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The following publications were authored or developed by William Downey. To Obtain a complete copy please email me and I will be pleased to forward them to you either by email or by mail. Cost Worksheet for CMV Crashes, publication #0709 price $10.00 Export FAQ's,written by a lawyer for the general public , publication #0703 price $25.00 Business Disaster Primer, for small and mid-sized businesses, publication #0705 price $50.00 Standard Emergency Policy, publication # 0707 price $50.00 Shipping & Handling Fee's may apply for mail service. | Speculation & Oil Mr. William Downey, J. D. - Managing Director W.J. Downey Consulting Implications: Speculation, which has been around since Hector was a pup, is a part of our economic system. The regulated markets, CBOT, NYMEX, NYSE are after all speculation. Unfortunately, successful speculation often leads to "windfall" profits. But profits are why we invest. In this case however speculation results in a distorted price structure for fuel, which affects food and finances, which in turn may result in social and political turmoil, in oil producing as well as other poorer nations. Analysis: In 2006 Goldman Sachs predicted that oil would rise to $200 a barrel. Today Brent Crude is around $124/barrel. On Wednesday, May 7, world oil prices rose 1.4%, primarily as a result of speculation. Speculation is a major cause of the price of fuel world wide. Mr. McWilliams ventures that it may be as much as 60% of that is due to speculation. His source article(s) in the Asia Times, written by F. William Engdahl, cites Goldman Sachs (who has predicted $200/barrel), CitiGroup and JP Morgan, as key contributors to the explosion in speculation. Unregulated trading in oil derivatives on the London based ICE and to a lesser extent Dubai based Dubai Mercantile Exchange, has contributed to this phenomenon. This is largely due to the Commodity Futures Trading Commission, abdicating its responsibilities under the Commodity Exchange Act. (By the way where we heard the word derivatives? Didn't they have something to do with the Enron(OTC:ENRNQ) meltdown?) Fuel costs go up, food prices go up as a result, as do the costs of all goods. Financialy, this results in pressure on all modes of transportation, as fuel becomes the primary cost, people have to decide on food, mortgage or fuel to operate cars and heat their homes. As we attempt to develop alternatives to gasoline and diesel, using agricultural products, we put additional pressure on food prices. Critically, we also reduce the amount of agricultural products for consumption. Not only increasing food prices, but creating shortages that impact poorer nations. Again increasing turmoil and resulting in increased speculation in oil. In addition, smaller, poorer countries, must devote more of their treasuries not only to provide fuel but also food. Again contributing to social/political turmoil, as well as the increased prospect of sovereign default. So long as the federal government continues its present policies of cheap money, low US Dollar and abdicating its responsibilities (CFT for example) speculation will continue to result in windfall profits for oil companies and financial speculators. The attitude of greed and profits, will have dire consequences for the trucking industry, the American consumer, and frankly world citizens. Posted: 5/9/2008 2:24 AM https://news.glgroup.com/cm/Analysis | Congress Sees No Compelling Interest
Mr. William Downey, J. D. - Managing Director
W.J. Downey Consulting
Implications:
Congress and for that matter the administration fails to see a compelling interest in transportation issues, unless it is to make grandstand plays such as Mr. DeFazio's. Let's keep in mind that Congress and the Administration and previous administrations, created this situation, through inaction over the past 30 years. These are the same people who cannot come up with a viable transportation infrastructure policy, have failed with bio-fuels and abandoned alternative means to access oil, because it cost $55 a barrel to produce.
Analysis:
We can always count on Congress, and sometimes the administration, to make what they think are solutions. Representative DeFazio, has made one such move regarding freight brokers.
First, the proposal is unworkable. Theoretically brokers receive their operating right from the DOT/FMCSA and could be answerable to the Surface Transportation Board. However, Rep. DeFazio, would create a new and unwieldy apparatus, not to mention funding issues. Who would benefit? Friends of Congress and what ever administration is in office, since those are the people who will be appointed to run the program. Oh yes and lawyers. Congress is full of lawyers, elected and staffers, who write legislation for lawyers to be implemented by lawyers employed to write the regulations, for lawyers (lawyers like Congress it makes work).
Second, there are always bad actors in any profession. The majority of freight brokers are honest, and work well with both drivers and shippers.
Third, what's really needed is a viable energy policy, which is basically a long term solution. For now, if Congressman DeFazio and others want to do something about the cost of fuel, they could do something about having the Commodities Futures Trading Board rescind its decision to allow US commodity derivative trading by computer on the London ICE and Dubai Mercantile Exchange. This enforcement organization has basically abdicated its power by authorizing these trades, which are apparently in violation of existing federal law. Of course the Department of Justice or the Federal Trade Commission could also look into the effect of speculation on the oil market, rather than price collusion by the oil companies.
Unless there is a huge wave of resentment from the American public, based on a severe recession (even if the President won't use the word) or even a depression, Congress will continue business as usual. Taking money from companies such as Goldman Sachs, CitiGroup and JP Morgan, who have made millions by speculating on oil.
Posted: 5/12/2008 2:29 AM
https://news.glgroup.com/cm/Analysis
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