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Guest Aurang

Crude Oil Futures Speculator Crooks Drive Up Oil Prices and Cause Financial Crisis

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Guest Aurang

I wish the government would investigate the large speculators trading activity and volatility in the U.S. Crude Oil futures market. Opec Secretary General Abdalla Salem El-Badri said that there was no shortage of crude oil, brushing aside US calls for higher output to dampen runaway prices.


"There is clearly no shortage of oil in the market," he said.


The turmoil in some global equity markets and the considerable depreciation in the US dollar have encouraged investors to seek better returns in commodities, particularly in the crude oil futures market. This has driven prices higher," he said. This bull run in crude has been driven by "investor interest" in commodities.

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Guest Republican No More

It is companies like the Taipan Publishing Group that do not care for what is happenning to consumers.


Oil at $200?! I know what you’re thinking… they’re crazy!


But it's amazing; in less than a year, we've watched the price of oil soar 138%. It's already hit the $100 mark. Heck, it's even hit the $120 mark. And it's going to keep right on climbing.


That's a perfect opportunity for you to make some money… if you know where to look. To help you do that, we've assembled the very best investment opportunities in oil — 5 oil stock picks in all.


Sign up today and you'll gain immediate access to Ride The Profit Wave All The Way To The Bank With $200 Oil.




Speculators thrive on risk, and their buying and short-selling actions will artificially push up the demand and therefore spot price. They may buy a large number of futures from farmers, and hold them for any period of time, before selling them to buyers at a significant profit.


Today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”


Congress is considering a bill that will apply he Commodity Futures Trading Commission (CFTC) regulations on oil futures speculators. Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency's mandate has been renewed and expanded several times since then, most recently by the Commodity Futures Modernization Act of 2000.


The New York Mercantile Exchange (NYMEX) is the world's largest physical commodity futures exchange, located in New York City. IntercontinentalExchange (ICE) is an American financial company that operates Internet-based marketplaces which trade futures and over-the-counter (OTC) energy and commodity contracts as well as derivative financial products.


Currently, the OTC and ICE Futures energy markets are unregulated, so there are no precise or reliable figures as to the total dollar value of recent spending on investments in energy commodities, but the estimates are consistently in the range of tens of billions of dollars. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.


West Texas Intermediate (WTI), also known as Texas Light Sweet, contains about 0.24% sulfur, rating it a sweet crude oil. Its properties and production site make it ideal for being refined in the United States, mostly in the Midwest and Gulf Coast regions.


North Sea Brent is also known as Brent Blend, London Brent and Brent petroleum, containt 0.37% of sulphur, classifying it as sweet crude. Brent is ideal for production of gasoline and middle distillates. It is typically refined in Northwest Europe, but when the market prices are favorable for export, it can be refined also in East or Gulf Coast of the United States or the Mediterranean region.


Did you know that we sell almost all of our Alaska oil to Japan. Hardly any of it finds its way into American gas tanks because the Environmental Protection Agency doesn’t like the kind of crude the pipeline produces. It isn’t the “light sweet crude” that passes EPA muster. In the meantime, the American consumer is looking at gasoline prices of $4 per gallon by Memorial Day.

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Guest Lawrence Zell

Oh, the crookedness goes way deeper than that. You need to understand what a petrodollar is and how oil is priced.

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Guest Yurica Report

How California’s energy scam was inextricably linked to a war for oil scheme


By Katherine Yurica

This story begins with the California energy crisis, which started in 2000 and continued through the early months of 2001, when electricity prices spiked to their highest levels. Prices went from $12 per megawatt hour in 1998 to $200 in December 2000 to $250 in January 2001, and at times a megawatt cost $1,000.



One event occurred earlier. On July 13, 1998, employees of one of the two power-marketing centers in California watched incredulously as the wholesale price of $1 a megawatt hour spiked to $9,999, stayed at that price for four hours, then dropped to a penny. Someone was testing the system to find the limits of market exploitation. This incident was the earliest indication that the people and the state could become victims of fraud. The Sacramento Bee broke the story three years later, on May 6, 2001.


Today, Californians are still paying the costs of the debacle while according to state officials the power companies who manipulated the energy markets reaped more than $7.5 billion in unfair profits.


During those early months of the Bush administration, and even during the prior transition period, Dick Cheney was deeply involved in gathering information for a national energy policy. The intelligence he gathered would provide justification for a war against Iraq but would also place White House footprints all over a fraud scam. This is how it all happened.




Enter the Lead Villain


That Ken Lay, the former chairman of Enron, enjoyed a long and close relationship with George Bush senior is a well-known fact. What isn't so well known is that George W. Bush also benefited from a close relationship with Lay. No one supported the younger Bush quite like Lay. Enron executives contributed more than $2 million to George W. Bush's political campaigns since 1999, earning Lay an open door to the governor's office. Lay was also Bush's number one choice for Treasury Secretary. A study authorized by Rep. Henry Waxman reveals that Enron had 112 known contacts with the Bush administration in 2001. This figure does not include seventy-three disclosed contacts between former Army Secretary Thomas White and his former colleagues at Enron. (Secretary of Defense, Donald Rumsfeld, recently fired White.)


Significantly, Ken Lay was also a close friend to Dick Cheney who is a former Enron shareholder. It should come to no one's surprise that given the relationships, Ken Lay was selected to work on the Bush energy transition team under the chairmanship of Cheney. Lay's easiest assignment? He interviewed potential candidates for the Federal Energy Regulatory Commission, an agency that would oversee his company (and months later lead a slow, long investigation into Enron's role in the California energy debacle). The President picked Lay's nominee, Pat Wood, to serve as chairman of the agency.


Ken Lay was a very useful and a very knowledgeable man to have around. He knew, for instance, of the holes in the California power market that could be exploited. He tried to warn officials about the problem in 1994 when Enron testified at a Public Utility Commission hearing. Unfortunately his advice was ignored. Enron then went with the flow. It reversed itself, endorsed the system, and lauded the politicians for setting up what Enron knew was an exploitable and faulty infrastructure.


As events would unfold, the dark side of Enron got part of its comeuppance when the Justice Department began investigations of Enron's role in the California energy disaster.


Along with Dynegy and other power brokering companies, Enron employees were subject to federal criminal charges. One Enron employee pleaded guilty to wire fraud while Dynegy agreed to pay $5 million in fines.




Enter A Little Damning Document


In April of 2001, Ken Lay handed Dick Cheney a two-page memorandum recommending national energy policy changes. The memo contained Enron's positions on specific, rather technical issues, which were presented as a "fix" for the California crisis. (Enron brazenly advised the administration not to place price caps on energy, which would be precisely the request California officials made to the President, and which the President and the Vice President would just as brazenly deny until public pressure forced them to capitulate.)


According to a special report prepared for Rep. Henry A. Waxman, over seventeen energy policies recommended by Enron made their way into the official White House National Energy Policy report.


Congress awoke from its somnambulism, having become alarmed at Enron's close association with the Bush administration. Congressional committees asked Dick Cheney for the names of those who advised him and the reports he relied upon in drafting the nation's energy policy. Cheney bluntly and adamantly refused to reveal those facts. After months of standoff, the General Accounting Office (GAO) filed a suit against the Vice President in an effort to obtain the requested information. The White House then developed a fascinating legal strategy that helped them triumph over the legislative branch.


Defense attorneys from the civil division of the Justice Department should have been assigned to the case. However, in an unprecedented move, the Bush administration required the services of the nation's number-one-gun, Theodore Olson, the Solicitor General, who normally only makes appearances before the Supreme Court. Olson, his Assistant Solicitor General, and a handpicked group of Justice Department lawyers formed a special "trial defense task force" to defend the Vice President. This act telegraphed to the court, press, and public that this was no ordinary case. The move paid off, a federal judge found for Mr. Cheney and the GAO declined to file an appeal. That, more or less, marked the end of the story. But then something happened.




Enter Obscure News Article


On October 6, 2002, a newspaper in the UK published a little known article about Mr. Cheney's advisers. According to Neil Mackay, an award-winning journalist, writing for Scotland's Sunday Herald, Dick Cheney commissioned an energy report from ex-Secretary of State, James Baker III. The time of this "commission" is not reported, but since the members of the appointed task force held three videoconferences and teleconferences in December, January, and February 2000-2001, Cheney therefore logically contacted Baker some time prior to the December 2000 meeting -- during the presidential transition period.




Enter the Man Who Gets Things Done


James Baker was uniquely situated to fulfill Cheney's commission, for among the many hats he wears, he is legal counsel to the Carlyle Group, one of the nation's largest defense investment firms whose board consists of former high level government officials, including George Bush senior. Baker was also the "hired gun" for George W. Bush's campaign in Florida, along with Karl Rove. But among the hats he wears, none is more valuable than his ability to become invisible and leave no fingerprints behind. James Baker courts the press and is hailed a statesman; he also serves as the honorary chairman of the James Baker III Institute for Public Policy at Rice University, a think tank that was involved in aiding the George W. Bush presidential transition teams.


Equally intriguing is the fact that Baker has ties with both the Bushes and Ken Lay. Years earlier, in 1993, after Baker stepped down from his stint as Secretary of State, he and Robert A. Mosbacher -- Bush senior's commerce secretary -- signed a joint consulting and investing agreement with Enron. The two men began a lucrative career making joint global investments with Enron on natural gas projects. Baker Botts LLC, James Baker's law firm, flourished in its specialty of international oil and gas counseling.


Since Baker walked in their circles, when he set out to select an energy team to advise the White House, he filled it with leaders of the oil, gas, and power industries. Three appointees stand out: Kenneth Lay from Enron, who was working on the Bush Energy Transition team under Dick Cheney at the time; Chuck Watson, the then Chairman and CEO of Houston's Dynegy Inc., and Dynegy's General Counsel and Secretary, Kenneth Randolf. Both firms were deeply involved in illegally manipulating the California energy market at the time and eventually faced criminal investigations.


The oilmen selected for the task force were Luis Giusti, a Shell non-executive director, formerly CEO of Petróleos de Venezuela, S.A.; John Manzoni, regional president of British Petroleum; David O'Reilly, Chief Executive of Chevron/Texaco; and Steven L. Miller, Board Chairman, CEO and President of Shell Oil.


In his Sunday Herald article, Neil Mackay links another Fellow of the Baker Institute to the document, Sheikh Saud Al Nasser Al Sabah, the former Kuwaiti oil minister. The Baker Institute's report on energy was funded through Khalid Al-Turki and the Arthur Ross Foundation.


Sometimes a mystery is hidden in a loaded detail that most of us would rather skip over. A case in point is this: the Baker task force report shows a forty-one member task force, but the press release gives fifty-one as the number. This of course, could be just a typo. But when we look at the structure as revealed in the report, it shows the Baker energy task force team was divided into three separate groups. First came the names of the forty-one-all-star task force. Secondly, came the names of nine observers. And thirdly, there was an unknown number forming a group of "reviewers" whose identities were not disclosed, but who collectively had "broad academic, economic, and energy expertise." According to the acknowledgements these "individuals reviewed drafts of the report at various stages and participated in the Task Force meetings." Perhaps the most telling admission is that the final version was "greatly enhanced" by this shadowy group.




Enter Major Document No. 1


The Baker energy task force produced a report titled, Strategic Energy Policy Challenges for the 21st Century, dated April 2001. There is no mistaking the fact that reasonable, detailed and important expert advice is meted out to the new president. However, this amazing 107-page report strikes a drumbeat for action that grabs the reader as it propels a picture of a unclothed, energy-scarce nation, subject to energy shortages and price fluctuations, across its pages. Contrasting the state of what is, against what should be, and mercifully making powerful recommendations that will "save our economy," it offers warnings such as: a sharp rise "in oil prices preceded every American recession since the late 1940s."


The California energy crisis is raised again and again, along with the prophecy that America can expect "more California-like incidents" in the future. There's even a connection made between the California crisis and the Middle East, which according to the report, "will remain the world's base-load supplier and least expensive source of oil for the foreseeable future." With that prophetic utterance, the stage is now set for a new actor, a new villain, and a new energy policy.




