Background to the oil price hoax

The United States Is at War With the British Empire

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The speculative parasites will not give up easily, as their demands for bailouts and their criminal speculation in food and energy show. The idea of condemning millions, if not billions of people to starvation in the name of profit shows the monstrous immorality of the people who engage in such activity and of the governments which permit it.
The oil market plays a crucial role in this. With the oil hoaxes of the 1970s, the spot market was created, which, in turn, created a huge pool of dollars centered around the London-based international oil cartel. Through this mechanism, the U.S. government essentially lost control of the dollar, which became a weapon for a speculative assault on the U.S.A. Today, the market price for oil is not set by OPEC, but by the financial markets, which take an increasing cut of the money people pay for gasoline and diesel fuel. OPEC, it should be noted, was created by the big oil companies, modelled on the Texas Railroad Commission's role in setting production quotas as a way of supporting oil prices in the early 1900s, when Texas was the world's leading oil producer. It is the big oil companies of the London-centered oil cartel, and not OPEC, which controls the oil business, and which is, in turn, an arm of the financial oligarchy.

LaRouche's Presentation to Monterrey:

There is No Reason to Have this Crisis

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Now this was followed by a breakdown of the Bretton Woods system international, in a conference the following year, beginning January. This was led, on the United States' side, by George Shultz.
But then, a second thing happened: You had, in the early 1970s, a great artificial petroleum shortage—at a point that the oceans and the port areas of the world were flooded with the tankers which were glutted with oil—hmm?—there was a declared oil shortage. The great oil shortage of the early 1970s.
There was no reason for it! There was no oil shortage! The world was flooded with tankers with oil, which were sitting just offshore, ready to be delivered, but not being unloaded! What this did, and it was an operation between the United Kingdom and the Saudi Arabian Kingdom, which led to the formation of an organization later called BAE, this organization, by creating an artificial oil shortage, created a phenomenon which is called "the spot market," the international spot market. This placed the power over a great part of the petroleum production marketed on a world scale, in the hands of a group based in Amsterdam, financially the spot market.
As a result of this combination, the floating of the U.S. dollar, by President Nixon, and the spot market, the security of the U.S. dollar was no longer based on the value of the U.S. dollar, but it was based on the fluctuating value of petroleum. Because we had created an economy which was dependent upon petroleum, integrally. We had destroyed, for example, we destroyed the rail system in the United States, and things like that, pretty much. So we had destroyed things. We now became more and more dependent upon the automobiles. We began to destroy communities in order to have automobiles. You would fill up areas with highways, loaded with trucks and cars which were loaded with high travel times, and you destroyed the rail system. Like, for example, in Mexico, there's no rail system, that should exist between the U.S. border and Mexico City—none! And that's essential! Why not? Because world policy said, Mexico should not be allowed to have a rail system. And every time Mexico would threaten to do something like that, some strange intervention would occur, and it wouldn't be done.

LaRouche: Why You're Paying $4 for Gasoline

March 12, 2008—As the dollar dramatically collapsed below $1.55/euro today following the Federal Reserve's announcement of a huge new bank bailout, the "spot price" of a barrel of oil settled at just under $110, up 60% in six months, 25% in six weeks, and accelerating. The world's leading physical economist, Lyndon LaRouche, bluntly stated what is going on.
LaRouche noted that the current gasoline price is heading for $4/gallon; but the Saudis, on long-term supply contracts, get only $3 per barrel for their oil at the wellhead. Americans are paying more per gallon for gasoline at the pump, than the Saudis receive in long-term contracts per 42-gallon barrel of oil at the wellhead.
Why? The "spot" futures price of oil, and the value of the dollar, is controlled by the British. This was launched, LaRouche said, with Richard Nixon's treason against the U.S. for the British Empire. When Nixon destroyed the Bretton Woods System in 1971-73, the British were left in control of the growing masses of overseas dollar deposits, called "eurodollars." In the phony oil crises of 1974 and 1979, long-term fixed-price oil contracts, frequently for 24-36 months, were replaced with spot markets, and then with futures markets, controlled from London. Thanks to the Nixon Administration, the British Empire controls oil, and they run the dollar through the oil speculative markets.
The London International Petroleum Exchange (IPE) controls the price of 60% of world oil, by controlling the price of Brent Crude oil, which is less than one-half percent of the oil produced. On May 14, 2004, Brent Crude contracts on the IPE reached 375 million barrels—about five times the daily production of all sorts of oil worldwide. The huge masses of "paper oil" traded on futures markets control the price of the far smaller volumes of real oil.
On the London IPE, a speculator can buy an oil futures contract by putting up only 3.8% of the price. A tiny group of London-based speculators control the price of all oil worldwide.
"That's why you're about to pay $4 for a gallon of gasoline," LaRouche said. "If you want to blame somebody, blame Nixon and George Shultz for destroying Franklin Roosevelt's Bretton Woods system, and giving control of the dollar to the City of London."

