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Page added on June 18, 2008

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June is Bustin’ Oil All Over

According to Rep Peter DeFazio (D-Or), the entity that owns the most oil in the United States right now is not ExxonMobil or Chevron or Valero: it’s Morgan Stanley. So what’s Morgan Stanley doing with all that oil? Speculating on the petrofraud bonanza.


The short-sightedness of this utterly stupid investment pattern are many:

1. The faster they ratchet up the cost of oil, and, in turn, the gasoline that comes from it, the faster the public will change its patterns of consumption, the demand will go down, and the bottom will fall out of the market. That is the most logical supply-and-demand scenario, which ends in Morgan Stanley left holding billions of dollars of lost equity on the oil futures contracts. Note that Ford, GM. and Toyota – so far – have shuttered factories building large SUVs and trucks (the behemoth Toyota Tundra got axed today), thus, even the opportunity to continue buying these gas guzzlers has begun to be eliminated. GM has already hybridized the most ostentatious gas sucker of them all – the Cadillac Escalade – thus more than doubling the city mileage of that vehicle.

2. There is no reason for oil prices to be what they are, because there is no shortage. If there were a shortage, there would be rationing and/or gas lines. We have been through genuine shortages, most recently in 1979. In 1979, the price of gasoline increased from 69



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