Veteran oil trader Daniel Dicker takes a look at the price of crude oil and draws some conclusions in Real Money:

The bottom line has been clear to me — speculation has been the key driver of the oil market for the past two years and will continue to be the single most important factor going forward. As crude makes new highs seemingly every day, figuring out why this destructive rally inexorably continues becomes almost more important than the rally itself. As a floor trader of oil for 25 years, I have, I believe, a unique perspective on this rally — after all, I was immersed in this market, almost exclusively, every day of my trading life…

the growth of commodities as an asset class is unprecedented…At the end of 2007, Nymex reported average daily volumes of 1.485 contracts per day, an increase of 25% over 2006. So far in 2008, growth has continued at an astronomical pace: January volumes increased 6% over the same period in 2007, February was up 28% and March increased an astounding 62%…it all represents an enormous increase in flow of speculative trade…

speculative action in crude is swamping out other fundamental factors, while gasoline prices are being arrived at still using fundamental measurements…In previous years, refiners would depend upon the summer driving season to return margins to profitable levels. This year, however, it hasn’t happened yet, and it’s unsure if it will. This is in spite of shutdowns, lower utilization and bullish weekly EIA reports for gasoline in the last several months — no matter what fundamentals are applied, it can’t seem to catch up. Gasoline is trading fundamentally, while crude is trading speculatively…

the speed of global growth, as compelling as it is, is just not sufficient to explain the 60% rise in price last year and the more than 20% rise we’ve seen so far this year. As my old trading mentor used to tell me, “In an up market, all news is bullish.” He’s right…

take a look at the crude curve — the representation of how the market feels crude will be trading one, two and three years from now…what do we see? In the midst of global recession, when oil consumption and demand should be decreasing (this year), crude is at its highest price, while further back in the curve, when demand should ramp significantly and inexorably, you can purchase the crude barrel today for future delivery for far less. In fact, the crude barrel gets cheaper the further out on the curve you go. How is this possible? This condition, called “contango,” where prices run in reverse further out in the curve, as opposed to run in premium, has always been an indicator of speculative action.

“At the end of 2007, Nymex reported average daily volumes of 1.485 contracts per day, an increase of 25% over 2006. So far in 2008, growth has continued at an astronomical pace: January volumes increased 6% over the same period in 2007, February was up 28% and March increased an astounding 62%.” So there is a frenzy in volume to complement the frenzy in price. We hope the speculators get the ending they deserve.

Co-founder of Greenpeace Patrick Moore has a few things to say. WSJ:

Greenpeace has evolved into an organization of extremism and politically motivated agendas. Its antichlorination campaign failed, only to be followed by a campaign against polyvinyl chloride. Greenpeace now has a new target called phthalates (pronounced thal-ates). These are chemical compounds that make plastics flexible. They are found in everything from hospital equipment such as IV bags and tubes, to children’s toys and shower curtains. They are among the most practical chemical compounds in existence.

Phthalates are the new bogeyman. These chemicals make easy targets since they are hard to understand and difficult to pronounce. Commonly used phthalates, such as diisononyl phthalate (DINP), have been used in everyday products for decades with no evidence of human harm. DINP is the primary plasticizer used in toys. It has been tested by multiple government and independent evaluators, and found to be safe.

Despite this, a political campaign that rejects science is pressuring companies and the public to reject the use of DINP. Retailers such as Wal-Mart and Toys “R” Us are switching to phthalate-free products to avoid public pressure. It may be tempting to take this path of least resistance, but at what cost? None of the potential replacement chemicals have been tested and found safe to the degree that DINP has.

Of course phthalates are much more commonly used than alar was, so they will not likely disappear. However, there would seem to be profit opportunities for the Greenpeace crowd in a scare of that magnitude.

Nora Ephron comments on the contest between Senators Clinton and Obama in Pennsylvania:

it’s suddenly horribly absolutely crystal-clear that this is an election about gender and race. This may have always been true, but weeks ago it wasn’t so obvious — once upon a time there were eight candidates, and although six of them withered away, their presence in the campaign managed to obscure things. Even around the time of Ohio, when there were primarily three candidates, the outlines were murky, because Edwards was still in there, picking up votes from all sectors. But now there are two and we’re facing Pennsylvania and whom are we kidding? This is an election about whether the people of Pennsylvania hate blacks more than they hate women.

Ms. Ephron also has some deep thoughts on presumptive Republican nominee Senator McCain and something she refers to as the “Torture Thing”. Charming.

