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Gasoline & Oil Markets Rigged Far Worse Than Libor

By: EconMatters
Posted: 12/19/2012 8:27:00 PM
Referenced Stocks:

UBS paid $1.5 Billion for manipulating Libor, and Barclay`s already paid the piper for manipulating the Libor rate. Well, it is about time the CFTC get its act together, and start going after the culprits who rig the oil and gasoline markets costing consumers and businesses a mafia tax by paying prices much higher than the markets should be priced based upon supply and demand fundamentals in the consumption marketplace.

Gasoline Market

Today we had another build in Gasoline supplies, up 2.2 million barrels in the week for a fourth straight weekly build. We have had builds of 3.9 million barrels, 7.9 million barrels, 5.0 million barrels, and 2.2 million barrels totaling 19 million barrels build in gasoline inventories in a month.

Well, you say there must be strong demand numbers for gasoline. Nope, gasoline demand in the wholesale market is soft down 2.9 year-on-year, meaning gasoline sales this month are weak as well!

Now, what is happening to price? On November 28th 2012 RBOB Gasoline prices were 2.66 a gallon, and today after 19 million barrels of build, (i.e. we no longer have short supplies on hand, about average for this time of year, in fact), RBOB gasoline prices are 2.74 a gallon.

Ergo, we have 19 million barrels of build, weak demand year-on-year.  However, this month, consumers are set to pay a whopping 8 cents a gallon more for the base commodity, which eventually will work its way to the pump over the next few weeks!

Consumers may think prices are going down.  Yeah, but they should be continually going down, and down a lot more if the gasoline market wasn`t rigged. If anything gasoline prices should have come down at least another 25 cents based upon the build in inventories.  Instead consumers will be paying 8 cents higher with these 19 million build in gasoline inventories --the fair market pricing system at work!

In other words, there was so much supply on the market that wholesalers had to store it because there wasn`t enough demand to sell it to consumers.  Yet prices still go up for the base commodity. So instead of prices continuing to come down further, consumers will have to pay more for gasoline in the coming months, and they shouldn`t if the market wasn`t rigged by this “mafia tax”!

Libor Rates

So where is the CFTC, the Commodity Trading Futures Commission, who should monitor these price shenanigans? The same place all the regulatory authorities were when consumers were being robbed by paying higher Libor rates than the market should have dictated for all types of lending from credit cards to other types of loans.

UBS got caught and agreed to pay 1.5 billion in fines.  Will consumers ever get any of this money? Heck no! These fines go straight to government coffers, the same government and regulatory bodies who looked the other way while consumers were being charged this mafia tax by big banks for years.

Remember, Timothy Geithner knew about phony Libor rates for years before anybody did anything about it. And they say Geithner is in line to be the next Fed chief.  Guess he makes for a good business as usual candidate since Ben Bernanke knew about inappropriate Libor rates for years as well.

These officials don`t give a crap about consumers.  They just saw an opportunity to make some money by going after these firms on Libor, long after consumers have paid far more than 1.5 billion in higher interest payments. Moreover, Consumers don`t get any of the money back, the actual victims in the scam!

The regulatory and governmental bodies responsible for monitoring these unscrupulous practices are where they always are, sitting on the sidelines for years of damage to consumers pocketbooks, and then when they finally do something about it, it is years down the line, and these firms only pay a slap on the wrist “shakedown fine”, and governments keep all the proceeds while consumers get screwed again.

How about giving the money from fines back to the real victims of these scams like the consumers in the form of tax rebates? The government made a whole lot of money off of AIG, how about giving this money back to taxpayers in the form of tax rebates? It will never happen because governments and these regulatory bodies are just as corrupt as the firms doing what I call these “mafia taxes” in the gasoline and oil markets.

They only care about how they can make some money off these firms by conducting these pseudo shake down cases just so they can get some money for their own little fiefdoms!

It would sure be nice if Obama could actually care about consumers and get somebody in the CFTC to represent consumer’s interests for a change, instead of these cozy relationships that currently exist in the CFTC for the last 10 years as the gasoline and oil markets have been rigged for decades!