Enter Saddam Hussein


According to the Baker report, Saddam Hussein became a swing oil producer by turning Iraq's oil taps "on and off" whenever he felt that it was in his interest to do so. During these periods Saudi Arabia stepped up to the plate and provided replacement oil supplies to the market to keep California type "disruptions" and scarcity from occurring in America. Hussein, the report says, used his own "export program to manipulate oil markets." The report's implications are clear: the national energy security of the U.S. was now in the hands of an open adversary and the Saudis might not make up the difference in the future. The Baker report recommends: "The United States should conduct an immediate policy review of Iraq, including military, energy, economic and political/diplomatic assessments…. Sanctions that are not effective should be phased out and replaced with highly focused and enforced sanctions that target the regime's ability to maintain and acquire weapons of mass destruction." Military intervention is listed as a viable prospect.


According to Neil Mackay in the Sunday Herald article, James Baker delivered the report to Dick Cheney in person in mid April 2001.


The subsequent events of September 11, 2001 helped take the world's eyes away from the notion that an invasion of Iraq is for oil, but according to Mackay's sources, the Bush cabinet agreed to military intervention in Iraq six months earlier, in April of 2001.




Enter Major Documents No. 2 and 3


A haunting familiarity exists between the Baker energy report and another policy paper that could negatively impact the Bush administration. The style of the two reports is similar, particularly in discussions on national security; their task force methodologies are essentially the same; they share the repeated use of a relatively rare term; they share similarly constructed phrases; they both name Iraq as an adversary and they both attack problems in the same manner. There is a possibility that one writer served on both task forces.


A little background is necessary: In June of 1997 a group of former republican administration officials launched The Project for the New American Century, a think tank offering research and analysis on a "revolution" in modern military methods and military objectives. Like the energy task force, the passionate neo-conservative authors endowed their Principles with hard-hitting force, calling for the necessity of "preserving and extending an international order friendly" to America's "security, prosperity and principles." The founders wrote: "The history of the 20th Century should have taught us that it is important to shape circumstances before crises emerge and to meet threats before they become dire." In fact, on pages 51 and 67 of the institution's intellectual centerpiece, Rebuilding America's Defenses, the authors lament that the process of transforming the military would most likely be a long one, "absent some catastrophic and catalyzing event -- like a new Pearl Harbor." (How unfortunate for Americans, they got their needed event on September 11, 2001.)


The signers to the "principles" read like a who's who of the Bush administration plus a chorus line of supporters: Dick Cheney, I. Lewis Libby, Donald Rumsfeld, Paul Wolfowitz, and Elliott Abrams, plus world famous: William Bennett, Jeb Bush, and Dan Quayle, among others.


The signers endorsed two other dynamic enabling policies: increased military spending, and the necessity of challenging "regimes hostile to America's interests and values."


The seventy-six-page Rebuilding America's Defenses was published in 2000. With a lot of expositional swagger, the authors created not only the ideal military preparedness level for their goal of global domination, but they identified a new kind of warfare that requires far less "force" than the military was accustomed to accept. What's more, they identified the "hostile regimes" mentioned in the "Principles" to be none other than Iraq, North Korea, Iran and Syria.


The report credits Thomas Donnelly, a military writer, as "principal author," and lists twenty-seven participants, some of whom contributed a "paper" to the discussion. The list of participants includes Dick Cheney's present chief of staff, I. Lewis Libby as well as Paul Wolfowitz.


The two documents clearly show that before George W. Bush took office, key officials of his future administration not only listed Iraq, Iran, and North Korea as "adversaries" who "are rushing to develop ballistic missiles and nuclear weapons as a deterrent to American intervention in regions they seek to dominate," but endorsed an alien concept, the doctrine of pre-emptive strikes against those nations believed to have hostile intent against the U.S. before such intent is manifested.




Enter Document No. 4


On May 16, 2001, Dick Cheney officially handed the National Energy Policy (national report) to George W. Bush. Ostensibly the cabinet members that formed the National Energy Policy Development Group (NEPDG) were its authors. But a careful study and comparison of the national report with the Baker report reveals the Baker report provided the skeleton framework upon which the national energy policy was hung. However, the skeleton was broken up into unrelated parts: the skull in the middle, the thigh bone on top.


When it was all unraveled, almost every major policy action in the Baker report was incorporated into the national report. The tedious process of comparing the two reports with each other occasionally revealed a subtlety. For example, the Baker report says, "The U.S. must have a strategic energy policy based on energy security." The national report subtly changes this to: "The NEPD Group recommends that the President make energy security a priority of our trade and foreign policy." This foreign policy change led to the discovery that an important topic is missing from the national report.


Although every other oil producing country was discussed in the national energy text, two countries were glaringly omitted from even a mention: Iraq and Iran. There's an explanation for the omissions: First, in reading the Baker report one is struck by the strategic military information provided, which would be odd and inappropriate in a report on energy. Secondly, the Baker report is divided into two sections: the first part focuses on strategic steps the new administration should take immediately. The second part focuses on long-range energy policy. "Taking care of Iraq" is listed as an immediate step in the Baker report. The national report, however, focuses solely on long-range policy.




Enter Incriminating Statements


One of the most striking facts about the national report is that it makes 110 references to California's energy crisis, which was ninety-nine more than the Baker report makes. Clearly, someone in the White House needed an impressive energy crisis to tout. How unfortunate that the crisis cited was fraudulently induced. Like the Baker report, the national report states, "The California experience demonstrates the crippling effect that electricity shortages and black outs can have on a state or region." Warnings abound: "America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970s." The 110 repetitions of the word "California" linked with words like "energy crisis," and "energy shortages and price spikes," could turn the national energy report into an ad man's prized primer.


Notwithstanding its importance as an example of what could happen to other states, the author of a passage (at page 5-12) of the national report suddenly yields to an impulse to relate what really happened in California. In doing so, he completely contradicts at least 105 references to California throughout the report. The significance of this contradictory entry into the National Energy Policy must not be underestimated.


In the process of reversing the carefully construed "California experience," the author's grasp exceeds his knowledge in that his understanding of the events in California go beyond what he should have reasonably known at the time of its writing. For he wrote, "The risk that the California experience will repeat itself is low, since other states have not modeled their retail competition plans on California's plan." This is an astounding statement. If the California crisis was caused by a supply shortage as the author claims a line above this sentence, surely other states could suffer similar shortages. But no, the author is actually making an admission here: he is admitting the energy crisis in California can't be replicated in other states because certain market means do not exist in the other states. How could the author know this? The writer of that sentence would have to be someone intimately involved in the California system; know the real cause of the state's crisis; and be familiar with all the other state rules and market infrastructures.


But our knowledgeable author is not done. In trying to amplify what he just revealed, he tried to hide the true actors in the next sentence by misdirecting the reader away from the culprits to blame the state. This is a formula for incoherence. Nonetheless, the writer's sentence found its way into the national energy report where it spoke for the Bush administration: "California's failure to reform flawed regulatory rules affecting the market drove up wholesale prices." If this sentence is read literally, it asks the reader to believe that a state's experience of failure to amend its rules, along with the flawed rules themselves, somehow had an independent power to "drive up wholesale prices," without an intervening acting agent. The only sensible reading left to us is that the flawed rules allowed power brokers to manipulate the system. But how could our author and his administration editors know this to be true without being in collusion with the wrongdoers? If they were not in collusion they would have reported the crime. But if they remained silent when they had a duty to report or stop the commission of a crime, they became accessories.


Continuing his unexpected analysis, the author tells us, "Actions such as forcing utilities to purchase all their power through volatile spot markets, imposing a single-price auction system, and barring bilateral contracts all contributed to the problems that California now faces." This is nothing more than the author, and through him the White House, attempting to throw responsibility for any wrongdoing by energy companies in California squarely at the feet of the state.


Many people were blaming the state at the time, including the Federal Energy Regulatory Commission. The Hoover Institution jumped into the fray and released a book by James L. Sweeney, The California Electricity Crisis, which promotes and assigns blame like this: "After political leaders mismanaged the electricity crisis, California now faces an electricity blight while it struggles to recover from its self-imposed wounds."


Not until the Sacramento Bee broke its story, "How Californians got burned" on May 6, 2001 -- ten days before the national report was released -- did the public receive the first concrete signs the crisis may have been caused by manipulation. There was finger pointing in the media at the time, and accusations, but there was simply no proof. But after criminal convictions for federal wire fraud came thundering down, everything changed.




Enter the Federal Regulators


Following a two-year staff investigation, on March 26, 2003, the Federal Energy Regulatory Commission (FERC) released findings that impacted this article in the above "Incriminating Statements" section. FERC's latest investigation was to determine whether Enron or any other sellers manipulated the electricity and natural gas markets in California. In its report, "Price Manipulation in Western Markets" (Findings at a Glance) the FERC made the following finding:



"Staff concludes that supply-demand imbalance, flawed market design and inconsistent rules made possible significant market manipulations as delineated in final investigation report. Without underlying market dysfunction, attempts to manipulate the market would not be successful."

Amazingly, the finding eerily echoes our unknown author's statements published in the National Energy Policy document (the national report) at page 5-12. The questions I raised above are even more significant now: How could the author and the editors have inserted an accurate assessment of the causes of the California energy fraud in May 2001 without having inside knowledge and or without being part of the scam, when it took the FERC two years of investigation to release virtually the same findings as those published in the national energy report?




Enter the Question, "Who Done It?"


In a letter to the Vice President dated January 25, 2002, Rep. Henry Waxman outlined the information he gathered on how the National Energy Policy was written: passages not included in the draft of the national report, appear to have been added to the plan during the final revisions made under the direction of the White House. The White House energy plan was first drafted, Waxman says, by a "workgroup composed of staff from various agencies led by the Executive Director, Andrew Lundquist," of Dick Cheny's staff. Each chapter, according to Waxman, "was drafted by one of the participating agencies," and those copies "were then circulated among all of the workgroup members." The workgroup then met to discuss each agency's comments before submitting the drafts to the White House.


Waxman wrote, "Any further changes in the plan were made under the direction of the White House. No subsequent versions of the White House energy plan were circulated to the interagency workgroup." Assuming this description of the process applied to all the chapters of the national report, it appears the White House had the final word and made the final insertions and changes to the report.


In trying to answer the question, "Who done it?" our Sherlock Holmes people will have to look at the top levels of the White House and the Bush administration, and ask, "Who had sufficient knowledge of electricity markets in California and other states to have written the incriminating statements?"


Few if any names come to mind. Secretary of Energy, Spenser Abraham just doesn't fit the profile. He was a one-term defeated junior senator from Michigan who is mainly known for never missing a roll-call vote and for his support of abolishing the same Department of Energy he now heads. Many people held the belief that Abraham's appointment was a clear signal that Bush and Cheney would make all the energy decisions.


Andrew Lundquist, however, is another cup of tea. He was formerly the chief of staff for the Senate Energy Committee where he served brilliantly. Bush appointed him to be the Executive Director of the NEPD Group, chaired by Dick Cheney; however, he may never have seen the final changes.


Beyond Cheney and Lundquist and perhaps I. Lewis Libby, Cheney's chief of staff, or perhaps Pat Wood, Chairman of FERC, who may fit the profile, one runs out of names.


However, another player does come to mind: he was a lone outsider who insinuated himself into a position of power in Bush's White House. He is one man who by far is the most knowledgeable and capable power-market-man in the country, and he also happened to know how the marketing system in California could be rigged. His name is Kenneth Lay, the former chairman of Enron.




Enter Ken Lay Act Two


Indeed, Rep. Henry Waxman's Minority report on Enron found more instances of Ken Lay's input transferred into recommendations to the President on pages 5-11 and 5-12 than any other portion of the national report. However, the recommendations don't show the style and form of a contributing writer.


So the question is, are there any correlations between relevant passages in the text with other documents written by Ken Lay?


In a comparison of the two-page memo we know Lay submitted to Cheney, the passages attributed to the unknown author reveal similarities of vocabulary, including the identical use of words, a similar style of writing, and a correspondence of ideas expressed. It appears that Ken Lay may have written more of the national report than was previously suspected. So what about Dick Cheney as a suspect?


Although Mary Matalin, who was then serving as an adviser to the vice president, told a San Francisco Chronicle reporter that Cheney's energy plan included input from many sources, "Just because some of the things are included in the plan doesn't mean they were from the talks between Cheney and Lay."


However, Mary Matalin may not have known what we now know: She apparently did not know that Ken Lay wrote his memo down on paper and submitted it to the Vice President. In fact, there may have been more than one memo submitted by Lay to Cheney, which might explain why the vice president went to such extremes to keep congress from viewing those documents.


