative energy projects off the ground.  Then the cartel crashes prices so the alternative projects go bankrupt.  Then the have their media friends point an sneer how frivolous and unworkable all these alternatives are.

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Re: The $2.5 trillion global oil scam

Exactly which alternative fuels were you thinking of...  because they are all made with oil!  When oil went through the roof last year, corn ethanol got so dear it was no longer viable and most plants were shut down.  This was reported right here on this site, and some searchong would find it...

Mike

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Re: The $2.5 trillion global oil scam

This came upo last night as I went to bed in Australia...

Biofuels cropping may threaten health, environment

By Joanne Dodgson

Cropping for biofuels could threaten human health as well as the environment, according to delegates at a biosecurity conference in Canberra.

The Biosecurity in the New Bioeconomy symposium is discussing the potential of failed crop species to become invasive weeds, as well as the risks to people from allergens or toxins, and the introduction of pests.

With increasing pressure globally to find alternatives to fossil fuels, Dr Andy Sheppard from CSIRO Entomology says it is critical the impact of new crops is understood.

Dr Sheppard says it is simplistic to think all plants that can replace fossil fuels are sustainable.

"While on the face of it, people think that because you grow something and it comes from a plant it's going to be relatively good," he said.

"There's really little understanding of the dangers that can come from changing your agricultural systems in such a dramatic way."

Dr Sheppard says research and better information sharing could improve crop productivity and minimise mistakes.

"These new types of crops being proposed have characteristics that are very similar to many of our highly abundant weeds in Australia," he said.

"If these cropping systems prove to be uneconomic, like in the past, we'll have many abandoned crops that then go on and invade our natural environment."

The conference is also addressing the criteria to be used to assess the merits of biofuels crops, including impacts on people, the planet and profit.

Scientists from countries including France, the United States, the UK and South Africa are attending the five-day symposium.

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Re: The $2.5 trillion global oil scam

Most corn ethanol is made for 80 to 120cents a gallon depending on plant efficiency.  Sugar ethanol (Brazil) 40 cents a gallon, gasoline 20 cents a gallon(where does all the rest of that money go?Undecided).  There were to be sure huge government subsidies(actually less than we subsidize our oil industry)  keeping many plants afloat, but most were making money with gas prices over 3.00.  They tanked when the gas prices dropped to less than 2.00 a gallon.

The net energy of ethanol is not as good as petroleum, but there is positive net.  Corn is just not as good a substrate for ethanol production, but that is what you get when you mix politics and science.  Kind of like global warming.Tongue out

you can ride a horse,  I'm brewing my own fuel.Wink

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change of focus on this topic

So they are blatently holding the price of oil with "false" buys by round-trip buying. What if this is the methodology by which the dollar and other commodities are being artificially held at prices? It is suddenly appearing that all trading is a scam. EGP

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Re: The $2.5 trillion global oil scam
docmims wrote:

Most corn ethanol is made for 80 to 120cents a gallon depending on plant efficiency.  Sugar ethanol (Brazil) 40 cents a gallon, gasoline 20 cents a gallon(where does all the rest of that money go?Undecided).  There were to be sure huge government subsidies(actually less than we subsidize our oil industry)  keeping many plants afloat, but most were making money with gas prices over 3.00.  They tanked when the gas prices dropped to less than 2.00 a gallon.

The net energy of ethanol is not as good as petroleum, but there is positive net.  Corn is just not as good a substrate for ethanol production, but that is what you get when you mix politics and science.  Kind of like global warming.Tongue out

you can ride a horse,  I'm brewing my own fuel.Wink

Where do you get those figures from...?  A barrel of oil is 42 gallons.  At $80 a barrel, that's ~$2 a gallon BEFORE it's even refined!  I find it IMPOSSIBLE to believe that a gallon of gas only costs 20c to refine....

Then there's this:  Ethanol from corn costs about $1.74 per gallon to produce, compared with about 95 cents to produce a gallon of gasoline. "That helps explain why fossil fuels-not ethanol-are used to produce ethanol", Pimentel says. "The growers and processors can’t afford to burn ethanol to make ethanol. U.S. drivers couldn’t afford it, either, if it weren’t for government subsidies to artificially lower the price".

Which isn't dated but clearly shows ethanol costs MORE than gas.....

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Re: The $2.5 trillion global oil scam
Damnthematrix wrote:

 

Where do you get those figures from...?  A barrel of oil is 42 gallons.  At $80 a barrel, that's ~$2 a gallon BEFORE it's even refined!  I find it IMPOSSIBLE to believe that a gallon of gas only costs 20c to refine....

Then there's this:  Ethanol from corn costs about $1.74 per gallon to produce, compared with about 95 cents to produce a gallon of gasoline. "That helps explain why fossil fuels-not ethanol-are used to produce ethanol", Pimentel says. "The growers and processors can’t afford to burn ethanol to make ethanol. U.S. drivers couldn’t afford it, either, if it weren’t for government subsidies to artificially lower the price".

Which isn't dated but clearly shows ethanol costs MORE than gas.....

