May 14, 2016
Duress Pricing: Exxon's $41 billion profit for 2012 and the 2015 petroleum price cliff-dive proves that high gas prices were unjustified.
in dire need of the overpriced product. It's de
facto extortion. In as much, Exxon's $41 billion
profit margin in 2012 proves that the price of gas
has been unjustifiably high. Now, OPEC does
NOT operate according to c"market forces." It
artificially causes the price to "initiate" where it
does. Plus, Exxon spent $3 billion in 2013 buy-
ing back 34 million shares of stock, to an 18%
decrease in profit
Then come the speculators ...
None the less, the sudden cliff-dive of petroleum prices shows that the former-
ly high price of fuel was artificially contrived, all along, and that FoxNews was
100% WRONG in its explanation for the high price of gasoline. For the record,
FoxNews presented people who claimed that the price of petrol would no longer
deceases and that it was due to rising demand in China. Well, the price dove
downward in an instant.
Once again is another instance to show that FoxNews is utterly worthless and
even a detriment to humanity. That news entity is nothing more than a propa-
ganda machine for the exceptionally greedy. To follow its on-air voices is to
be a gullible puppet without a mind of his/her own. God provided you with a
mind, so use it for a change.
To start, know that there's a blatant piece of public evidence which proves that
the FoxNews network and other right wing pro-corporate media outlets have
been lying to you all along, in having stated that the sharp rise in oil/gasoline
prices was the result of "market forces:" The proof is OPEC. It's the cartel
designed to set oil prices according to an artificial monopoly pricing schematic.
It has been in operation for decades. Monopoly pricing sets prices higher than
they would be IF natural market forces would prevail.
In light of present gasoline prices, the article linked immediately below is still
pertinent. It was written February 2012, but its subject matter remains current.
Keep in mind that, during February of 2012, demand for oil was at a 15 year low
in the U.S. Yet, oil was at a record high in price, for the same time span. If you
already know how the oil price manipulation works, then feel free to proceed to the
following article which was written in the Winter of 2012. In it are numerous links
to articles on the 2012 gasoline price gouging spree, written by those reasonably
versed in the topic:
Petroleum Products: #1 U.S. export at record high prices for Winter,
despite a 15 year low in demand.
There should be a law forbidding anyone to purchase oil unless he/she is going
to use the oil he purchases. This is because the pivotal trick of the oil speculator
is to artificially cause a shortage of oil by requiring numerous barrels of it to sit
entirely immobile, in the wait to honor the futures contract delivery date. The oil
remains all dressed up with nowhere to go, being that the typical oil speculator has
no intention to warehouse and use the oil.
The original article:
2012 Gasoline prices were a déja vu of those of 2008. Thus, knowing the cause
of the rise in prices then might might might help you understand one thing:
Simply because FoxNews states something, it doesn't mean it's anywhere near
true. The Fox network claimed that the drastic rise in 2008 gasoline prices was
due to increased demand. No. It was oil speculators who horded the oil supply,
via futures contracts. This meant that the needed oil sat idle, in order for the sup-
pliers to honor the delivery of future oil that was intended to go nowhere, being
that the oil speculators had no intention to use said oil. They only wanted to sell
it at an inflated price.
This covers a very brief and rudimentary review of the following:
1) Selling Short,
2) Put and Call Options,
3) Oil Speculation in futures derivatives.
In brief, the terminology refers to a broker leading you a block of stock of which
you are short and don't yet own. The full amount of stock that you borrow is im-
mediately sold by you. Yet, you intentionally remain in debt to the broker. You
pay the broker for the stock later, at a designated time. You hope that, by that
time, you will have to pay for the borrowed stock at a lower price. One sells
short when he/she is gambling on the price of the stock to go down.
Selling short consists in:
1} literally borrowing a block of stock from a broker and immediately selling it
to someone else,
2} followed by buying an equal amount of stock at a later time, at a different price,
3} thereby paying the broker.
This means that:
1} if the price of the stock goes down, you re-purchased it at a price cheaper than
the price by which you previously borrowed it and then immediately sold it.