It's shocking to realize that at the same time the author's incriminating admissions were being submitted to Dick Cheney, then read, edited and approved for publication by the White House, the fraudulent acts they referenced were being executed. This fact may have serious criminal justice implications for the White House. For in the spring of 2001, California was reeling from rolling blackouts and brownouts and the price of electricity was breaking through the sky like a con trail from a speeding jet.


It may be time to paraphrase Senator Howard Baker's famous questions during the Watergate hearings, "What did the President and Vice President know and when did they know it?" At the very least, congress and the people of this country need to know who wrote the incriminating passages and who read them.




Enter Documents No. 5, 6 and 7


The New American Century Project's writings were not the only brainy papers that were read and studied by conservatives before George W. Bush gained the presidency. We know the Baker Report went directly to Cheney. But other reports from Conservative think tanks like Stanford's Hoover Institution, the American Enterprise Institute, and the Heritage Foundation had the ears of the group of neo-conservatives who favored using America's great military power to not only carve out an empire but to set America on a course to global domination. One report, "Using Power and Diplomacy to Deal With Rogue States," written in the mid 90's by Thomas H. Henriksen, a senior fellow and associate director of the Hoover Institute is an analysis of the world following the end of the cold war. The report favors power over diplomacy. What is so striking about the paper is its wild-west, tough cowboy style.


Henriksen was worried about a few countries, "If left unchecked, rogue states like Iraq, North Korea, Iran, Libya, and others will threaten innocent populations, undermine international norms, and spawn other pariah regimes, as the global order becomes tolerant of this political malignancy."


His solution? "America must act not like a policeman but like a sheriff in the old Western frontier towns, acting alone on occasion, relying on deputies or long-standing allies, or looking for a posse among regional partners. . .[America] cannot allow desperadoes to run loose without encouraging other outlaws to test the limits of law and order." (Surely, given the president's performance in his first two years in office, this sentence must have been inserted into George W. Bush's play book.)


Newt Gingrich, the former Speaker of the House and the then-soon- to-be-appointed member of the National Defense Policy Board echoes this simple, lone star imagery, in an address to the Overseers Meeting of the Hoover Institution. "Somebody on horseback with a satellite phone and a laser designator connected directly with a B-2 bomber or a B-52 with smart weapons has a level of power unthinkable ever before in human history."


Then there are the sensible folks of the Council on Foreign Relations, advising the new president in June of 2001, "Saddam Hussein and his regime pose a growing danger to the Middle East and the United States. The regime cannot be rehabilitated. Therefore, the goal of regime replacement should remain a fundamental tenet of U.S. policy options."


The paper, written by Geoffrey Kemp and Morton H. Halperin, with sixteen other participants, advises the president there are three red lines describing actions that Saddam Hussein might possibly take. If he crosses any one of the three, the report states, we will gain the support of the Arabs and the Turks against him:



"First, Iraqi military threats or attacks on allied forces.

Second, Iraqi threats or attacks on neighboring states.


Third, Iraqi acquisition and deployment of weapons of mass destruction or their use, including nuclear, chemical and biological weapons."



Note the tense of the third sentence: it is present or future tense as opposed to the past tense. Judging from the subsequent actions and words of the president, it appears that the third red line in Kemp-Halperin paper may have played a large role in the administration's attempts to gain allies in its war against Iraq.


Newt Gingrich's address before the Hoover Board of Overseers was titled, "National Security Initiative, the Transformation of National Security," and was an attempt to describe a new kind of military that called for a new kind of military education. He advised dropping the "concept of exit strategies," which he said was a "fetish that grew out of the Vietnam War." As for Saddam Hussein, Gingrich said, "We need to immediately replace him."


Pulling his words out carefully, Gingrich revealed a stunning use of psychological intimidation and warfare. He elevated coercive verbal bullying to weaponry status. He said, "You cannot change Saudi Arabia as much as we need to change Saudi Arabia until you have an Iraq which is an American ally. And you need an Iraq that's an American ally [because] it has a larger oil reserve than Saudi Arabia does."


Gingrich unveiled how coercive a threat an American-Iraqi friendship would have over the Saudis: the bi-national friendship would destroy the Saudi's sense of their reality that they alone are the one single source for the world's reserve supply of oil. "The morning they see that we are that serious and we are that determined, they will negotiate with us in a very different way." In other words, once there are two sources of cheap oil, it isn't likely the Saudis will thumb their noses at a U.S. president's offer to buy reserve oil at two dollars a barrel. It's either two dollars a barrel or it's nothing. (Since this speech, Gingrich has become an adviser to Donald Rumsfeld, the Secretary of Defense.)




Enter Document No. 8


By December of 2002, "an Independent Working Group" led by two Ambassadors, Edward P. Djerejian and Frank G. Wisner, wrote a report for the president to guide him on what comes after the war. They created a "perfect" war on paper: The war was presumed to have occurred. It was a fast, smooth war. It ended nicely. There were no complications. The report does not address the problems of a war that bogs down in urban street fighting or in mass demonstrations against the United States or any other messy possibility.


Titled, "Guiding Principles for U.S. Post-Conflict Policy in Iraq," the report is cosponsored by the Council on Foreign Relations and the James A. Baker III Institute for Public Policy of Rice University.


The President and his advisers are greeted with constraints such as "uphold the territorial integrity of Iraq."


Addressing the motives of the U.S., the report tells the president, "Western anti-war activists, the Arab public, average Iraqis and international media have all accused the United States of planning an attack on Iraq not to dismantle weapons of mass destruction but as a camouflaged plan to ‘steal' Iraq's oil for the sake of American oil interests." The solution: any repairs, future investments, oil exports and sales of oil must be made transparent and involve both international and Iraqi oversight.


The report gets most interesting when it talks about oil -- the lure and the reality. While there is great potential, "it will require massive investment." ($28 billion.) The president is told, "Iraq has the second largest proven oil reserves in the world (behind Saudi Arabia) estimated at 112 billion barrels with as many as 220 billion barrels of resources deemed probable. Of Iraq's 74 discovered and evaluated oil fields, only 15 have been developed." In the western desert "there are 526 known structures that have been discovered, delineated, mapped, and classified as potential prospects in Iraq of which only 125 have been drilled." It must be very difficult for some individuals and nations to let go of such a vision. We know the president and his men could not.




Enter Painful Conclusion


When John DiIulio, a high-level Bush administration official, left his job at the White House, he sent a letter to Ron Suskind at Esquire, describing his experiences working in the administration. DiIulio gave the world an insider's view into the secret center of power. "There is no precedent in any modern White House for what is going on in this one: a complete lack of a policy apparatus."


DiIulio wrote, "The Clinton administration drowned in policy intellectuals and teemed with knowledgeable people interested in making government work." DiIulio said simply that intellectual work wasn't "Bush's style."


In "eight months," DiIulio continued, "I heard many, many staff discussions, but not three meaningful, substantive policy discussions. There were no actual policy white papers on domestic issues."


What Mr. DiIulio may not have known is what the Yurica Report discovered: the policy papers were written for this administration -- and not by this administration. The National Energy Policy like the Baker report drills into the reader's mind that devastating "California-like" crises can and will be repeated unless the administration and congress choose to take prescribed steps to regain control over energy supply-lines. Control or insurance is spelled out as w-a-r against Iraq. Something intervened, however, that made energy crises unnecessary as a justification tool for war. That something was another Pearl Harbor on September 11, 2001.


This story ends as it began: with unrequited lies, deception and fraud. Three sentences inserted into the National Energy Policy report reveal: 1) the White House knew the California crisis was man-made; 2) knew the power companies were manipulating the market in California; 3) and knew these facts at the time the people of California were being fleeced by the scam; 4) yet the Bush White House did nothing to stop the fraud.


A special prosecutor should be appointed by Congress to investigate this whole matter as well as what Mr. Bush and Mr. Cheney knew and when they knew it.




Related Yurica Report - How Bush Pushed Gasoline Prices Sky High:


With a little manipulation of the Strategic Petroleum Reserves, a little change in the rules, and a little chutzpah, billions of dollars rolled into the back pockets of Big Oil.


***** ENDS *****


Documentation & Links


1. San Francisco Chronicle, "Memos show makings of power crisis," May 10, 2002. See... http://sfgate.com/cgi-bin/article.cgi?file.../10/MN24643.DTL


2. The Sacramento Bee, Special Report: "How Californians got burned" May 6, 2001.

See... http://www.sacbee.com/static/archive/news/...california.html


3. The two page Ken Lay Memo (Go to this page and click on the "Memo" photo-icon at the top of the article):San Francisco Chronicle, "The Enron Collapse", January 30, 2002. See... http://sfgate.com/cgi-bin/article.cgi?file.../30/MN46204.DTL


4. Bush Administration Contacts with Enron, Prepared for Rep. Henry A. Waxman by the Minority Staff Special Investigations Division Committee on Government Reform, U.S. House of Representatives.

See... http://www.house.gov/reform/min/inves_admin/admin_enron.htm


5. How the White House Energy Plan Benefited Enron Prepared for Rep. Henry A. Waxman by the Minority Staff Committee on Government Reform.

See... http://www.house.gov/reform/min/inves_admin/admin_enron.htm


6. Neil Mackay's article in the Sunday Herald:

See... http://www.sundayherald.com/print28285


7. The Baker Report Press Release:

See... http://www.rice.edu/projects/baker/Pubs/re...p200107_03.html


8. Document No. 1: The Baker Report, Strategic Energy Policy Challenges for the 21st Century:

See... http://www.rice.edu/projects/baker/Pubs/wo...gy/energytf.htm


9. Document No. 2: Project for the New American Century "Principles":

See... http://newamericancentury.org/statementofprinciples.htm


10. Document No. 3: Rebuilding America's Defenses See... http://newamericancentury.org/publicationsreports.htm


11. Document No. 4: National Energy Policy report:

See... http://www.whitehouse.gov/energy/


12. FERC Findings and Report:

See... http://www.ferc.gov/western.htm


13. San Francisco Chronicle, "The Enron Collapse", January 30, 2002.

See... http://sfgate.com/cgi-bin/article.cgi?file.../30/MN46204.DTL


14. Letter from Rep. Waxman to Dick Cheney, dated January 25, 2002. See... http://reform.house.gov/min/inves_energy/energy_cheney.htm


15. Document No. 5: Using Power and Diplomacy to Deal With Rogue States: See... http://www-hoover.stanford.edu/publications/epp/94/94a.html


16. Document No. 6: Newt Gingrich, "National Security Initiative, The Transformation of National Security." A speech to the Board of Overseers Meeting, Hoover Institution, July 18, 2002. See... http://www-hoover.stanford.edu/research/co...oo2002july.html


17. Document No. 7: A Report on U.S. Policy Options Towards Iraq by Geoffrey Kemp, Morton H. Halperin, Council on Foreign Relations: See... http://www.cfr.org/publication_print.php?i...90&content=


18. Document No. 8: Guiding Principles for U.S. Post-Conflict Policy in Iraq Edward P. Djerejian and Frank G. Wisner, Co-Chairs See... http://www.rice.edu/projects/baker/Pubs/wo...iraq/index.html


19. Esquire, "Why Are These Men Laughing?" January, 2003. "The DiIulio Letter" October 24, 2002,




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Guest LAW_*

Commerce Committee to Examine Energy Market Manipulation


he Senate Committee on Commerce, Science, and Transportation announces a Full Committee hearing on Energy Market Manipulation and Federal Enforcement Regimes scheduled for Tuesday, June 3, 2008, at 10:00 a.m.


The hearing will examine energy market manipulation and federal enforcement regimes. The hearing will also consider the current state of the oil and gas markets and their impact on consumers, as well as solicit testimony and discussion as to the key factors the Federal Trade Commission should incorporate into its upcoming rulemaking on its new responsibility to prevent manipulation in the wholesale oil and petroleum distillate markets.


Energy Market Manipulation and Federal Enforcement Regimes

Full Committee

Date: Tuesday, June 3, 2008

Time: 10:00 a.m.

Location: Room 253, Russell Senate Office Building


Rob Blumenthal w/Inouye 202-224-8374

Jenilee Keefe w/Inouye 202-224-7824

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Guest John McCain 2008

John McCain Contends That It Is Important For Us To Understand The Role That Speculation Is Playing In Our Soaring Energy Prices. There are already several investigations underway to examine this kind of wagering in our energy markets, unrelated to any kind of productive commerce, because it can distort the market, drive prices beyond rational limits, and put the investments and pensions of millions of Americans at risk. John McCain believes that where we find abuses, they need to be swiftly punished. And to make sure they never happen again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments.