I get my figures from Ethanol Producer magazine by BBI international. Your $1.74 a gallon is gross cost of entire process divided by the gallons of ethanol -- which is an error.  Ethanol is not the only product produced.  The corn is milled into several different products before the starch is broken down into sugars and fermented.  The left over proteins are milled into animal feed and sold.  The sale of the other products (including CO2 in the most efficient processes acounts for 50 to 75 cents per gallon of ethanol.  So you have to subtract that from the $1.74.

Also gas breaks down to this 5-10c a gallon to pump it out of the ground in Saudi Arabia.  40c a gallon to ship it here on a tanker. 20c a gallon to refine it in Alabama or Texas.  The rest of that 80 bucks a barrel goes into some sheiks pocket.(that adds up to 65-70cents.  I guess 95c is close if you pump it from offshore or some higher cost area.

Brazil makes their ethanol for 40c a gallon from sugar cane.  That's why we ban imports to protect the US ethanol industry.  I don't agree, but it's not my call.

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Re: The $2.5 trillion global oil scam

Add to the last post:

The 80 bucks a barrel is for unrefined oil delivered at the refinery.  which is about 1.90 a gallon.  It is THEN refined costing .20.  So the base price is about 2.10 or thereabouts(you have to remember that the refining process yields other more valuable and less valuable chemicals other than oil which are also sold).  You add tax and distributor/dealer markup and you have what you pay at the pump.

 The ethanol figures are frrom 2004 when i did a feasability study for an ethanol plant in GA.  And yes you burn what is cheapest to distill the ethanol -- which currently is natural gas not oil btw.

(actually my who premise of the feasabilty study was to combine a livestock feedlot with the ethanol plant and solar water pretreatment to cut the huge energy costs.  corn --> ethanol +distillers grains.  distillers grains + livestock = fat livestock and Poop -- Poop into an anaerobic digester = methane.  Methane + solar preheated H2O = steam for ETOH distillation.  Sell the cows and ETOH and CO2, and start over.  Seemed like a perfect natural cycle to me.  Unfortunately feedlots are a midwest industry and not well suited to Georgia due to our hot weather and long distance from the midwest for shipping costs.)  Plus you put out of the box ideas like that to developers who just want to sell their prepackaged plants you get a blank stare.

 

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Re: The $2.5 trillion global oil scam

Okay, does anyone know how much cropland it would take to replace as much oil as possible? Leaving aside things like fertilizers and pesticides,etc which i don't think can be replaced in the same way. I'm not trying to prove a point either way I'm honesty curious if anyone has done the math.

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Re: The $2.5 trillion global oil scam
Ed Archer wrote:

Okay, does anyone know how much cropland it would take to replace as much oil as possible? Leaving aside things like fertilizers and pesticides,etc which i don't think can be replaced in the same way. I'm not trying to prove a point either way I'm honesty curious if anyone has done the math.

I don't know ed.  For corn it would probably not be feasable for more than 10 percent of the supply, but there are better crops.  I see some self sufficiency brewing sites saying that 2 acres of sugar beets will provide the average family with a years supply of fuel. So for north america figuring 4 person families with 2 drivers figuring roughly 400 million population. you are talking 100+ million acres in magnitude.  However with the newer enzymes for cellulosic ethanol that figure could be reduced.

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Re: The $2.5 trillion global oil scam

Brazil makes their ethanol for 40c a gallon from sugar cane.  .....  using virtual slave labor!


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Re: The $2.5 trillion global oil scam

docmims-

you clearly have done your homework, I don't dare enter into this discussion from a mathematical standpoint, but I think that this is the core of the problem:  to just look at fuel from a numbers and dollars point of view ignores the sheer stupidity of using productive cropsoil for making fuel to be used for personal vehicles- ultimately a single-use product which pollutes our air. 

It is different if biofuels were derived from algae or waste products- I think this is the direction we should be going.  Just because people are willing to pay a certain price to turn food into fuel does not make it right, does not make it wise.  Any "profits" derived from such a transaction is made at the peril of the general good.

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Re: The $2.5 trillion global oil scam
yoshhash wrote:

docmims-

you clearly have done your homework, I don't dare enter into this discussion from a mathematical standpoint, but I think that this is the core of the problem:  to just look at fuel from a numbers and dollars point of view ignores the sheer stupidity of using productive cropsoil for making fuel to be used for personal vehicles- ultimately a single-use product which pollutes our air. 

It is different if biofuels were derived from algae or waste products- I think this is the direction we should be going.  Just because people are willing to pay a certain price to turn food into fuel does not make it right, does not make it wise.  Any "profits" derived from such a transaction is made at the peril of the general good.

Cellulosic ethanol will make use of waste material such as paper, sawdust, corn cobs etc.  Also as far as one use goes, you do have to take into account that it does "recycle" the CO2 out of the atmosphere so there is no net CO2 added to the atmosphere as opposed to fossil fuels being taken from the ground and burned into the atmosphere.  I would go so far as to call that a solution to global warming.

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Re: The $2.5 trillion global oil scam
Damnthematrix wrote:

Brazil makes their ethanol for 40c a gallon from sugar cane.  .....  using virtual slave labor!


yes.  Seems to be a lot of that going around in those 'BRIC' countries.  It's why we have less manufacturing jobs in the US than the 1940s.

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