a number of informants working covertly and overly for it as well as a payment structure that includes secret offshore accounts along we'll talk to civil liberties blogger kevin got to tell us about the leader of the week and that's going to do it for now stay tuned we will be back here in an hour and a half. remember wolf war lords will give him a note so we have a little the only groups of the callers using the sluices all our views in the whole mood right enough to my mind it was like many of them out age it wasn't forced marriage it's the smadi when i was fifteen years old you can liberate other women and you certainly can't do it through the barrel of a gun only effective social change you can be the afghans themselves

afghan men and women we believe i'm going to stun them not to the cross part of. the part of the patient it's chemical position and that a construction company stop people in the obama administration talking about how much they care about the women of afghanistan it's not true they don't care about the women of afghanistan.

more news today once again flared up. these are the images the world. canada. china corporations rule the day. in. a low and welcome across talk on people about the price of crude remains stubbornly high and consumers feel the pinch but why are energy prices so high is it the lack of supply and security jitters surrounding the growing tensions over iran or is it due to greedy speculators and the way boil is traded.

to cross-talk the reasons that make oil prices escalate i'm joined by ferdinand banks in stockholm he is a professor of economics at newcastle university in east lansing across to kurt cobain he is a writer and author of preclude a peak oil novel and in paris we have sobered carbo's he is director of hydrocarbons at the mediterranean observatory for energy all right gentlemen crosstalk rosen if i mean you can jump in anytime you want fred if i can go to you to stockholm why are oil prices so stubbornly high because it seems to me and i'm not an expert on oil but supply and demand the market seems to be out of whack because there is an excess amount of oil out there but prices continue to go up and i should point out to our viewers that in even in the united states the united states is an excellent net exporter of gasoline right now but gasoline prices are very high so fred why are energy prices so high. well there's only one answer here

that there are some monopoly elements in the picture but in so far as the price of oil is concerned over the years it's gone up since two thousand and eight because demand is out running supply and olympic can adjust the price of oil they are the ones who determine the supply on the margin opec determines the supply and opec of course has an agenda that agenda is to bank. an enormous amount of money this year and and they intend to do that and game theory we call that a focal focal. and their goal is to get as much this year as a god last year which was an enormous amount of money and so they want to not allow the price to go down if you were in their place you would do exactly the same thing it's not speculate should well we'll get back to him just like you yes i'll get to speculation in a second her what do you think the reasons are supply and demand is the market out of whack is it reacting to the market forces or is it opec just just going to

banking itself in time and enormous amount of cash. look i don't disagree with fred but i do think there's something else at play here and that is since two thousand and five oil production worldwide has been flat and besides that global net exports have actually been declining from about forty five and a half million barrels a day to about forty two and a half million barrels a day and that means importers like the united states and china and japan and india are having to compete for a shrinking pie of global exports and there are one hundred fifty countries out there are so that are importing oil so the competition has gotten very keen i think that's one of the reasons that we've seen prices hovering around one hundred for nearly a year now i think there are lots of other factors but i think that's one of the main factors ok so but in paris what do you think the primary reason is because you get if you open up a mainstream media a newspaper or mainstream television only to be generous around iran ok if there's

a premium because of the by the possibility that the israel united states will attack iran and plus we have the whole oil game of cutting off of a imports of iranian oil into europe eccentrics center is that how much is that playing a role well i would say that first of all prices fluctuate based on perceived market conditions and expect that future market fundamentals now what is the current market conditions this is. because we really don't know how much oil is produced and how much oil is constant so this is just. a perception second anything that happens in the market. here is expectations of traders.