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Guest LAW_*

Oil companies are racking up obscene profits left and right while American families are stretched to the limit by skyrocketing gas prices. It’s time for Big Oil to pay its fair share so Americans can see a little relief. The windfall profits tax will do just that, and help spur innovation in the process.”


“Gas prices are nearing four dollars a gallon and a barrel of oil is around $120 per barrel, yet this President is refusing to take action to put downward pressure on gas prices,” Dorgan said. “We need to immediately stop putting oil underground into the Strategic Petroleum Reserve, and start addressing the fundamental issue of these sky-high prices by cracking down on the rampant speculation that’s driving up the price of energy.”


Said Cantwell: “We need a cop on the beat to patrol the markets for any illegal activity or manipulation and help ensure Americans are paying prices that are not just fair, but based on supply and demand fundamentals. Now it’s time for Congress to pursue vigilant oversight over these markets to ensure Americans aren’t the victims of a few rogue traders manipulating energy markets. By taking these steps, we may be able to burst the energy price bubble that is dragging down our economy.”


“If we don’t act boldly, the economic situation for millions of middle-class families and working Americans will continue to deteriorate,” Sanders said. “Record-breaking oil and gas prices are a crisis not only for commuters going to work, especially in rural areas, but also for family farmers, small businesses, truckers, airlines, grocery stores, restaurants, hotels, tourists and indeed every sector of our economy. The bottom line is this: Congress and the President can no longer sit idly by while Americans are getting ripped off at the gas pump, the economy deteriorates, and Exxon Mobil, greedy speculators, and OPEC are allowed to make out like bandits pushing oil and gas prices higher and higher.”

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Guest Always Red

The President's 2001 National Energy Policy set out a comprehensive strategy to reduce our dependence on foreign sources of oil while diversifying and expanding our resources here at home. The strategy involved three key components: increasing efficiency, increasing the use of alternative fuels, and increasing domestic supply of traditional fuels.



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Guest Philip_*

In its 2008 world energy outlook, the International Energy Agency (IEA) based in Paris announced the most important 350 gas- and oil-fields were under close scrutiny and lowered its prediction for the world petroleum supply. This prediction alone now drives the price, the experts say.


The “house of cards will collapse” – when America’s car drivers begin to react to the higher price of oil or there is a decline of the demand from China. An exaggeration of such an extent won’t last in the long run.

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Guest LAW_*

This is a must read to understand the Enron Loophole:


Mr. Gerry Ramm

Senior Executive, Inland Oil Company

Ephrata, Washington

On behalf of the

Petroleum Marketers Association of America

Arlington, Virginia


Testimony before the

Committee on Commerce, Science and Transportation

United States Senate

Washington, DC

June 3, 2008


Honorable Chairman Inouye and Ranking Member Stevens and distinguished members of the committee, thank you for the invitation to testify before you today. I appreciate the opportunity to provide some insight on the extreme volatility and record setting prices seen in recent months on the energy commodity markets.


I am an officer on the Petroleum Marketers Association of America’s (PMAA) Executive Committee. PMAA is a national federation of 46 state and regional associations representing over 8,000 independent fuel marketers that collectively account for approximately half of the gasoline and nearly all of the distillate fuel consumed by motor vehicles and heating equipment in the United States. I also work for Inland Oil Company in Ephrata, Washington. My Dad started Inland Oil Company in 1946 after he returned from duty in World War II. Today we operate seven gas stations and convenience stores and we also supply fuel to eight independent dealers. Also, supporting my testimony here today is the New England Fuel Institute who represents over 1,000 heating fuel dealers in the New England area.


Last year, gasoline and heating oil retailers saw profit margins from fuel sales fall to their lowest point in decades as oil prices surged. The retail motor fuels industry is one of the most competitive industries in the marketplace, which is dominated by small, independent

businesses. Retail station owners offer the lowest price for motor fuels to remain competitive, so that they generate enough customer traffic inside the store where station owners can make a modest profit by offering drink and snack items. Because petroleum marketers and station owners must pay for the inventory they sell, their lines of credit are approaching their

limit due to the high costs of gasoline, heating oil and diesel. This creates a credit crisis with marketers’ banks, which creates liquidity problems and may force petroleum marketers and station owners to close up shop.


Excessive speculation on energy trading facilities is the fuel that is driving this runaway train in crude oil prices. The rise in crude oil prices in recent weeks, which reached $135.09 on May 22, 2008, has dragged with it every single refined petroleum product, especially heating oil. According to the Department of Energy, the cost of crude accounts for roughly 73 percent of the pump price, up from 62 percent in January of 2008.1 Wholesale heating oil prices from March 5, 2008 – May 28, 2008 have risen from $2.97 to $3.81.2 The spike comes despite warmer temperatures in the Northeast and the end of the heating oil season. Interestingly, Colonial Group Inc. which provides wholesale/retail petroleum fuels announced May 7, 2008 that it had 150,000 barrels of surplus heating oil available for auction. That same day heating oil futures set yet another record high with a 9.3 cent gain at $3.37 a gallon along with

temperatures averaging in the upper 70s in the Northeast. The data doesn’t add up.


Large purchases of crude oil futures contracts by speculators have created an additional demand for oil which drives up the prices of oil for future delivery. This has the same effect as the additional demand for contracts for delivery of a physical barrel today drives up the price for oil on the spot market. According to the Department of Energy, the amount of petroleum products shipped by the world's top oil exporters fell 2.5 percent last year, despite a 57 percent increase in prices.


According to a 2006 Senate Permanent Subcommittee on Investigations bipartisan report by Chairman Carl Levin (D-MI) and Ranking Member Norm Coleman (R-MN) entitled, The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat, “Several analysts have estimated that speculative purchases of oil futures have added as much as $20-25 per barrel to the current price of crude oil, thereby pushing up the price of oil from $50 to approximately $70 per barrel.” Who would have thought that crude oil futures would rise to over $130 a barrel?


Three weeks ago, Michael Masters, Managing Member and Portfolio Manager of Masters Capital Management, LLC, a hedge fund, argued before the Senate Committee on Homeland Security and Government Affairs that institutional investors are the cause of the recent run-up in commodity prices. Institutional investors are buying up all the commodity contracts (going long), especially energy commodities, and are not selling, thereby causing the demand for contracts to increase and putting further pressure on commodity prices. Institutional investors allocate a portion of their portfolios into commodities since they are posting solid returns rather than traditional investments like stocks and bonds.


Since commodities futures markets are much smaller than equity markets, billions invested into commodity markets will have a far greater impact on commodity prices than billions of dollars invested in equity markets. Masters stated that while some economists point to China’s demand for crude oil as the cause for the recent rise in energy costs, he disclaims that assumption. In fact, Masters’ testimony highlights a Department of Energy report that annual Chinese demand for petroleum has increased over the last five years by 920 million barrels. Yet, over the same five-year period, index speculators’ demand for petroleum futures has increased by 848 million barrels, thus the increase in demand from institutional investors is almost equal to the increase in demand from China! Wouldn’t this demand by institutional investors have some effect on prices?


Also, many economists and financial analysts report that the weak dollar has put pressure on crude oil prices. While the weak dollar explanation is partly true because crude oil is denominated in dollars which reduces the price of oil exports for producers, leading them to seek higher prices to make up for the loss, this does not justify crude oil’s move beyond $130 a barrel. On May 1, 2008, the front month NYMEX WTI crude oil contract closed just under $113 per barrel. Three weeks later the same front month NYMEX WTI contract was trading at over $132 per barrel. In that same period of time the dollar traded between $1.50 to $1.60 against the Euro. While the Euro strengthened against the dollar, it doesn’t justify that crude oil should have increased $19. There were no significant supply disruptions during this time period.


U.S. destined crude oil contracts could be trading DAILY at a rate that is multiple times the rate of annual consumption, and U.S. destined heating oil contracts could be trading daily multiple times the rate of annual consumption. Imagine the impact on the housing market if every single house was bought and sold multiple times every day. An October 2007 Government Accountability Office report, Trends in Energy Derivatives Markets Raise Questions about CFTC’s Oversight, determined that futures market speculation could have an upward effect on prices; however, it was hard to quantify the exact totals due to lack of transparency and recordkeeping by the CFTC.


To be able to accurately “add up” all of the numbers, you must have full market transparency. This is perhaps the biggest barrier to obtaining an accurate percentage calculation of the per barrel cost of non-commercial speculative investment in crude oil, natural gas and other energy products. Much of the non-commercial (i.e. speculators that have no direct contact with the physical commodity) involvement in the commodities markets is isolated to the over-the-counter markets and foreign boards-of-trade, which, due to a series of legal and administrative loopholes, are virtually opaque.


PMAA would like to thank Congress for passing the Farm Bill (H.R. 2419), specifically, Title XIII, which will bring some transparency to over-the-counter markets. However, the Farm Bill is only a first step.


What the Farm Bill language does not do is repeal a letter of “no action” issued by the CFTC to the London based International Petroleum Exchange (IPE) which was subsequently purchased by the Intercontinental Exchange (ICE). The letter of no action was issued since the IPE was regulated by the United Kingdom’s Financial Services Authority (FSA), which theoretically exercised comparable oversight of the IPE as CFTC did to NYMEX. Recently, however, whether or not the FSA exercises “comparable oversight” was brought into question by CFTC Commissioner Bart Chilton. Congress needs to investigate whether or not

oversight by foreign regulators is “comparable.” Currently, FSA doesn’t monitor daily trading to prevent manipulation, publish daily trading information, or impose and enforce position limits that prevent excessive speculation.


ICE is the exchange most often utilized by those who exploit the Enron Loophole. ICE is a publicly traded exchange whose shareholders are primarily investment funds. In recent years ICE’s trading volume has exploded at the expense of the regulated NYMEX. According to the Securities and Exchange Commission filings, traders on ICE made bets on oil with a total paper value of $8 trillion in 2007, up from $1.7 trillion in 2005. ICE purchased IPE and will continue to claim exemptions on various contracts whether or not the Farm bill becomes law since they effectively have a “get out of jail free card.”


While PMAA applauds the recent CFTC announcement that it will expand information sharing with the U.K.’s Financial Services Agency and ICE Futures Europe to obtain large trader positions in the West Texas Intermediate crude oil contract, more needs to be done to

prevent and deter market manipulation on all foreign boards of trade.


Congress and the Administration might also consider:


1. Closing the Administrative Foreign Boards-of-Trade Loophole via review or elimination of CFTC “no action letters” to overseas energy trading platforms. PMAA supports any legislative remedy that would ensure that all off-shore exchanges be subject to the same level of oversight and regulation as domestic exchanges such as the NYMEX when those exchanges allow U.S. access to their platforms, trade U.S. destined commodities, or are owned and operated by U.S. based companies.


2. Raising margin requirements (or necessary collateral) for non-commercial entities or so-called “non-physical players,” i.e. commodities traders and investors that do not have the ability to take physical possession of the commodity, or otherwise incurs risk (including price risk) associated with the commodity either in connection with their business or that of a client. In other words, anyone who does not meet the definition of “eligible commercial entity” under 7 USC §1a (11). Currently, margin requirements in futures trading are as low as three percent for some contracts. To buy U.S. equities, margin requirements are a minimum of 50



3. Requiring non-commercial traders (e.g. financial institutions, insurance companies, commodity pools) to have the ability to take physical delivery of at least some of the product. (Rep. John Larson (D-CT) is considering such a proposal).


4. Banning from the market any participant that does not have the ability to take direct physical possession of a commodity, is not trading in order to manage risk associated with the commodity, or is not a risk management or hedging service (again, anyone that does not meet the statutory definition of “commercial entity” under 7 §USC 1a(11).


5. Significantly increase funding for the CFTC. The FY 2009 President’s budget recommendation is for $130 million. While this is an increase from previous years, CFTC staff has declined by 12 percent since the commission was establish in 1976, yet total contract volume has increased over 8,000 percent. Congress should appropriate sufficient funding to keep up with the ever changing environment of energy derivatives markets.


We and our customers need our public officials, including those in Congress and on the CFTC, to take a stand against excessive speculation that artificially inflates energy prices. PMAA strongly supports the free exchange of commodity futures on open, well regulated and transparent exchanges that are subject to the rule of laws and accountability. Many PMAA members rely on these markets to hedge product for the benefit of their business planning and their consumers. Reliable futures markets are crucial to the entire petroleum industry. Let’s make sure that these markets are competitively driven by supply and demand.


