CITIZEN ALERT v1.88
OCTOBER MISS!
VIOLENCE CREATES MORE VIOLENCE!
FULL STORY
Plummeting gas prices have been good news for the motoring public. They also raise the questions: Why? How? Since their August highs, oil prices dropped from $77 to $60 per barrel. Gas prices have fallen from an average of $3.04 to $2.25 per gallon. In a September USA Today poll 42 percent of Americans thought there was a direct connection between the Republicans wanting to keep control of Congress and gas prices falling.
Free-market types went to town. Oil is set by market forces, not Washington, rang the unified voice of analysts. "If only Bush had that kind of control," mused White House spokesman Tony Snow. But subtle manipulation is a form of control.
Let's back up. In July, legendary investor Jim Rogers--who got his start with George Soros--and other Wall Street analysts were saying that within the scope of the bull market, oil prices would head over $100. This would translate to roughly $4.00 to $4.50 per gallon at the gas pumps.
Meanwhile, the White House was evading blame for gas prices having doubled like Olympian dodgeball champions. It's not us. It's unrest in Iraq. Nuclear threats from Iran. Growth in China. Economists said, It's supply and demand, stupid.
Following their logic, and giventhe second-fastest drop in gas prices ever, we'd expect a noticeable reversal of those factors: an end to the war in Iraq, perhaps; India and China halting production; the Iranian president warmly embracing Bush and the home team. None of this happened. As far as supply goes, this spring US crude oil inventories were at their highest point since May 1998.
Manipulation can be physical or psychological. No, Bush wasn't calling his broker to short the market and Cheney probably wasn't conversing with oil execs to back it up. But long-term mutual back-scratching relationships are potent. An overly speculated market like oil (the most traded commodity in the world) picks up on subtle signs. Just as traders push the market up, they can take it down, depending on those signs.
If detectives from CSI were investigating the plummet in oil prices, they'd look for motive and method. Motive's obvious: strategically important midterm elections. With Iraq and swarming allegations that the Administration has created more terrorism than before, there's not a lot the GOP can control. According to Doug Henwood's Left Business Observer study, there's a 78 percent correlation between the direction of gas prices and approval for the GOP.
Republicans have been pleased to focus on what they can manipulate, if not overtly control. Big Oil gave the GOP 81 percent of its $63 million in campaign contributions since Bush took office. Republicans are giving Big Oil a $5 billion helping of tax breaks. Last November the Republican-led Senate Commerce Committee, headed by Alaska Senator Ted Stevens, gave oil companies a post-Katrina break to keep their exorbitant profits. Democrats called for windfall profits. Republicans didn't.
After Katrina oil companies like Exxon, which also happen to own the major oil refineries in the country, increased their refining profits, which had direct implications on the price of gas at the pumps--that made them higher than the rising price of crude oil would dictate.
In September the difference between the cost of crude oil and the price of gas after the refining process (called the "crack spread" in the markets) has narrowed substantially, meaning oil refiners are extracting less profit because they're charging proportionately less at the independent gas station pumps.
Just as Enron and others could manipulate, if not directly control, California prices by closing power plants at will, so can oil companies reduce refining profit margins (which were gigantic) to keep their friends in power. That's easier to control than futures where other players are in the market, and it's something retailers pass on to drivers. This is not conspiracy, but self-preservation.
Other strong messages came from Washington. My favorite is the one that came directly from the Federal Reserve. For two years, the Fed has been raising interest rates due to inflationary pressures (such as the high cost of gas). Then, it stopped--the day after gas prices reached their August 7 peak of an average $3.04 per gallon. The next day, the Fed said that despite high energy prices, inflationary pressures would "moderate."
The market slide started that day, not a sudden change in supply or demand. On September 20, the Fed again left rates unchanged, saying energy prices were in check, causing a further slide. Global crude oil prices fell, but gas prices fell faster.
Wall Street analysts, traders and hedge funds don't care about any of these reasons. They just don't want to be caught behind the ball, so they sell the market, causing further price drops. Yes, those are market forces--but they are market forces with a lot of push from Washington-related signals. Why now? To say the election has nothing to do with it would be naïve. To say gas prices won't be up again afterward would be wrong.
FREEDOM OF THE PRESS IN RUSSIA NOT SO FREE
MOSCOW (Reuters) - Russian journalist Anna Politkovskaya, an outspoken critic of President Vladimir Putin, was shot dead on Saturday at her apartment block in central Moscow, police said.
"According to initial information she was killed by two shots when leaving the lift. Neighbors found her body," a police source told Reuters. Police found a pistol and four rounds in the lift.
On the same day that a senseless tragedy struck the Amish community in Pennsylvania, Oxfam International released a report entitled Arms Without Borders - Why a globalized trade needs global controls.
Oxfam is confederation of NGOs that fight poverty and poverty related issues like: trade with their Make Trade Fair campaign made popular by the gentleman from Coldplay and arms control with their Control Arms campaign.
The report stated that "The globalization of the arms industry has opened up major loopholes in all current arms export regulations, allowing sales to human rights abusers and countries under arms embargoes."
It should come as no surprise that the US makes quite a bit of money as one of the leading suppliers of arms to the world. Oxfam's report revealed:
that US, EU and Canadian companies are among those able to circumvent arms regulations by selling weapon components and subcontracting arms manufacturing overseas. The report details how weapons, including attack helicopters and combat trucks, are being assembled from foreign components and manufactured under licence in countries including China, Egypt, India, Israel and Turkey.
The report shows how these or similar weapons have ended up in destinations such as Colombia, Sudan and Uzbekistan where they have reportedly been used for the killing and displacement of civilians, highlighting the urgent need for global rules to regulate an increasingly globalized industry.
The two major loopholes that countries like the US, UK, Russia, Germany and France are using are 1) selling the parts instead the whole weapon and 2) selling it from a different country. These five countries accounted for 82% of all conventional arms transfers in 2005. Want another stat? 1000 people a day die from armed violence. This is our export. This is our contribution to the world. Armed conflict. Death and destruction.
Irene Khan the Director General of Amnesty International along with Oxfam has called for an Arms Trade Treaty to prevent arms transfers into conflict zones while allowing the responsible transfer of weapons for policing, defense and peacekeeping.
I urge you to take a look at the report and see what the Control Arms campaign is doing to help stop the armed violence around the world.