that has big implications on the trading traders behaviors so well i mean i expect i mean so you're saying i mean you're more on my side as you're more on my side of the issue because i think a lot of this pricing is extremely artificial and i think there is an enormous amount of speculation there because of who controls the oil market curd if i could go back to you there are some people that will say that anything about seventy five dollars a barrel now in today's conditions is speculation that means that's thirty dollars a barrel speculation you think that's outrageous is it possible i don't think it's outrageous there's so many paper instruments now that trade oil i mean the average investor can now can go into the stock market and actually get a sort of hybrid security that looks like a stock but trades in the futures markets and these have become so enormous and so influential in the marketplace that i think they do have an upward effect on the oil prices of course if we get a crash and oil at some point which i think we will because it because i think the economy is weakening then all of those things that work in reverse are right now

they push the price of oil higher than it would normally be and i think then the downdraft they push it down lower than it should be fred what do you think about that i mean how again you know. i'm i guess i want to say racist that this is artificially price to be grossly high go ahead yes yes i can say that i agree with could supply demand thing is concerned. so far is speculation is concerned i don't agree with that at all or little of course if you look at the situation in two thousand and eight what happened was when the oil price started going into orbit the speculators joined in they were the they don't it's not a question that determine anything it's a question of them reacting to what they think is going to happen when the oil price started going up people were talking about that price going to two hundred dollars a barrel eventually. stopped at one hundred forty seven dollars a barrel and then it crashed and then the most important thing of all in to far as

the oil market is concerned happened when opec showed their power their all upright price dropped to thirty two dollars a barrel they took it up to the seventy's and then they waited until the world economy got started again got back on the rollers and then they started moving it up their goal is to get the oil price up to one hundred dollars a barrel minimum minimum what it is today to about one hundred twelve if you look at both. westpac west texas and paris i mean how how much is a determined like a country like saudi arabia because we've seen because of the arab spring they don't want any of this democracy nonsense and their country so they have to pay off their people i mean how much is that play into the dynamic of global oil prices because of course being such an important producer they do impact the price and they need this for domestic social policy and like i said to pay off their people to make sure they're happy they don't want any of this revolutionary stuff visiting them. absolutely absolutely you know when saudi king

returned back to. non-standard thirty billion dollars of social for social programs but this is this is other side of the story of course southern doesn't want cheap oil they need they need money but why can't or how can we ignore financialization of commodity markets look at last year five fifth of may come of that the market is crushed including oil so what happened i mean. why should we ignore there is. doesn't the capital isn't. if you ignore. the. amount of money circulating air on in one second from one market to our the market to one call more than two other commodities and we don't know exactly who these players are so saying speculators just as

a name doesn't mean much because we don't know who they are this is a point think we know things and i think we know who they are is unlike anything we do know who they are these are major advantage all institutions these are major financial institutions that are driving this they're the ones that are the traders ok it's not the consumers and it's not the producers here fred you want to jump in . yes yes i want to jump in and see i've studied this market for about thirty years when the one nine hundred seventy three the king of arabia whoever that was at the time said that or saudi arabia would never produce more than ten million barrels a day and the auto companies wanted to go up to fifteen or twenty but that's irrelevant in one thousand in twenty twenty thousand and eight when the oil price started going out of reach president bush he didn't do well st he didn't go to one of the big banks so all the big banks and talk to the traders he went to saudi

arabia because he wanted them to produce more oil and they simply said to him well have a nice trip home because we're not going to produce more oil that's the end of the producing oil and now of course they say well you know we're going to do something if there's a fall off an oil we go to produce this much of that much they are not going to produce more than ten million barrels a day that is this is stained oil production and then there is this surge production which is about a million and a half or two million but that can't go on for long ok saudi arabia is going to saudi arabia wants one hundred dollars a barrel minimum ok we can we can look at that a little bit later but as a kurd if i can go back to you i mean energy consumption in the united states is actually going down why surprise going up ok i mean there's there's more people are buying more environmentally friendly cars because people are bidding mrs rated they can't spend as much on heating oil and things like this i mean again is the market out of whack because consumption is going down but prices going up. well

i can say i didn't get any more i shouted i'm sitting here in the united states i'm going to hurt and i'm watching i'm watching oil prices i'm watching gasoline prices basically trend down for the last several weeks they've gone up a little bit now and i'm watching gasoline consumption just drop like a rock like so it tells me that the u.s. economy is all soft now either the chinese economy and the indian economy are really really growing fast and so they're making up for the lack of consumption here in the united states or as you say there's some element of speculation paper oil if you will that's pushing the market around in the short term now i want to agree with with fred i think he said that the oil market it's or a sold out said that the oil market is very opaque it's very opaque any regime down the line here gentlemen i'm going to go to a short break and after that short break we'll continue our discussion on the causes and consequences of high oil prices stay with our team.