Thank you again for allowing me the opportunity to testify before you today.

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Guest Office of Rep. Hinchey

With oil and natural gas prices out of control, Congressman Maurice Hinchey (D-NY) today helped introduce a bill to close various regulatory loopholes that have enabled oil, gasoline, and natural gas speculators to artificially drive up the price of the commodities. Hinchey is an original cosponsor of the 2008 Prevent Unfair Manipulation of Prices (PUMP) Act, which was authored by Congressman Bart Stupak (D-MI).


"Closing these loopholes would help ensure the oil and gas market are not being unfairly manipulated by speculators who are hoping to drive up the price of those commodities simply to make a profit for themselves at the expense of everyone else," Hinchey said. "We have enough problems with the Bush administration's oil policies driving up the price of oil and gas that we don't need speculators out there doing further damage. These speculators are gaming the system and we need to put an end to that right now."


Traditionally, trading of energy commodities such as crude oil, gasoline, and natural gas has taken place with oversight by the Commodity Futures Trading Commission (CFTC). However, as a result of loopholes in the Commodity Exchange Act, an increasing amount of trading occurs on over-the-counter or dark markets, without any CFTC oversight. Without effective oversight, there is no way to know whether energy speculators are basing trades on market realities, or are instead gaming the system to make money at the expense of hard-working Americans.


While provisions in the recently-approved Farm Bill to close some speculation loopholes are a good first step, Hinchey said more must be done to close all of the existing loopholes to prevent manipulation on these markets. The 2008 PUMP Act would close several of the remaining loopholes:


· Bilateral Trades: These trades are made between two individuals and are not negotiated on a trading market. Because the Farm Bill only closed the Enron Loophole for electronic exchanges, these bilateral trades remain in the dark.


· Foreign Boards of Trade: Petroleum contracts offered on the InterContinental Exchange (ICE), the largest dark market, are cleared on a foreign board of trade in London. Because the Farm Bill did not address foreign boards of trade, these trades will remain in the dark.


· Swaps Loophole: By closing the swaps loophole, this would eliminate another major avenue energy speculators use to avoid CFTC oversight.


· Bona Fide Hedging Exemption: A growing number of speculators have taken advantage of an exemption that allows businesses "to hedge their legitimate anticipated business needs." The bill would clarify that “legitimate anticipated business needs” does not mean energy speculators.


The positive impact of greater oversight of oil and natural gas trading is well documented. At a congressional hearing held late last year, Michael Greenberger, a former CFTC Commissioner and professor at the University of Maryland School of Law, testified that better federal oversight of these dark markets could reduce the price of crude oil by as much as $20 to $30 a barrel and reduce the price of natural gas by one-third.


The PUMP Act would also strengthen the authority given to the Department of Energy to prosecute manipulation in natural gas and electricity markets.

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Guest Office of Rep. Hinchey

With oil and natural gas prices out of control, Congressman Maurice Hinchey (D-NY) today helped introduce a bill to close various regulatory loopholes that have enabled oil, gasoline, and natural gas speculators to artificially drive up the price of the commodities. Hinchey is an original cosponsor of the 2008 Prevent Unfair Manipulation of Prices (PUMP) Act, which was authored by Congressman Bart Stupak (D-MI).


"Closing these loopholes would help ensure the oil and gas market are not being unfairly manipulated by speculators who are hoping to drive up the price of those commodities simply to make a profit for themselves at the expense of everyone else," Hinchey said. "We have enough problems with the Bush administration's oil policies driving up the price of oil and gas that we don't need speculators out there doing further damage. These speculators are gaming the system and we need to put an end to that right now."


Traditionally, trading of energy commodities such as crude oil, gasoline, and natural gas has taken place with oversight by the Commodity Futures Trading Commission (CFTC). However, as a result of loopholes in the Commodity Exchange Act, an increasing amount of trading occurs on over-the-counter or dark markets, without any CFTC oversight. Without effective oversight, there is no way to know whether energy speculators are basing trades on market realities, or are instead gaming the system to make money at the expense of hard-working Americans.


While provisions in the recently-approved Farm Bill to close some speculation loopholes are a good first step, Hinchey said more must be done to close all of the existing loopholes to prevent manipulation on these markets. The 2008 PUMP Act would close several of the remaining loopholes:


· Bilateral Trades: These trades are made between two individuals and are not negotiated on a trading market. Because the Farm Bill only closed the Enron Loophole for electronic exchanges, these bilateral trades remain in the dark.


· Foreign Boards of Trade: Petroleum contracts offered on the InterContinental Exchange (ICE), the largest dark market, are cleared on a foreign board of trade in London. Because the Farm Bill did not address foreign boards of trade, these trades will remain in the dark.


· Swaps Loophole: By closing the swaps loophole, this would eliminate another major avenue energy speculators use to avoid CFTC oversight.


· Bona Fide Hedging Exemption: A growing number of speculators have taken advantage of an exemption that allows businesses "to hedge their legitimate anticipated business needs." The bill would clarify that “legitimate anticipated business needs” does not mean energy speculators.


The positive impact of greater oversight of oil and natural gas trading is well documented. At a congressional hearing held late last year, Michael Greenberger, a former CFTC Commissioner and professor at the University of Maryland School of Law, testified that better federal oversight of these dark markets could reduce the price of crude oil by as much as $20 to $30 a barrel and reduce the price of natural gas by one-third.


The PUMP Act would also strengthen the authority given to the Department of Energy to prosecute manipulation in natural gas and electricity markets.

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IntercontinentalExchange (NYSE: ICE) is an American financial company that operates Internet-based marketplaces which trade futures and over-the-counter (OTC) energy and commodity contracts as well as derivative financial products.


In June of 2001, ICE expanded its business into futures trading by acquiring the International Petroleum Exchange (IPE), now ICE Futures Europe, which operated Europe’s leading open-outcry energy futures exchange. Since 2003, ICE has partnered with the Chicago Climate Exchange (CCX) to host its electronic marketplace. In April of 2005, the entire ICE portfolio of energy futures became fully electronic.




ICE Gasoil Futures


ICE Gasoil Futures is designed to provide users with an effective hedging instrument and trading

opportunities. Its underlying physical market is heating oil barges delivered in ARA (Antwerp,

Rotterdam, Amsterdam). It is used as the pricing reference for all distillate trading in Europe and



Contracts are for the future delivery of gas oil into barge or coaster or by in-tank transfer from Customs and Excise bonded storage installations or refineries in the Amsterdam, Rotterdam, Antwerp (ARA) area (including Vlissingen and Ghent) between the 16th and the last calendar day of the delivery month.


Price transparency


Real-time prices are available via the ICE Platform and major data vendors. As a result, the price at which a particular contract is trading can be known instantly by all participants.


Trading shall cease at 12:00 hours, 2 business days prior to the 14th calendar day of the delivery month. This is also the tender day (see Related Documents - 'Gas Oil Delivery Mechanism').


Contract security


LCH.Clearnet Ltd (LCH.Clearnet) acts as the central counterparty for trades conducted on the

London exchanges. This enables it to guarantee the financial performance of every contract

registered with it by its members (the clearing members of the exchanges) up to and including

delivery, exercise and/or settlement. LCH.Clearnet has no obligation or contractual relationship

with its members' clients who are non-member users of the exchange markets, or non-clearing

members of the exchanges.


Delivery mechanism


ICE Gasoil Futures offers users the opportunity to make or take physical delivery of gasoil. This

can be achieved upon expiry of the contract through the Standard Delivery Mechanism or

Alternative Delivery Procedure. Prior to contract maturity, physical delivery can be achieved

through the Exchange of Futures for Physical (EFP).


Unit of trading


One or more lots of 100 metric tonnes of gasoil, with delivery by volume namely 118.35 cubic

metres per lot being the equivalent of 100 tonnes of gasoil at a density of 0.845 kg/litre in

vacuum at 15°C.


Property and risk


Risk passes to the Buyer when the product passes the vessel’s flange and the property passes

to the Buyer upon payment.


Seller's obligations


In respect of contracts still open at the cessation of trading in the current month the Seller shall:

a) Deliver to LCH.Clearnet all tender documents stipulated in the Administrative Procedures

and Certificate(s) of Availability of Product to the Exchange

B) Accept the Buyer or Buyers to whom LCH.Clearnet passes tenders

c) Subject to any default on the part of the Buyer, make delivery of gas oil

d) Ensure that such gas oil is of the required quality and quantity

e) In accordance with good industry practice pay any additional storage charges, delivery

fees and demurrage if delivery is not completed in the time allowed at the installation

f) Pass to LCH.Clearnet promptly all documents relating to payment


Buyer's obligations


In respect of contracts still open at the cessation of trading in the current month the Buyer shall:

a) Accept any tender passed to him by LCH.Clearnet.


Exchange of Futures for Physical (EFP) and Exchange of Futures for Swaps (EFS)


EFPs and EFSs may be reported to the Exchange during trading hours and registered by

LCH.Clearnet up to one hour after cessation of trading in the delivery month in which the EFP or

EFS is traded. These allow more effective hedging opportunities for market participants with

over-the-counter positions.




The contract is governed by English law and includes provisions for force majeure and




LCH.Clearnet guarantees financial performance of all ICE Futures contracts registered with it by

its clearing Members. All ICE Futures Member companies are either members of LCH.Clearnet,

or have a clearing agreement with a Floor Member who is a member of LCH.Clearnet.



ICE Futures is regulated in the UK by the Financial Services Authority (FSA) as a recognised

investment exchange (RIE) under Part XVIII of the Financial Services and Markets Act 2000

(FSMA). Further, ICE Futures has secured the relevant regulatory approvals or secured a

statement of no objection, or has satisfied itself that it does not require regulatory approvals to

allow direct access to the ICE Platform in a number of other overseas jurisdictions, such as US

and Singapore. The complete list of jurisdictions can be found at:




In accordance with the FSMA, all ICE Futures General Participants based in the UK will be

authorised and regulated by the FSA. Where General Participants are incorporated overseas,

they will be regulated by the relevant regulatory authority in that jurisdiction.

Edited by Luke_Wilbur

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Guest Enron Ex

You need to understand who are the real players.


Kinder Morgan Energy Partners, L.P. (NYSE: KMP) is a leading pipeline transportation and energy storage company in North America. KMP owns an interest in or operates more than 25,000 miles of pipelines and 165 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle bulk materials like coal and petroleum coke. KMP is also the leading provider of CO2 for enhanced oil recovery projects in North America. One of the largest publicly traded pipeline limited partnerships in America, KMP has an enterprise value of approximately $20 billion. The general partner of KMP is owned by Knight Inc. (formerly Kinder Morgan, Inc.), a private company.


Richard Kinder (born 1945) is a billionaire from Missouri, and former president of Enron. Enron Creditors Recovery Corporation (formerly Enron Corporation, NYSE ticker symbol ENE) was an American energy company based in Houston, Texas. Before its bankruptcy in late 2001, Enron employed around 22,000 people (McLean & Elkind, 2003) and was one of the world's leading electricity, natural gas, pulp and paper, and communications companies, with claimed revenues of $111 billion in 2000.


Kinder and his family are strong supporters of George W. Bush. Kinder’s wife raised more than $200,000 for Bush during the 2004 election, and had pledged $100,000 to the Bush campaign in 2001. during that 2001 campaign Kinder and his wife served as regional co-chairs for Bush’s Presidential Exploratory Committee, and Kinder has given $379,745 US to the Republican party.


Partners Kinder and Morgan formed Kinder Morgan Energy Partners in February 1997 after purchasing the general partnership that ran the liquids pipeline operations of energy giant Enron Corporation. Kinder partnered with University of Missouri Law School classmate and former Enron pipeline executive, Bill Morgan, to form Kinder Morgan Energy Partners, a large energy and pipeline corporation. In May 2006, Kinder and Morgan, with Fayez Sarofim and several investment banks, including Goldman Sachs, made an offer to take Kinder Morgan private. In August 2006, they succeeded in the buyout by enhancing their offer.


Kinder left Enron, reportedly uncomfortable with its ‘asset-light’ strategy, to join Morgan and form what has become the biggest and most successful master limited partnership (MLP) in the US.