You have made a profit.
2} if the price of the stock goes up, you end up losing money, because you have
to pay for the block of stock that you owe at a higher price.
Example: You borrow 1,000 shares of Widgetville Inc. which cost $100 per
share. You immediately sell that block of stock at $100 per share, for a price
of $100,000. Thus, you have $100,000 on hand, to buy an equal amount of the
same stock later. Then, when it comes time to buy an equal amount of Widget-
ville stock, it's price has already dropped to $90 per share. This means that you
buy the 1,000 shares of stock for $90,000 and keep $10,000 for yourself.
Of course, you give the 1,000 shares of Widgetville to the stock broker who
originally lent you 1,000 shares of it.
The previous example in review: 1,000 shares of Widgetville borrowed ... You
immediately sold it at $100 per share for $100,000 ... 1,000 shares are purchased
by you later at $90 per share ... You paid $90,000 for the 1,000 share ... You keep
$10,000 for yourself, minus any fee and applicable dividend reimbursement. The
1,000 shares of Widgetville Inc. are given to the broker who originally lent you
the 1,000 shares of it in the first place.
Remember: If the stock price rises, you lose money. For example, if the price
was hypothetically $110 at the time you purchased the new set of shares that
were to be given to the broker whom you owe 1,000 shares, you had to pay
$110,000. You lost a hypothetical $10,000.
Until 2007, investors were forbidden to sell short, unless the price were above
the present stock price, or unless the previous stock price was lower than the
present price. This was the uptick rule. You could only sell after the price in-
creased, or you increased the price yourself, thereby permitting you to sell.
Calling the Short
Note that the broker may instantly require you to cover the price of the stock
you borrowed. It is solely done at his/her discretion.
Put and Call Options
Concerning a Put Option, it's a contract which grants the contractee the option
to sell a block of 100 shares of stock at a specific price, if the contractee elects
to do so. The price is known as the Strike Price. A Call Option consists in
having the option to buy a 100 shares of stock at the designated Strike Price.
Oil Futures Derivatives
Oil Speculation, in the form of oil futures derivatives, is what artificially caused
the price of oil to skyrocket in 2008. During this time, FoxNews had guests go
on air, stating the wrong reasons why the price of gasoline skyrocketed.
The news show guests continued to state that supply and demand market forces
caused the sudden rise. The invalidating feature of the FoxNews claim is that,
in the Year 2006, the oil supply was at an eight year high. Yet, the price of oil
started its ascent into economic havoc. The price should have dropped. Thus,
FoxNews perpetuated a lie until a Senate hearing uncovered the true cause of
the price hike.
Oil futures consist in making a binding pledge to buy oil at a specified price at
a specific future date. The 2008 crisis consisted in investors not looking to buy
oil, but to merely buy oil futures. This is referred to as paper oil This meant
that significant amounts of oil needed to be reserved for investors who had no
intention to use the oil. This was the delivery aspect of futures derivatives.
This meant that oil was going to be kept away from oil consumers, in order to
honor the contractual obligation of the futures contracts. As a result, a reduc-
tion in the oil supply was being artificially induced. This, in effect, was the
hording of oil. It was a game of keep-away from the oil consumer. It was
the ploy of reducing supply, artificially. The barrels of oil attached to spec-
ulator futures contracts were all dressed up with nowhere to go. They were
the collectors' dolls never taken out of the box.
Deregulation, and NOT regulation, caused the price of oil to skyrocket. In fact,
the Enron Loophole was basically the oil speculators' reporting exemption.
Incidentally, Texas Senator Phil Gramm's late night Enron Loophole simply
made it that oil futures contracts didn't have to be monitored by the CFTC
(Commodities Future Trading Commission.) Thus, no one could tell if prices
were being manipulated, until it was too late. As a result, the price of oil rose
to $137.11 in July 2008, and later to $147.27 a barrel. Gasoline reached $4.09
a gallon. Even in April 2011, the price of a barrel of oil was $113.93 or so.
Keep in mind that it was the deregulated speculators who caused oil prices to
from Patrick Pontillo on 5/14/2016