in. the world with. technology innovation all the latest developments from around russia we've got the future covered.

if you still. want to. welcome back to prosecute about to remind you we're talking about energy prices. and the

story. ok fred before we were end of the bra first part of the program kurt said something that i had a completely agreed with the oil market is opaque ok so you want to take it from there go ahead. yes yes well i agreed with just about everything that curtis said but one thing i will never agree with regardless of who says it and that is that speculation leads the way speculators react and again president bush in two thousand and eight he didn't take a greyhound bus to new york and talk to the speculators he took a play into saudi arabia speculation there was a big discussion about speculation it's too long to take up here but i will never agree about this speculation and i would love to have a long discussion about speculation was anyone who wants to have it and i will straighten this out for the ok well i don't want to go i don't need to

a large argument with you so far to find out to you i mean traditionally i seventy percent of the oil market that to the trading of it was with involve the producers and consumers and but now seventy percent of it is financial institutions and you can't convince me i'm sorry fred and maybe we'll have to have that long conversation one day but it's very much in their interest to speculate with a price of oil because they make an enormous amount of money i mean look i think actually scenario fred let me finish a financial institution says we predict the price of oil be one hundred fifty dollars well that's a self-fulfilling prophecy it's going to suburbs in paris what do you think about that. but. look speculators have to make money ok they make money with money that that is it but of course speculation is or speculators are not built on the reason when the tide markets are tight fundamentals are tight supply demand is tight this gives a big leverage for speculators to bet on the prizes because i mean we say hedge

funds financial institutions this or that this is not important today in financial markets we don't know how much oil is traded in paper barrels compared to world oil production consulate of estimate is fifteen or twenty times more oil is traded so there is no supply demand in financial markets you know and then if you are selling a product you see that financial market price of paper barrels price is high then why should you sell your oil cheap you can't you cannot. the people are talking about supply demand but we have pathetically poor data on market fundamentals i mean we have no transparency you know so you really are still reinforcing my point it has no reason to do with the market fred you want to react to that in reality and i have to say i want to react don't say nothing of the work to it go ahead fred

. yeah i want to i want to react to it on the demand side china is taking up the slack if the united states is actually consuming less oil on the supply side opec makes the decisions i mean i don't like agreeing with the mayor right donald trump but he's absolutely correct here they make the decision to speculation businesses concerned i have talked to these people in new york they agree one hundred percent with me that the speculators are doing what they have always done they're making money. and they are not leading the market they are not they are reacting to the market see when you've got a price that's growing up the way it went to two thousand and eight all you have to do is decide by and then when you see that something is going to has gone wrong then you sell it's really quite simple it's a very simple operation and it's just as transparent as it can be the behavior is

just as threadbare and as it can be right it's just like it's just like speculation or buying and selling the know there are a lot of money so the only thing about the oil market is the transparency of how you later so ok current go ahead and east lansing. yeah well i'm going to agree with both you and fred i know that's probably seems like it's impossible but i think that fred is right that that speculators tag along with with the fundamental trend in exaggerated but i think you're right yeah that's right the leaders have become so dominant in the paper markets that that they are that eventually what i think is going to happen is that fundamentals are going to drag the market in the opposite direction and then take and then speculators are going to tag along in the other way and exaggerate the price in the longer i don't think it's helpful for us to have this a long run in the long run you know i don't i think in the short run in the short run they can move the price around. quite fantastically and out of sync with the fundamentals but in the long run they can't and i truly think that this is damaging

to world economies to have these huge swings and i'm not sure that allowing this much speculation oil is a good thing for long term energy planning ok if i can if i go back there had fred . i said. so would my students that you were wrong that boy well. ok so that if i go to you i think something was mentioned earlier work or just said i think it's very interesting here and i want to throw a little bit of politics in here is obama's up for reelection and we have the eurozone it's touch and go touch and go the last thing they need to do is they need to have some kind of energy price shock ok and again going back to the speculation i mean if we speculators if we're looking at one hundred fifty dollars a barrel i mean the eurozone is going to have a hard time swallowing that one plus with all this stuff going on with the imports exports of oil from iran i mean again i don't want to throw it all in the hands of speculators but we're kind of playing with fire right now i mean you know american