Kinder and Morgan have transformed the MLP sector’s reputation as a holding area for ‘sleepy’ assets like pipelines and terminals to one renowned as a vehicle for growth. Certainly, such asset-acquisition

vehicles have sprung up left, right and centre in recent years in the US, spurred by the mass sell-off of assets by energy companies and utilities. Kinder Morgan now controls 35,000 miles of pipeline, and transports two million barrels of fuel products and 14 billion cubic feet of natural gas a day. It has grown from a $325 million company with 150 staff in 1997 into what is widely viewed as a very credible and strong energy company with 5,600 employees and an estimated value of $24 billion.


The company makes 2–3 cents a gallon to transport gasoline through its pipeline regardless of the

price at the pump. This arrangement, combined with long-term transportation and storage contracts, provides a platform for a solid, growing income.


Pipelines operated by this company have been involved in over thirty significant incidents in the United States. Kinder Morgan is “the poster child for pipeline problems,” according to Carl Weimer, executive director of the Bellingham, Washington based Pipeline Safety Trust.


In August 2006, Goldman Sachs, AIG and Carlyle/Riverstone announced the $22 billion acquisition of Kinder Morgan, Inc., which controls 43,000 miles of crude oil, re-fined products and natural gas pipelines, in addition to 150 storage terminals.


August 28, 2006

#2006-100pc (issued by portfolio company)

Kinder Morgan, Inc. Enters Into Agreement to Sell to Investor Group for $107.50 Per Share


Houston – Kinder Morgan, Inc. (NYSE: KMI) today announced it has signed a definitive merger agreement under which Chairman and CEO Richard D. Kinder, together with other members of management, co-founder Bill Morgan, current board members Fayez Sarofim and Mike Morgan, and investment partners Goldman Sachs Capital Partners and certain affiliates, American International Group, Inc. and certain affiliates (principally AIG Financial Products and AIG Highstar Capital), The Carlyle Group and Riverstone Holdings LLC, (“Investor Group”) will acquire KMI in a transaction valued at approximately $22 billion. This includes the assumption of approximately $7 billion of debt.


Under the terms of the agreement, KMI stockholders will receive $107.50 in cash for each share of KMI common stock they hold. The board of directors of KMI, on the unanimous recommendation of a special committee comprised entirely of independent directors, has approved the agreement and will recommend that KMI’s stockholders approve the merger.


The purchase price represents a premium of approximately 27 percent over $84.41, the closing price of KMI stock on Friday, May 26, the last trading day before the Investor Group made its proposal to take the company private.


“We are proud to partner with this prominent group of private equity firms, all of which have proven records of success,” said Kinder. “They share our goals and will be strong partners moving forward. I also want to thank our 8,300 employees for their efforts and the company’s success and assure them that we will continue to focus on incentive programs that enable them to share in the company’s future accomplishments.”


Kinder, who will continue as Chairman and CEO following the close of the transaction, will reinvest all of his 24 million KMI shares. “This buyout reflects the confidence that senior management and the sponsors have in the future growth potential of Kinder Morgan Energy Partners, L.P. (NYSE: KMP). KMI’s ownership of the general partner of, and other partnership interests in, KMP represents KMI’s largest asset,” Kinder said.


The transaction is expected to be completed by early 2007, subject to receipt of stockholder approval and regulatory approvals, as well as the satisfaction of other customary closing conditions.


The transaction will be financed through a combination of equity contributed by the Investor Group, and debt financing provided by Goldman Sachs Credit Partners L.P. and affiliates of Citigroup Global Market Inc., Deutsche Bank Securities Inc., Wachovia Securities and Merrill Lynch, Pierce, Fenner & Smith Incorporated. There is no financing condition to the obligation of the Investor Group to consummate the transaction.


Morgan Stanley and The Blackstone Group L.P. are acting as financial advisors to the special committee, and have each delivered a fairness opinion. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to the special committee. Bracewell & Guiliani LLP is acting as legal advisor to the independent directors.


Goldman Sachs & Co. is acting as financial advisor to the Investor Group. Wachtell, Lipton, Rosen and Katz is acting as legal advisor to the private equity investors, and Weil, Gotshal and Manges LLP is acting as legal advisor to Richard Kinder and the other management investors. Simpson Thacher & Bartlett LLP is acting as legal advisor on the financing to the Investor Group.


* * * * *



Kinder Morgan, Inc. is one of the largest energy transportation, storage and distribution companies in North America. It owns an interest in or operates approximately 43,000 miles of pipelines that transport primarily natural gas, crude oil, petroleum products and CO2; more than 150 terminals that store, transfer and handle products like gasoline and coal; and provides natural gas distribution service to over 1.1 million customers. KMI owns the general partner interest of Kinder Morgan Energy Partners, one of the largest publicly traded pipeline limited partnerships in the United States. Combined, the companies have an enterprise value of more than $35 billion.


Founded in 1869, Goldman Sachs is one of the oldest and largest investment banking firms. Goldman Sachs is also a global leader in private corporate equity and mezzanine investing. Established in 1992, the GS Capital Partners Funds are part of the firm's Principal Investment Area in the Merchant Banking Division. Goldman Sachs' Principal Investment Area has formed 12 investment vehicles aggregating $35 billion of capital to date. With $8.5 billion in committed capital, GS Capital Partners V is the current primary investment vehicle for Goldman Sachs to make privately negotiated equity investments.


American International Group, Inc. (AIG), world leaders in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed in the U.S. on the New York Stock Exchange as well as the stock exchanges in London, Paris, Switzerland and Tokyo. For further information on AIG see http://web.archive.org/web/20061113184315/...://www.aig.com/.


Riverstone Holdings LLC is a New York-based energy and power focused private equity firm founded in 2000 with $7 billion currently under management. Riverstone conducts buyout and growth capital investments in the midstream, upstream, power and oilfield service sectors of the energy industry. To date, the firm has committed more than $3 billion to over 20 investments across each of these four sectors, involving more than $15 billion of assets. For more information on Riverstone Holdings, see http://web.archive.org/web/20061113184315/...erstonellc.com/.


This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although it is believed that the expectations are based on reasonable assumptions, there can be no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Kinder Morgan Inc.’s and Kinder Morgan Energy Partners, L.P.’s Forms 10-K and 10-Q as filed with the Securities and Exchange Commission.


For Release: January 25, 2007

FTC Challenges Acquisition of Interests in Kinder Morgan, Inc. by The Carlyle Group and Riverstone Holdings


To Protect Competition, Carlyle and Riverstone Must Make Their Investment in Magellan Midstream Holdings Passive and Restrict Flow of Sensitive Information


The Federal Trade Commission today announced a complaint challenging the terms of a proposed $22 billion deal whereby energy transportation, storage, and distribution firm Kinder Morgan, Inc. (KMI) would be taken private by KMI management and a group of investment firms, including private equity funds managed and controlled by The Carlyle Group (Carlyle) and Riverstone Holdings LLC (Riverstone).


According to the FTC, Carlyle and Riverstone already hold significant positions in Magellan Midstream, a major competitor of KMI in the terminaling of gasoline and other light petroleum products in the southeastern United States. The proposed transaction would threaten competition between KMI and Magellan in eleven metropolitan areas in the Southeast, likely resulting in higher prices for gasoline and other light petroleum products.


The FTC’s order settling the complaint and allowing the transaction to proceed will ensure that competition between KMI and Magellan continues after the KMI buyout occurs. This will be accomplished by effectively turning Carlyle’s and Riverstone’s interest in Magellan into a passive investment, by requiring them to: ( 1 ) remove all of their representatives from the Magellan Board of Managers and its boards of directors, ( 2 ) cede control of Magellan to its other principal investor, Madison Dearborn Partners, and ( 3 ) not influence or attempt to influence the management or operation of Magellan. The order also requires Respondents to establish safeguards against the sharing of competitively sensitive information between KMI and Magellan.


“This is an example of the Commission acting to ensure that mergers and acquisitions involving energy firms will not lead to higher gasoline prices for consumers,” said Jeffrey Schmidt, Director of the Commission’s Bureau of Competition. “Just as important, this order demonstrates the Commission’s resolve to act against acquisitions of partial interests in competing firms in situations where competition would likely be diminished,” Schmidt added.


The Acquiring Group: In addition to Carlyle, Riverstone, and KMI management, firms in the acquiring group include affiliates of Goldman Sachs Capital Partners and American International Group. Through the proposed transaction, Carlyle and Riverstone would acquire a combined 22.6 percent interest in KMI. A private equity fund controlled and managed by Carlyle and Riverstone already holds a 50 percent interest in the general partner that controls Magellan.


The FTC’s Complaint: According to the Commission’s complaint, the proposed acquisition violates Section 7 of the Clayton Act and Section 5 of the FTC Act because investment funds controlled by Carlyle and Riverstone would hold interests in both KMI and Magellan, leading to a reduction in competition in the terminaling of gasoline in eleven markets in the Southeast where customers have few competitive alternatives. These markets include: (a) Birmingham, Alabama; (B) Albany, Georgia; © Atlanta, Georgia; (d) Charlotte, North Carolina; (e) Greensboro, North Carolina; (f) Selma, North Carolina; (g) North Augusta, South Carolina; (h) Spartanburg, South Carolina; (i) Knoxville, Tennessee; (j) Richmond, Virginia; and (k) Roanoke, Virginia.


The proposed acquisition would reduce competition because Carlyle and Riverstone would have the right to board representation at both firms, the right to exercise veto power over actions by Magellan, and access to non-public competitively sensitive information from or about KMI or Magellan. The proposed transaction would make it easier for the acquirers to exercise unilateral market power because many of KMI’s and Magellan’s terminals are customers’ first or second choices, and other terminals may be either unable or unwilling to replace the competition that would be lost through the transaction as proposed. In addition, the transaction would increase the likelihood of coordinated interaction between competitors in the eleven markets, as it would combine, through common partial ownership, two of the primary independent participants in these markets.


The complaint also states that entry into the market for terminaling of gasoline and other light petroleum products in each of the relevant markets in the southeastern United States is not likely to be timely or sufficient to deter or counteract the alleged anticompetitive impacts of the transaction.


The Consent Order: The FTC’s consent order is designed to remedy the competitive harm resulting from the proposed acquisition of equity interests in KMI by Carlyle and Riverstone. Under its terms, representatives of Carlyle and Riverstone will be prohibited from serving on any Magellan boards, and from exerting any control or influence over Magellan, as long as they hold any interest in KMI. In addition, Carlyle and Riverstone are required to set up procedures to prevent the exchange of competitively sensitive nonpublic information between KMI and Magellan. The agreement and order will ensure that KMI and Magellan are operated independently and in competition with one another, and will remedy the lessening of competition that likely would result from the transaction as proposed.


The order contains a range of other terms, each of which is detailed in the FTC analysis to aid public comment that can be found as a link to this press release on the Commission’s Web site. In particular, the order requires that an independent monitor be put in place to ensure that the parties’ procedures to restrict the flow of sensitive information are effective. The parties have selected, and the Commission has approved, Kevin Sudy, an associate director at Navigant Consulting, as the monitor. He will serve in this position until the parties have fully established the required procedures. The Commission may reinstate the monitor if necessary to ensure the parties are complying with the terms of the order.


There is a separate order to maintain assets, requiring Carlyle and Riverstone to adhere to the terms of the order during the time leading up to their acquisition of the KMI interests. The order will terminate in 10 years.


The Commission vote to approve the consent order and place a copy on the public record was

3-1, with Commissioner Jon Leibowitz voting no and Commissioner J. Thomas Rosch recused. The FTC will be accepting comments on the order for 30 days, until February 26, 2007, after which it will decide whether to make it final. Comments should be sent to FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.


NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.


In 2007, Tennessee Valley Authority Inspector General Richard Moore and United States Attorney Courtney Cox, Southern District of Illinois, reached a civil settlement in excess of $25 million for an alleged violation of the civil False Claims Act with three Kinder Morgan limited partnerships that provide coal and other energy transportation and distribution services.


The way the alleged scheme worked was that coal was weighed by certified scales when it was loaded onto a train to be shipped to the terminals. However, that same coal when shipped from the Cora terminal to the customer was weighed by barge draft. The barge draft method usually weighed two to three percent heavier than the certified scales, resulting in less coal being shipped from the terminal than received. Kinder Morgan exploited this weighing differential to show that it shipped out the same amount of coal as it had received. It claimed the “excess” coal therefore belonged to it and it had the right to sell the coal and keep the profit. KM took the differential (unshipped customer coal or excess coal) and sold it as its own “Red Lightning” coal. At the GRT terminal where certified scales were used for both incoming and outgoing coal, it is alleged that KM simply took coal from the customer stockpiles.