Carla Marinucci in the San Francisco Chronicle tells us that a new, new Age of Aquarius is dawning, with the coming of the Millenial Generation, previously mentioned here:

Illinois Sen. Barack Obama hasn’t been in the habit of wearing an American flag on his lapel. Yes, he’s got some controversial acquaintances and has made some slipups lately about working Americans who “cling” to religion. So won’t it be easy for Republican Sen. John McCain, Democratic presidential candidate Sen. Hillary Rodham Clinton — and the media — to keep painting Obama as an ultraliberal elitist who is out of touch with American values and working people? In another era — when Baby Boomers were the overwhelmingly dominant generation — maybe so.

But with just two days until Pennsylvania kicks off the final round of primaries, political observers say there’s clear evidence that the election of 2008 represents a new universe — and a new generation — when it comes to White House contests. And the political phenomenon of Barack Obama is symbolic of the game-changing attitudes and growing influence to be wielded by the upcoming generation of “Millennial” voters — the largest and most diverse generation in American history, born between 1982 and 2003 — who already are helping to shape the race.

Is it possible that any generation could be more full of themselves and full of fatuous, self-flattering ideas than the awful Baby Boomers?

Maureen Dowd on Senator Obama:

There’s no doubt the cat is cool. It’s easy to imagine the wild reception many parts of the world would give a President Obama as he loped down the stairs of Air Force One in his aviator glasses, the chic and chiseled Michelle on his arm. The imagery of the 2008 race is all about cool and hot.

It’s all part of that “re-branding of America” thing that Barbara Ehrenreich said was coming. Wouldn’t it be cool if America was, like, a fashion magazine or America’s Next Top Model or whatever? Then, like, all the problems would go away, because there’d be like change and everything.

Question: how cool is too cool? If the Senator flips his opponent the bird, is that the coolest presidential gesture yet — or is it something else entirely?

Surprisingly, from the Boston Globe:

Corn should be used for food, not motor fuel, and yet the United States is committed to a policy that encourages farmers to turn an increasing amount of their crop into ethanol. This may save the nation a bit of the cost of imported oil, but it increases global-warming gases and contributes to higher food prices.

Candidates for president need to tell Americans the truth about ethanol, but they are falling over themselves in pursuit of the farm belt vote. Barack Obama and Hillary Clinton want more ethanol factories built than even President Bush envisaged when he called for 15 percent of US gasoline consumption to be replaced by alternative fuels by 2017. John McCain, who correctly called the ethanol push a boondoggle in 2000, now says that it is “a very important way to achieve energy independence.”

Ethanol consumes almost a quarter of US corn production. The energy self-sufficiency that all the candidates seek should not come at the expense of the environment or the food supply.

Increased ethanol production isn’t the only reason for the spike in food costs, but it’s more controllable than drought in Australia, higher fertilizer prices, or increased meat consumption by the Chinese. Unlike those other cost-drivers, ethanol production is encouraged by federal subsidies.

And it’s not as though ethanol improves the environment. When emissions inherent in the production process are included, ethanol consumption generates more carbon dioxide per gallon than gasoline

The beginning of the end of a fad? We’ll drink to that.

A Reuters “story“:

China says foils ‘terrorist’ plot to kidnap Olympians — Chinese authorities have detained 45 East Turkestan “terrorist” suspects, and foiled plots to carry out suicide bomb attacks and kidnap athletes to disrupt the Beijing Olympics, a police spokesman said on Thursday. Uighur militants have been agitating to establish an independent East Turkestan in China’s predominantly Muslim northwestern region of Xinjiang bordering Pakistan, Afghanistan and Central Asia.

Chinese authorities cracked two “terrorist” groups, one of which belonged to the East Turkestan Islamic Movement (ETIM), Ministry of Public Security spokesman Wu Heping told a news conference in Beijing. ETIM was listed by the United Nations as a terrorist group in 2002 and has links to Al Qaeda. The group asked its members to do trial runs using poisoned meat, poison gas and remote control explosive devices, Wu said.

Their aim was “to create an international incident with the goal of disrupting the Olympic Games”, the spokesman said. The first group, led by Aji Muhammat, bought explosive materials and carried out 13 test explosions, Wu said without giving the nationality of the ringleader. Suspects in custody confessed they were ordered to commit suicide when arrested, he said. Police detained 10 suspects and seized 16,000 yuan ($2,300) in cash and a large quantity of “Holy War” training materials, Wu said.

We understand all the problems with China’s authoritarian government. Having said that, if you don’t believe in the story about a “terrorist” plot to wage some kind of “Holy War,” then don’t print the story. Reuters should at least be very clear about what quotation marks mean in a “news” story, so that its readers can properly interpret their imprecise intent.