consumers their gasoline prices sank or sank when you go to the polls ok so i mean how much is this could have played into a political realm consumers pay for the high price is due to politically motivated actions or sanctions all of the elected representatives ok. saying that oil prices guzzling prizes for approaching four gallons four dollars per gallon in the united states. and it is hurting american citizens but in europe. guzzling price is double the amount in the united states yes all american citizens should learn that this is not questioning the right they never will she never will they should just like the european consumers are just they have to live it at high oil prices this is the point i mean how do you do that this is this is others other issue where. if you want to put other sanctions then you're saying that.

blame or pick this is voluntary voluntary actions don't want to buy iranian oil then you cannot blame iran for high oil prices very good point kurt if i go you i hear jumps in and really stocks ok if i could jump in there i mean to be as an american you know how sensitive our gasoline prices can be with the electorate. well i guarantee you there will be no american politician in this election lecturing the people of the united states about how they have to get used to high gasoline prices that's not going to happen and fact a gaping mind that america has a huge strategic reserve and already the president and the congress are talking about letting some of those reserves out to try and calm prices down now the last time they did it it didn't do much good because what they were doing is they were just sending sending out a little bit and hoping that would spook the market if they really want to bring

the price down they're going to have to start draining those reserves at a pretty fast clip and i don't think they're going to do it so they're going to have a head fake and put out on a little and see if that knocks the market down. and of course i think that the obama administration will try to blame the situation in iraq or i'm sorry in iran for the high oil prices and to a certain extent they'll be right but they're not going to get in the people hostage be right when they tell the world not to buy iranian oil it's purely nonsense ok i mean if you want to keep prices down then import oil because they will be on the market i mean it's shooting yourself in the foot fred if i go back to you i really like what curt had to say about the strategic reserve because that puts the united states pits the united states against saudi arabia because you're telling us the saudis will keep it a certain price no matter what. yes that's right that's what i believe but let's. but that that particular question i'm really not prepared to discuss that at the brit present dime because i've looked at it it's off there i'm tired of it but i

just want to say one thing about say your oil price. the west texas price is hundred five dollars and the brant prices are more than one hundred twenty dollars . average we're get you one hundred ten dollars if that price goes up another twenty dollars then we're all in trouble ok that's a good sign over just like if we go to paris i mean we have before running out of time here i mean what price in your mind is it going to break the back of the economy because we i believe there's a lot of speculation out there these oil companies are making huge huge profits right now at what point do we risk raking the economy breaking down i mean in the united states is it really kind of a sluggish recovery and europe it's just a flat lining right now i mean one hundred fifty what that would that be a number who are going to ask you i seem to have a size where the remaining three. i believe that. oil prices will remain in three digit and just hope that the first remains one if

the first teach it to them will have problems hundred fifty dollars the we can live a hundred fifty dollars two hundred sixty dollars but after two hundred dollars i think we will have a problem and then we will think about it but what do you think about that curtain east lansing when you think about the prize where's the breaking poverty well peter i think more and more important more important than the absolute price level is the rate of change every i should say ten of the last eleven recessions have been preceded by oil price spikes so if this is an oil price spike and it continues to go up then i think we're very likely to see another recession so yes could the world economy stand this level of prices if it's if it just stood still maybe but if the rate of change going upward increases then i think we're in for we're in for a lot of trouble ok friends and stuff i hate i mean when you seem to agree go ahead

you got the last word in the program go ahead i have one quick thing to say if you want to know about the oil price look at the work of professor. james hamilton university of california san diego use the top man on this subject you'll find out everything you need to know and once again when the oil price gets to one hundred thirty dollars a barrel then we were in danger is there dory ok gentlemen we've run out of time here won't be dangerous territory for those speculators many thanks and i guess today in stockholm east lansing and in paris and thanks to our viewers for watching as here i do see you next time and remember rostock rules.

you know how sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realize that everything you thought you knew you don't know i'm tom harpur welcome to the big picture. is easy to eat it's. easy. to. see.

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