Not News

This is what you get when breathless headlines and no new information collide:

The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC's new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility.

Who didn't know that speculative buying was driving oil prices up b/t 2006-2008? I'm pretty sure that I wasn't hallucinating when I constantly saw and heard econ reporters talking about speculative buying as a hedge against the weak dollar, especially at the tail end of the oil bubble last year.

So then to see a report like this as 'econ' reporting makes me wonder if it's more like 'political' reporting.

What are Seeps?

The Santa Barbara County board of Supervisors recently took up a symbolic resolution on the prospect of off-shore drilling along our stretch of the Central Coast. The measure passed. That and $1.50 will buy you a cup of coffee...

But it was an important vote symbolically. For too many years critics of off-shore drilling have cited the 1969 Santa Barbara Channel spill that decimated the South Coast as the ultimate example of why you don't want to drill for off-shore oil.

The Supervisors recognition that 40 years of technology make such a similar event very unlikely to ever happen again should put that argument to bed. But who knows?

While this article doesn't necessarily have much to do with that, it does take a look at some of the local politics involved in the issue. I especially liked the equivalent of the fact sheet at the end:

Oil and methane gas created in the heat and pressure under the ocean floor flows upward through faults and cracks in rocks.
Plumes of oil-coated methane bubbles reach the surface, creating natural oil slicks.

The natural seeps of crude oil and natural gas flowing into the ocean on and near the coast of California are among the largest and most active concentration of such seeps in the world.

Seeps off Coal Oil Point near UCSB put an average of 150-170 barrels of crude oil and 5 million cubic feet of natural gas into the ocean every day.

More than 1 million barrels of oil have seeped off the Southern and Central California coast since 1980.

Crude oil seeping into the sea from Coal Oil Point alone is equal to about 55,000 barrels of oil a year. About 1.8 billion cubic feet of natural gas is seeping annually into the atmosphere.

Seeps produce 122% more air pollution daily than all the motor vehicle trips in Santa Barbara County each day.

— SOURCE: Woods Hole Oceanographic Institution, U.S. Minerals Management Service, Western States Petroleum Association

What should be a no-brainer...

Congress deadlocked over offshore drilling:

With a gallon of gas hovering at $4, energy prices are the No. 1 issue on voters' minds. But congressional leaders are increasingly deadlocked over what to do. In response, frustrated rank-and-file members on both sides of the aisle are stepping up efforts to find common ground.

While we're on the subject of Oil

And oil prices...

Buy, buy, buy and drill, drill, drill!:

It’s unfortunate the administration doesn’t seem ready to back this strong rhetoric with some old-fashioned intervention. The Treasury has the authority to buy dollars and sell euros in the open market. Better yet, it can coordinate these efforts with Jean Claude Trichet of the European Central Bank. President Bush and Treasury man Paulson also are forgetting the key word: “appreciate.” As in appreciate the dollar. That would be a head turner on Wall Street and on global foreign-exchange markets.

Meanwhile the ECB is raising interest rates which will appreciate the currency against the dollar, and you guessed it, more likely than not boost the price of oil.

Is anybody in D.C. paying attention...?