Oil Prices Fuelling the Bubble

The price at the pump is subsidising a dying global financial system.
Why do the prices of crude oil and gasoline rise so sharply? The first line of defense for the high prices is supply and demand, but that argument is easily demolished by comparing the relationship between world oil consumption and oil prices. Consumption rises steadily, while prices spike dramatically. The next line of defense is that "the market" is responding to perceived potential problems, such as turmoil in oil-producing regions, bad weather, good weather, or any number of other alleged situations. This is where it starts to get interesting, since blaming the market explains both nothing and everything.
It explains nothing, because there is no such thing as "the market," in the way that it is portrayed, namely the "Invisible Hand" of Adam Smith, which in some mysterious and independent way determines what the price ought to be. They might as well say the tooth fairy sets the price.
It explains everything, because the hand behind "the market"—the one you feel rummaging around in your pocket looking for your wallet—is neither invisible, nor mysterious, nor independent. It does exactly what the bankers and the oil cartel set it up to do, which is to allow the financial markets to manipulate the price of oil ever upward, with occasional drops to loot the non-insider speculators (remember Amaranth?), or to forestall political moves against this rape of the public. The price is what “the market" says it is, period. Running up the price of oil has many advantages, if you are a member of the oil cartel or an international banker. One need look no further than the record $40 billion in profits reported by ExxonMobil last year, and the stellar profits reported by its sisters, to see the benefits to the cartel, but that is only part of the story. The banks, the hedge funds, and other financial institutions are also major players in the oil markets. A few years ago, an EIR investigation showed that the average barrel of oil traded on the New York Mercantile Exchange (Nymex) changed hands some 500 times between the time it was pumped out of the ground, and the time it was sold to its final buyer.
Given the explosion in energy futures trading on the Nymex in recent years, that 500 times may be “the good old days." The volume of energy futures contracts traded on the Nymex has doubled since 2003, from 88 million that year, to 192 million in 2006. During that same period, the average price of oil has also doubled, from $31 a barrel in 2003, to $66 a barrel in 2006, according to the U.S. Department of Energy. Anyone see a pattern there? The rise in the price of oil is also good for the dollar, since the dollar is the currency of the oil markets. The higher the price goes, the more dollars needed, which in turn, supports the value of the dollar on international markets. That certainly pleases the U.S. Treasury and Federal Reserve.
The market-based approach to oil pricing is an outgrowth of the oil “crisis” hoaxes of the 1970s, which used Iran as the excuse for restructuring the global oil business, setting up the eurodollar market, and replacement of stable oil prices with a market-based system, much more amenable to manipulation by the imperial geopolitical forces behind the changes. Royal Dutch/Shell, and its bankers Rothschild and Lazard, played key roles in this scam, as did their agent Marc Rich. Not surprisingly, it was also Rothschild and Lazard that were the powers behind Enron, as the oligarchy attempted to do for our electricity prices what they had already done for oil.
By turning the price of oil into something set by financial markets rather than the physical economy of the petroleum business, oil has become a financial commodity more than a physical one, from the standpoint of the financial system. In that respect, sharp jumps in the price of oil could be considered indicators of the state of the bubble. When liquidity is badly needed, the price of oil is manipulated sharply upward, providing an influx of cash to the financial system. This functions as a sort of hidden tax, taking money from the public to bail out the bankers. When the crisis passes, the price of oil can be dropped a little, to give the consumers a chance to pay their mortgages and their credit cards, to keep consumer debt payments flowing.
The quick pace of the gasoline-price increases in recent weeks—with daily hikes and sometimes multiple hikes per day—reflects the hyperinflationary process under way in the financial markets, with ever-increasing demands for cash to plug the holes. This is not an oil issue, but a financial one, and the price at the pump is but a small part of the price we pay for tolerating this predatory system. That system is now collapsing, and what the bankers have planned to replace it will be much worse, unless we stop them. Otherwise, today will be the good old days.