Knight owns the general partner and limited partner interests in Kinder Morgan Energy Partners, L.P. (NYSE: KMP), one of the largest publicly traded pipeline limited partnerships in America with an enterprise value of approximately $20 billion.


Knight operates and owns a 20 percent equity stake in Natural Gas Pipeline Company of America (NGPL), the largest transporter of natural gas to the high-demand Chicago market. NGPL also has substantial storage operations along its approximately 9,800-mile pipeline system.


Knight operates and owns a 33 percent interest in the Express-Platte Pipeline, an approximately 1,700-mile crude oil pipeline system that runs from Alberta in Canada to the Rocky Mountain states to Illinois.


Knight operates and owns a preferred interest in a 550-megawatt natural gas-fired power plant in Jackson, Mich.





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Guest Ex Enron

Is the picture coming clearer?


On March 13, the Carlyle Capital Corporation hedge fund collapsed with debts amounting to 32 times its capital. Dutch-listed Carlyle Capital Corp, which was an affiliate of U.S.-based buyout firm Carlyle Group [CYL.UL] and mainly invested in mortgage-backed assets, went bankrupt in March and liquidated its assets as it could not meet margin calls from its lenders.


Carlyle is a "Washington merchant bank and client of Park Strategies that retains former president George Bush as a senior consultant." In 1991 Bush had appointed Berman to be assistant secretary of commerce. Last year Berman and retired senator Al D'Amato (R-NY) formed Park Strategies and hired Paul Silvester, who previously was Connecticut's treasurer and was in charge of investing state pension funds.


Carlyle's European fund retains former British prime minister John Major. Both men (Bush Sr & Major) have made hundreds of thousands of dollars counseling Carlyle on where to invest its money overseas, introducing Carlyle executives to foreign leaders and giving speeches at Carlyle gatherings. Bush's fees from Carlyle are poured into his accounts in various Carlyle funds


Kinder Morgan, Inc.

Houston , TX U.S.


Carlyle Partners IV

Carlyle/Riverstone Energy III

Acquired: May 2007

Status: Current


Kinder Morgan, Inc. is one of the largest energy transportation, storage and distribution companies in North America, with approximately 41,000 miles of pipelines and more than 155 terminals. KMI's assets include the general partner interests of Kinder Morgan Energy Partners, L.P. (NYSE: KMP) and the ownership of the Natural Gas Pipeline Company of America (NGPL).




Frontier Drilling ASA

Bergen , Norway


Carlyle/Riverstone Energy

Acquired: July 2001

Status: Current


Frontier Drilling ASA is an oil field services company focused on consolidating the niche market of conventionally moored drillships. The company also participates in the deepwater drilling and production market.


Legend Natural Gas

Houston , TX U.S.


Carlyle/Riverstone Energy

Carlyle/Riverstone Energy II

Acquired: September 2001

Status: Exited


Legend Natural Gas, LP is a North American natural gas focused acquisition, development and exploitation company


Seabulk Intl

Ft. Lauderdale , FL U.S.


Carlyle/Riverstone Energy

Acquired: September 2002

Status: Exited


Seabulk International, Inc. is a leading provider of marine support and transportation services. Seabulk is principally engaged in three main businesses: offshore energy support, marine transportation and towing.




Less than twenty-four hours after The Nation disclosed that former Secretary of State James Baker and the Carlyle Group were involved in a secret deal to profit from Iraq's debt to Kuwait, NBC was reporting that the deal was "dead." At The Nation, we started to get calls congratulating us on costing the Carlyle Group $1 billion, the sum the company would have received in an investment from the government of Kuwait in exchange for helping to extract $27 billion of unpaid debts from Iraq.



The Mubadala Development Company (Arabic:شركة مبادلة للتنمية) is a state owned company of the Abu Dhabi government in the United Arab Emirates. Mubadala is practically the investment vehicle of the Abu Dhabi government.


In the 3rd quarter of 2007 Mubadala acquired a 7.5 percent stake of The Carlyle Group. Mubadala also committed $500 million to an investment fund managed by Carlyle.


Carlyle’s outstanding returns, broad portfolio and global presence are a tremendous fit for Mubadala’s regional expertise, accelerating growth, and international expansion.


Carlyle is a global private equity firm with 900 employees operating in 21 countries managing $76 billion in capital committed to 55 funds. Since 1987, Carlyle has invested $34 billion in 686 transactions, returned $32.5 billion in equity and gain to its investors and has $30 billion in remaining value in its investments. Further, Carlyle has $32 billion in capital available to invest.



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Guest Enron Ex

“We had good days with the dollar and were happy. I think the decline of the dollar will not continue and it will recover within six months,” said Khaldoon Al-Mubarak, chief executive of Mubadala Development Co, an Abu Dhabi investment vehicle that manages over $10bn in assets. His comments were published in the Emirates Business daily newspaper.

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Guest CrazyWorld

I think all the major investors who did bad in the hedge fund market are driving up oil prices in the oil speculator market to recover their financial losses.

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Guest alharbi365

I bet that you did not know that since 2003, the UAE Armed Forces have worked with their American brothers to provide humanitarian assistance Afganistan. Opec does not set the price of oil, the market does. Hopefully the decision to allow major foreign oil companies to develop Iraq’s production facilities will be met with enthusiasm by its government. The UAE is investing billions in solar technology. Everyone knows oil has its end.

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Guest LAW_*

The testimony of Michael Greenberger directly implicated Goldman Sachs, Morgan Stanley and British Petroleum, and the hedge funds in the manipulating the oil futures markets through the CFTC exemption granted to the IPE in Atlanta.


Testimony of Michael Greenberger

Law School Professor

University of Maryland School of Law

500 West Baltimore Street Baltimore, MD 21201


Before the United States Senate

Committee Regarding Energy Market Manipulation and Federal Enforcement Regimes

Tuesday, June 3, 2008 10:00 a.m.

253 Russell Senate Office Building


One of the fundamental purposes of futures contracts is to provide price discovery in the ―cash or ―spot markets. Those selling or buying commodities in the ―spot markets rely on futures prices to judge amounts to charge or pay for the delivery of a commodity. Since their creation in the agricultural context decades ago, it has been widely understood that, unless properly regulated, futures markets are easily subject to distorting the economic fundamentals of price discovery (i.e., cause the paying of unnecessarily higher or lower prices) through excessive speculation, fraud, or manipulation.


The Commodity Exchange Act (―CEA) has long been judged to prevent those abuses. Accordingly, prior to the hasty and last minute passage of the Commodity Futures Modernization Act of 2000 (―CFMA), ―all futures activity [was] confined by law (and eventually to criminal activity) to [CFTC regulated] exchanges alone. At the behest of Enron, the CFMA authorized the ―stunning change to the CEA to allow the option of trading energy commodities on deregulated ―exempt commercial markets, i.e., exchanges exempt from CFTC, or any other federal or state, oversight, thereby rejecting the contrary 1999 advice of the President‘s Working Group on Financial Markets. This is called ―the Enron Loophole.


The SPI staff and others have identified the Intercontinental Exchange (―ICE) of Atlanta, Georgia as an unregulated facility upon which considerable exempt energy futures trading is done. For purposes of facilitating exempt natural gas futures, ICE is deemed a U.S. ―exempt commercial market under the Enron Loophole. For purposes of its facilitating U.S. WTI crude oil futures, the CFTC, by informal staff action, deems ICE to be a U.K. entity not subject to direct CFTC regulation even though ICE maintains U.S. headquarters and trading infrastructure, facilitating, inter alia, @ 30% of trades in U.S. WTI futures. That staff informal action may be terminated instantly by the CFTC under existing law.


Virtually all parties now agree the Enron Loophole must be repealed. The simplest way to repeal would be to add two words to the Act‘s definition of ―exempt commodity so it reads: an exempt commodity does ―not include an agriculture or energy commodity; and two words to 7 U.S.C. § 7 (e) to make clear that ―agricultural and energy commodities‖ must trade on regulated markets. An ―energy commodity‖ definition must be then be added to include crude oil, natural gas, heating oil, gasoline, heating oil, metals, etc. In the absence of quick CFTC action permitted by law, the statute should also be amended to forbid an exchange from being deemed an unregulated foreign entity if its trading affiliate or trading infrastructure is in the U.S.; or if it trades a U.S. delivered contract within the U.S. that significantly affects price discovery.


On May 22, 2008, the Food Conservation and Energy Act of 20086 (the ―Farm Bill‖) was enacted into law by a Congressional override of President Bush‘s veto. Title XIII of the Farm Bill is the CFTC reauthorization act, which, in turn, includes a provision that was intended to ―close‖ the Enron Loophole.7 Rather than returning to the status quo ante prior to the passage of the Enron Loophole by simply bringing all energy futures contracts within the full U.S. regulatory format with exceptions to regulation granted on a case-by-case basis under section 4 © of the CEA, the Farm Bill amendment requires the CFTC and the public to prove on a case-by-case basis through lengthy administrative proceedings that an individual energy contract should be regulated if the CFTC can prove that that contract ―serve a significant price discovery function‖ in order to detect and prevent ―manipulation.‖8 This contract-by-contract process will take months, if not years, to complete and it will then only apply to a single contract. It will doubtless be followed by lengthy and costly judicial challenges during which the CFTC and the energy consuming public will be required to show that its difficult burden has been met. It has also been widely reported that the CFTC intends to use the new legislation to show that only a single unregulated natural gas futures contract, and not any crude oil futures contracts, should be removed from the Enron Loophole and be fully regulated. Thus, by CFTC pronouncement, crude oil, gasoline and heating oil futures contracts will not be covered by the new legislation.


It bears repeating that regulatory approach within the Farm Bill amendment, especially as narrowly construed by the CFTC, differs completely from the regulatory concept underlying the Commodity Exchange Act prior to the passage of the Enron Loophole. Before that highly deregulatory measure was enacted, all energy futures contracts were automatically covered by the Act‘s protections (i.e., recognizing that the very nature a publishing the prices of futures contract is to provide price discovery) unless the proponent of the contract carried the burden of demonstrating to the CFTC that lesser or no regulation is required under § 4 © of the Act, i.e., that there will be no fraud or manipulation pursuant to less than the full regulatory posture. In other words, the burden had been on the traders to show on a case-by- case basis that a contract should be deregulated; the Farm Bill puts the burden, and an expensive one at that, to prove on a case-by-case basis that an energy futures contract should be regulated.


Moreover, the Farm Bill‘s attempt to end the Enron Loophole will doubtless lead to further regulatory arbitrage. If the CFTC should be able to prove that an individual energy futures contract has contract has a ―significant price discovery function,‖ and thus should be subject to regulation, traders will almost certainly simply move their trading to equivalent contracts that remain exempt from regulation. This was the exact strategy employed by Amaranth when NYMEX imposed speculation limits on it in the natural gas futures market. Amaranth simply moved those trades that exceeded NYMEX limits to the unregulated ICE exchange, where no speculation limits were in place.


Again, the easiest course to end the Enron Loophole was not chosen as part of the Farm Bill. The most effective closure would have simply returned the Commodity Exchange Act to the status quo ante prior to passage of the Enron Loophole. To accomplish this, would have required a two word change in two sections of the Act, requiring that ―energy commodities be treated as ―agricultural‖ commodities, thereby requiring that all energy futures trading (as is now true of all agricultural futures trading) be done on regulated exchanges unless the regulated exchange demonstrates the need for a legitimate regulatory exemption to CFTC under § 4 © of the Act.


The Farm Bill Did Not Close the “Foreign” Board of Trade Exemption


As mentioned above, the Intercontinental Exchange (―ICE) of Atlanta, Georgia for purposes of its facilitating U.S. delivered WTI crude oil futures, is deemed by the CFTC, by an informal staff action, to be a U.K. entity not subject to direct CFTC regulation even though ICE maintains U.S. headquarters and trading infrastructure, facilitating, inter alia, @ 30% of trades in U.S. WTI futures. Moreover, as will be shown below11, the Dubai Mercantile Exchange, in affiliation with NYMEX, a U.S. exchange, has also commenced trading the U.S. delivered WTI contract on U.S. terminals, but is, by virtue of a CFTC no action letter, regulated by the Dubai Financial Service Authority. The CFTC has made it clear that the Farm Bill amendment could not be applied to cover any U.S. delivered crude oil futures contracts on the ICE or DME. Instead, those U.S. trades can only be regulated by the U.K. and Dubai, respectively.


