Frank Holmes: Three Reasons $100 Oil Is Here to Stay

I remember 1998 when oil hit under $10/BBL, they said we'd never see $20 oil, then hit $140 in 2008. I remember in the 1990's when they built all those gas power plants on $2 natural gas and gas surged over $8 in the winter of 2000 (anyone remember $1000 heating bills). I remember when oil hit $140, they talked about $200/BBL, then it dropped to under $40 in less than six months. I remember the mid-2000's, they said natural gas will never drop to $4 only to see $3 in 2009 and 2010.

The reality is (1) no knows where energy prices will be in 5-10 years, and (2) it'll be much different than today.

We need to repeal the Commodity Futures Modernization Act of 2000 and The Financial Services Modernization Act of 1999 and get speculators out of the oil market!
Three years ago most investment banks were on the brink of extinction. Lehman Bros, Bear Stearns and 427 other banks went belly up. Banks that did survive received bailout and Tarp money from the federal government. The banks took our taxpayer money and invested in commodities and in the currency market. By January the oil market had hit bottom; oil was selling for $34 a barrel. So the banks and hedge funds invested in oil, betting that it would go up. After all, they had been previously successful in driving up the price to $140 dollars a barrel. They began hoarding oil, storing it in tank farms and on supertankers.
Then the bankers hired an army of oil traders to bid the price of oil up. Even though world consumption was down, they were successful at pumping oil up again with the resurrection of the big lie of "peak oil" and a few geopolitical crises'. Oil is now selling at over 100 dollars a barrel.
Drilling will do nothing to the price of oil. Opening the reserves will do nothing to the price of oil. The present price of oil has nothing to do with supply and demand (there is a glut of oil and no place to store it.) Instead of the price of oil being determined by supply and demand, the oil and currency traders now control the price of oil. These American and international bankers didn't believe that the Obama administration would be successful combating the crisis that these very banks created. As the deficit grew and the treasury printed more money to bail out the banks, their traders and analysts declared the Obama administration dead on arrival when it came to the economy. They bet that the US dollar would lose its value. The US dollar has lost between 25-30% in the last four years. They bid it down and they made lots! Their cynical efforts to make a buck impoverished all of us by devaluing our currency. When your currency becomes devalued, the cost of everything goes up, especially oil and other commodities.
The banks scored twice; first by betting that oil would go up, then shorting the greenback, insuring that oil would go up. Don't forget, we loaned the banks the money to do this, and for years those banks have made record profits.
Two years ago there was still a lot of idle money around that was frightened of the stock market, and the insolvency of banks. That money was put into the commodity markets and fueled the rise of the price of commodities world wide. It's been a good couple of years for Goldman Sachs, J P Morgan, and their commodity and currency trading subsidiaries. A bright guy who ran an oil trading subsidiary for Citi Bank made 100 million as compensation. Their hoarding practices have started to be emulated by other countries; we now see China, The US, and others building vast oil storage facilities to take advantage of climbing oil prices. OPEC, big oil and the bank's speculative efforts have and will cost American consumers billions.
Then there is the continued greed of oil producers. With the price so high, think of the money to be made! Problem is, there is no place to store it anymore and everyone continues to pump it out of the ground. And world consumption continues to be low.
Those of us who heat our homes, drive our cars, and use oil products in a myriad of ways, are paying way more than we should. And we have been for some time. Bernie Madoff ripped off his clients to the tune of 50 billion dollars, a monumental theft. So what do you call this oil market that has taken 50 times that amount? We have paid $2.5 trillion dollars more than we should! The irony of all of this is that we the taxpayers provided the seed money for this, the greatest rip off in history.
All of this hoarding and manipulation needs to end. Repeal the Commodity Futures Modernization Act of 2000 and The Financial Services Modernization Act of 1999.

The major banks and their traders are making a killing manipulating the market. Should have let them go down. Now Glass-Steagull put back into effect could save our nation from the corruption.

To the Insider: So with domestic oil and gas companies holding approximately 10% of the world wide reserves of oil, you think that the solution to higher oil prices is to have the Federal Government Nationalize the American companies and the Federal Government start a drilling program? Do you think the foreign governments would stand by and allow the US to take over their oil fields that are run by American Companies or they might nationalize those reserves? And do you really think a government run oil program will find and produce oil cheaper than public traded companies can do it? I realize that all these questions might be a little deep for you seeing how you obviously have the intelligent depth of a Walmart Birdbath.

Three reasons why hundred dollar oil is here to stay..... speculators, elites and "GREED".

why was gas at 4 bucks when the barrel price was 140?
now it is 4 bucks when the barrel price is 90

I am sure he is long oil and not an unbiased observer. What he doesn't take into account is that there are oil sand/shale deposits in the western US and Canada that exceed the deposits of Saudi Arabia and one or two other oil producing nations combined. At production costs for these sources at $60-80/barrel, there is effectively a long term cap of oil at 80-90/barrel. With addtional investment in these areas, costs could even go lower. Speculation and the cartels will momentarily drive prices higher than this, but the same forces will allow the price to fall so that these new sources will not be expanded. I call @#$% on Mr. Holmes.

Blah Blah, The real reason oil will fluctuate is because of speculators and big banks. NOT because of anything else.

Geopolitical, developing countries and peak oil are all garble to get speculators rich. Period.

Remove speculators and BAM, oil will be $ 60 again.

SEC

nothing will change until there is an alternative-when natural gas or whatever else eventually becomes mainstream, the demand for crude oil will decrease and the price will come down-that's why it needs to be done ASAP not to mention the fact that there is only so much oil in the world-until there is an alternative there is no reason to think gas prices will decline

Frank is an idiot.He has no clue ,you can never know what tomorrow tells.

If we could harness all that hot air coming out of the mouths of certain people we wouldn't need oil.

The prime reason that oil prices are so his is speculation. A study released yesterday by the University of Massachusetts says that 83 cents per gallon is added due to speculation in the oil markets.

I also love the people that say "make the buyers take possession of the oil they buy". OK, do the same with corn, wheat, pork bellies, chickens, cows, corn, orange juice and on and on. All of these are traded on the same market.

If Holmes declares himself an expert in the enery sector, how come he does not know about a company in California that can transform natural gas to gasoline. This company is still in early phases of testing but if all goes well, US does not need to import a drop of foreign oil. The method is carbon neutral for the whack jobs out that believe in global warming. This would a game changer; price of all will drop drastically to $25 a barrel.

Three Reasons $100 Oil Is Here to Stay :
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# 1 Profits
# 2 Greed
# 3 Bonuses for Oil Executives

There is no reason for crude oil to be around, US$ 60/per barrel. Even at US $ 60/barrel, these companies make huge profits.Being in Oil industry for 35 long years in my career, I know what is the price of production of one barrel of crude oil. It is the greed of Oil companies plus the speculators, the reason for the rise of crude oil prices.

What President Obama did by releasing strategic crude oil reserves is a correct decision. He should do many times in short runs, in future, to kill the speculators and keep crude oil below US$ 90/barrel. Then the world economy slowly improves.
These people can not take the world to economic doom !!

I suggest replacing the $ symbol with "TP"...because it's all Toilet Paper.

Oil would drop 25%-35% if the speculators were kicked out of the market. If you don't have a legitimate need to hedge (airline, plastics co, etc), you shouldn't be allowed to trade oil contracts. Create a license to limit oil market access and make applicants demonstrate their legitimate need to trade oil contracts.

Just out of curiosity, if speculators are driving the price of oil up, why don't they do the same thing for stock prices, why just stick with oil?

I refuse to believe that we will not come up with a new technology to replace oil within a decade or two.