Cheney's Wars and the Great Energy Price Heist of 2005

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No Free Market
Over the past 30 months, the price of crude and refined oil products has been unflinchingly driven upwards. In Economics 101, one is told that the price of everything is set by "free-market forces." But in fact, this price is set by a top-down controlled process from the moment the oil gets out of the ground; the final determination of the price is enforced by the speculative world derivatives market. As a visibly moved Sen. Byron Dorgan (D-N.D.) told the same Sept. 6 Senate hearings, "There is no free market." Indispensable to the process's workings, is the British House of Windsor-pivoted oil cartel's control of all the critical aspects of the industry, as a single integrated system: 1) in the United States, the oil production system (aside from the imports); 2) in the oil refinery network; 3) in the oil distribution network; and 4) internationally, the oil derivatives market.
Table 1 documents that just the top five oil companies—Royal Dutch Shell, ExxonMobil, BP, Chevron-Texaco, and ConocoPhilips—by dominating half or more of each of these markets, control domestic production, refinery capacity, and the supply and price of gasoline charged to retail gas stations. The head of the Society of Independent Gasoline Marketers of America, William Shipley III, testified to the Senate hearing that the oil companies tell the gas station managers what to charge. Since 1976, this cartel has shut down part of U.S. refining capacity to create a shortage. Further, merely since 2001, these five oil companies have gouged more than $175 billion in profits.

Determining the Oil Price
This oil cartel, in alliance with the City of London-Wall Street's biggest banks, has the final say on price. They dominate the two institutions where the world oil price is set: the London-based International Petroleum Exchange (IPE), and the New York Mercantile Exchange (NYMEX). The way this works, is that the trading companies that trade oil derivatives, push up the world oil price, through long positions and other manipulations, called "updrafting the market." The futures market determines the real world price. Most European oil contracts are based on the marker price of Brent Crude, which in turn is determined by the IPE. Speculators purchase futures contracts on the IPE and NYMEX exchanges; each single contract is a bet on 1,000 barrels of oil. More than 100 million of these oil derivatives contracts were traded on these exchanges in 2004, representing 100 billion barrels of oil. On the IPE, there are 570 derivatives contracts on Brent crude oil—"paper barrels of oil"—traded each year, for each physical barrel of oil produced in the North Sea.
Consider the IPE, which was created in 1980: Today, it is run by a Knight of the British Empire and former Royal Dutch/Shell official, Sir Robert Reid, and has a board which includes Lord Fraser of Carmyllie, representatives of Goldman Sachs, Morgan Stanley, BNP Paribas, Crédit Lyonnais, and French oil giant Total. Its parent holding company includes the Chicago Board of Trade's Richard Sandor (a former banker with Banque Indosuez and Drexel Burnham Lambert), and Jean-Marc Forneri, a banker who was a partner at Demachy Worms & Cie., the infamous synarchist Banque Worms. The biggest oil derivatives traders which run IPE trading include Barclays Capital, Bear Stearns International, J.P. Morgan Securities, Deutsche Futures London, BP Oil International, and Shell International Trading—the key components of the British oligarchy's world oil cartel.
Table 2 shows that for two full years before Katrina hit on Aug. 29, speculation drove up the price of gasoline by 83%, and crude oil by more than double. After Katrina hit, they drove it higher. The oil cartel used the NYMEX and IPE price as a floor, and drove the wholesale price above that, and the retail price even higher, with gas prices at $3.25 per gallon at the pump.