The former International Petroleum Exchange (―IPE), a British exchange then trading foreign delivered petroleum contracts with trading matching done in London, received a CFTC staff FBOT no action letter permitting the presence of U.S. IPE terminals to trade foreign contracts.23 In 2001(?), IPE was bought by the Intercontinental Exchange an Atlanta-based, U.S. owned exchange whose prominent founders were, inter alia, Goldman Sachs, Morgan Stanley and British Petroleum.


Despite the fact that ICE is now a U.S. owned exchange with U.S. trading engines trading U.S. delivered crude oil contracts, the CFTC continues to treat that exchange as a U.K. entity for purposes of its energy contracts to be directly regulated exclusively by the Financial Services Authority (―FSA) of the United Kingdom.


While the plain language of the Farm Bill amendment by its terms does not contemplate exemptions for U.S. delivered contract affecting price discovery, even if traded by a foreign exchange, the CFTC and ICE have maintained that the ICE traded WTI contract will nevertheless continue to be outside the CFTC‘s jurisdiction even if the Farm Bill amendment were applied to it. Again, this conclusion relies, not on statutory language, but on the 1999 staff no action letter issued to the old British based IPE. That is, even if the CFTC found (as it almost certainly would) that the WTI contract significantly affects the price of crude oil, gasoline, and heating oil to U.S. consumers, the CFTC and ICE have taken the position that that contract as traded on ICE will continue to be outside the CFTC‘s jurisdiction. In short, ICE will continue to be regulated by the U.K.‘s Financial Services Authority for purposes of the WTI contract traded on its U.S. terminals instead of the CFTC.


The Senate Permanent Investigating Subcommittee has now issued two reports, one in June 200632 and one in June 200733, that make a very strong (if not irrefutable case) that trading on ICE has been used to manipulate or excessively speculate in U.S. delivered crude oil and natural gas contracts.34 The June 2006 report cited economists who then concluded that when a barrel of crude was @ $77 in June 2006, $20 to $30 dollars of that cost was due to excessive speculation and/or manipulation on unregulated exchanges.35 If that assessment is correct, @ one quarter of the price of crude oil, and crude oil, derivatives, such as gasoline and heating oil, are the direct result of market malpractices by traders. Of course, we also know through U.S. enforcement actions and criminal prosecutions that Enron, using the Enron Loophole, for its Enron Online (an exchange that was deregulated in the way ICE is deregulated today), drove the price of electricity up almost 300% a year for California consumers in the 2000-2001 era.

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The major tenet of that legislation is that any exchange operating under an FBOT exemption may only do so if the CFTC finds that the non-U.S. regulator has regulation that is equivalent to that of the U.S. in several respects. Acting Chairman Lukken has already repeatedly stated that he has concluded that the U.K.‘s FSA regulation is not only comparable, but a model for U.S. regulators. This statement is reflected in the no action letters that have already been awarded to ICE and, more recently, to the Dubai Mercantile Exchange, where the CFTC has concluded that the Dubai Financial Service Authority‘s regulation of oil futures markets ―is the equivalent of the CFTC.44


Thus, if S. 2995 is enacted, it will preserve the status quo of FBOTs being allowed to trade U.S. delivered energy future contracts within the United States, but not be subject to U.S. regulation. For example, ICE –even though U.S. owned with U.S. trading engines, trading critically important U.S. delivered energy futures contracts (contracts that would almost certainly otherwise by regulated under the End the Enron Loophole amendment) – would continue to be regulated by the United Kingdom. Similarly, the DME, in partnership with U.S. owned NYMEX will continue to trade the U.S. delivered WTI contract within the U.S., but be regulated by the Dubai Mercantile Exchange.


Allowing ICE , DME and other FBOTs to be regulated by foreign regulators, like the U.K.‘s Financial Services Authority and the Dubai Financial Service Authority, undermines the stability of the U.S. crude oil futures markets. CFTC Commissioner Bart Chilton has recently stated, ―I am generally concerned about a lack of transparency and the need for greater oversight and enforcement of the derivatives industry by the FSA.

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The argument has been advanced by certain investment banks and their representatives that if Congress does not accede to S. 2995, they have threatened to move their trading ―offshore to escape U.S. regulation of foreign exchanges. However, the entire history of these markets is that every foreign exchange badly needs to trade within the U.S. That is evidenced by the eighteen staff FBOT no action letters issued to foreign exchanges to date. The desire to be in the U.S. is so prevalent that ICE apparently brought its IPE trading engines and trading matching systems to the U.S. –not just its trading terminals.


The argument is also advanced that the investment banks will figure out a clever technological way to ―trade abroad‖ with U.S. based technology that will fall short of traditional terminals. In that way, these traders say they can stay within the U.S. but appear to be trading offshore. However, if there is any trading in the U.S. of any kind (whatever the technology) of a futures contract within the U.S. of a futures contract anywhere, it is subject to U.S. jurisdiction. Indeed, if U.S. citizens manipulate foreign exchanges, they are subject to criminal sanctions and, in most instances, would be extradited back to the U.S. to face criminal charges if not civil fines if that impacted domestic markets and those exchanges had any meaningful contacts with the U.S.

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The Dubai Mercantile Exchange, which is a joint venture between NYMEX, Tatweer (a member of Dubai Holding) and the Oman Investment Fund. This entity is regulated by the Dubai Financial Services Authority61 and was granted a CFTC no action letter in 2007.62 As of May 16, 2008, the DME with NYMEX as its partner received CFTC approval to begin trading WTI contracts. In this way, NYMEX now effectively participates in the trading of the DME of a critically important U.S. delivered contract on U.S. terminals owned by the DME while escaping U.S. oversight on the DME‘s U.S. terminals. I worry that NYMEX‘s escape from U.S. control of these U.S. DME trades is wholly consistent with S. 2995.

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Senator Lieberman‘s and other legislative conclusions about the adverse impact of speculation were doubtless driven by the testimony of Michael W. Masters, Managing Member of Masters Capital Management, LLC, at the May 20 hearing. Mr. Masters showed that investment banks and hedge funds, for example, who were ―hedging their off exchange bets on energy prices on regulated exchanges were quite remarkably and inexplicably being treated by NYMEX, for example, and the CFTC as ―commercial interests, rather than as the speculators they self evidently are. By lumping these investment banks and hedge funds with traditional commercial oil dealers, even U.S. fully regulated exchanges were not applying traditional speculation limits to the transactions engaged in by these speculative interests. Mr. Masters demonstrated beyond all doubt that a huge percentage of the trades in WTI futures, for example, were controlled by non-commercial interests. It is now clear that the CFTC in its pre-May 29 assurances had never before examined the positions of these ―swaps dealers, because in that release it required these banks and hedge funds to report their trades to the CFTC and the CFTC committed ―to review whether classification of these types of traders can be improved for regulatory and reporting purposes.


Senator Bingaman realized that when Messrs. Lukken and Harris had been assuring the Senate Energy and Natural Resources Committee that speculators played no role is the oil prices run up, they were not counting certain investment banks and hedge funds, for example, as speculators!


Finally, a bipartisan coalition of 22 Senators on May 23, 2008 sent a strongly worded letter to the CFTC asking that agency to show cause as to why the charade of treating the U.S.-owned ICE as a U.K. entity when that exchange is run out of Atlanta, Georgia and is trading the WTI U.S. delivered crude oil contract not be ended immediately as the underlying CFTC staff FBOT no action letters allow by their express terms.84 That Senate letter made clear that an unsatisfactory answer from the CFTC would very likely lead to further legislative diminishment of that agency‘s authority.

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Not only did the CFTC never know who the end users were trading WTI crude oil contracts on ICE (crucial information for determining which entities might be engaging in manipulative behavior) and not only did it not have any of the FSA data accessible for purposes of CFTC surveillance programs, it does not have this information today; it only has a ―near term commitment that the information will be provided. In this regard, the CFTC‘s assurance to Senator Lieberman only two weeks ago that there was no manipulation in these markets based a ―comprehensive analysis of actual position data of these traders seems to be nothing more than a flight of fancy since critical portions of that data are not even now within the possession of the CFTC after its much ballyhooed May 29 MOU with the FSA and ICE.


There can be no ―final commitment by FSA and ICE on these ―near term commitment‖ points, because the United Kingdom‘s FSA is going to have to reconfigure (or more likely reinvent) the collection of its own data in order to be able to satisfy the CFTC‘s investigative needs in this regard. These ―near term failures in data collection only serve to highlight the total laxity of the FSA regulatory process as it applies to these markets; the extent to which CFTC analysis has been and will be uninformed ; and the absurdity of the CFTC‘s continuous charade that a U.S. owned exchange (ICE) located in Atlanta and trading critically important U.S. delivered energy products (WTI) should be regulated by the United Kingdom, whose regulation of these markets is self evidently lacking by the latter‘s need to mask its inadequacies through ―near term commitments.


Would it not be easier to simply require this Atlanta exchange to register in the United States? The ―Rube Goldberg quality of the CFTC‘s reliance on the FSA would be humorous were it not be for the fact that U.S. consumers are sinking under the weight of increasing gas prices that many respectable observers believe are caused in some substantial measure by outsized speculation and possible manipulation on ICE.


Another important weakness of the CFTC release is that, while it tries to accommodate concerns about the inadequacy of the United Kingdom‘s regulation of ICE, the release does not address the fast growing problem of other foreign exchanges trading in the U.S. who are quickly moving into the U.S. delivered WTI contract. For example, as mentioned above, the Dubai Mercantile Exchange (―DME) received a May 2007 staff FBOT no action letter enabling that Dubai exchange to bring its terminals into the U.S. without registering as a CFTC regulated designated contract market. DME is joined in this endeavor by NYMEX, but its U.S. trading activities are regulated by the Dubai government.

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The New York Mercantile Exchange is the world’s largest physical commodities exchange, offering futures and options trading in energy and metals contracts and clearing services for more than 300 off-exchange energy contracts.


The NYMEX ClearPort® clearing and trading platform allow the marketplace to mitigate counterparty credit risk by processing off-exchange transactions through NYMEX clearinghouse in the same manner as the NYMEX core futures contracts.


NYMEX offers crude oil, petroleum products, natural gas, coal, electricity, gold, silver, copper, aluminum, platinum group metals, emissions, and soft commodities contracts for trading and clearing virtually 24 hours each day.




Here are some terms you need to understand.



1) A term of reference describing a unit of trading for a commodity future or option. 2) An agreement to buy or sell a specified commodity, detailing the amount and grade of the product and the date on which the contract will mature and become deliverable.


Futures Contract

A supply contract between a buyer and seller, whereby the buyer is obligated to take delivery and the seller is obligated to provide delivery of a fixed amount of a commodity at a predetermined price at a specified location. Futures contracts are traded exclusively on regulated exchanges and are settled daily based on their current value in the marketplace.


West Texas Intermediate

A grade of crude oil deliverable against the New York Mercantile Exchange light, sweet crude oil contract. Nominally, the benchmark crude of the U.S. oil industry. This oil type is often referenced in North American news reports about oil prices.



The initiation of a position in a futures or options market that is intended as a temporary substitute for the sale or purchase of the actual commodity. The sale of futures contracts in anticipation of future sales of cash commodities as a protection against possible price declines, or the purchase of futures contracts in anticipation of future purchases of cash commodities as a protection against the possibility of increasing costs.



A trader who enters the market with the specific intent of protecting an existing or anticipated physical market exposure from unexpected or adverse price fluctuations.


Hedge Ratio

1) Ratio of the value of futures contracts purchased or sold to the value of the cash commodity being hedged, a computation necessary to minimize basis risk. 2) The ratio, determined by an option's delta, of futures to options required to establish a riskless position. For example, if a $1/barrel change in the underlying futures price leads to a $0.25/barrel change in the options premium, the hedge ratio is four (four options for each futures contract).


Trade House

A firm which deals in the physical commodity.


Trade Limit Monitoring System

The system through which clearing members set and monitor limits on their customers' NYMEX ACCESS? accounts, including maximum order size, maximum position size per session, session trading volume, and session trading losses.


Trader Workstation

A NYMEX ACCESS? workstation through which NYMEX ACCESS? orders are placed.

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