“Even if you are the only sane person in the asylum, there’s nothing you can do about” oil prices, says a leading expert. It’s crazy out there — just like NASDAQ 5000, except the whole world, including the US government, apparently believes it this time, with perhaps some very few exceptions. One of those skeptics is Oppenheimer oil analyst Fadel Gheit, via WSJ, who says that the oil market has become an insane asylum, with a $50 per barrel tulip-mania of speculation built in:

More than half or about $50 a barrel says longtime Oppenheimer & Co. oil analyst Fadel Gheit. After all, he says, world oil supply and demand has fluctuated only slightly since oil was at $60 a barrel. Signs now point to slowing demand growth, especially in developed countries, and no big supply shocks. So why would oil prices spike almost 5% in a single day, crossing the $100 mark Tuesday? And if fundamentals were the prime driver, why would it fall a few hours later?

The new rules are: There are no rules, says Mr. Gheit, a managing director and oil and gas analyst at the Wall Street brokerage, in a chat with Environmental Capital. There is a total disconnect between supply and demand and the price of oil, he says. His reasoning? Oil companies can profitably replace oil at between $15 to $20 per barrel. With the price of crude oil historically three times extraction prices, that should put oil between $45 and $60 a barrel. Any oil company that can’t replace reserves at $15 a barrel shouldn’t be in business. So anything over $45 a barrel is all fat, he says.

Lower interest rates threaten an already weak dollar, fueling a push into hedging commodities, such as oil. Bets made on future price movements can become self-fulfilling if enough trades pile in. That also leaves little room for bets in the opposite direction. It is a bull run stay out of their way. Even if you are the only sane person in the asylum, there’s nothing you can do about it, Mr. Gheit says.

When you take a look at how oil and the dollar have performed since the Fed started lowering interest rates last fall, you can see in the mirror images of the prices that Mr. Gheit may have a point. Oil prices are one way to go short the dollar in an era when the Federal Reserve has telegraphed that it will keep lowering interest rates in its turtle-like fashion, creating the safest of worlds for shorting the dollar — an almost risk free bet for the last six months or more:

We think this will all end with both a bang and a whimper, but we’ve been wrong before. Meanwhile, we recall the words of Keynes that a market can stay irrational longer than you can stay solvent. Be careful out there.

The comity of the Senate, as evidenced by senator Rockefeller:

“McCain was a fighter pilot, who dropped laser-guided missiles from 35,000 feet. He was long gone when they hit. What happened when they [the missiles] get to the ground? He doesn’t know. You have to care about the lives of people. McCain never gets into those issues.”

Other strange accusations regarding Senator McCain here.

We learned a lot today about the “US of KKK A“. And about how America invented AIDS. And about how the song should not be God Bless America but God Damn America. And about how FDR knew that the Japanese were going to attack Pearl Harbor but let it happen. And about certain nasty words that Senator Clinton has never been called. And far worse as well. Yes, it really is that bad. And we learned it all in church! Hmmm.

We never heard such things in church before. We must have gone to the wrong Sunday School. Speaking of that, would it be considered child abuse to put the kids through sermons of this sort? Does such a church deserve a $22,500 donation from a presidential candidate? What does it say that he attended sermons by this fellow since 1988 or 1990? VDH also has some very pertinent comments on Reverend Wright and Senator Obama.

Question: if this chap were your “uncle“, would you sit next to him at dinner or lock him in the attic?

UPDATE

Spengler explains elements of the strange theology at work in this case. Excerpt:

Black theology refuses to accept a God who is not identified totally with the goals of the black community. If God is not for us and against white people, then he is a murderer, and we had better kill him. The task of black theology is to kill Gods who do not belong to the black community … Black theology will accept only the love of God which participates in the destruction of the white enemy. What we need is the divine love as expressed in Black Power, which is the power of black people to destroy their oppressors here and now by any means at their disposal. Unless God is participating in this holy activity, we must reject his love.

This seems as weird as the idea of President Tom Cruise.

Global warming was a Planetary Emergency. Will this current global cooling merit its own emergency declaration, or is it just a passing thing?

Over the past year, anecdotal evidence for a cooling planet has exploded. China has its coldest winter in 100 years. Baghdad sees its first snow in all recorded history. North America has the most snowcover in 50 years, with places like Wisconsin the highest since record-keeping began. Record levels of Antarctic sea ice, record cold in Minnesota, Texas, Florida, Mexico, Australia, Iran, Greece, South Africa, Greenland, Argentina, Chile — the list goes on and on…

The total amount of cooling ranges from 0.65C up to 0.75C — a value large enough to wipe out nearly all the warming recorded over the past 100 years. All in one year’s time…it’s the single fastest temperature change ever recorded, either up or down.

Scientists…link the cooling to reduced solar activity which they claim is a much larger driver of climate change than man-made greenhouse gases. The dramatic cooling seen in just 12 months time seems to bear that out. While the data doesn’t itself disprove that carbon dioxide is acting to warm the planet, it does demonstrate clearly that more powerful factors are now cooling it.

We’ve discussed this cooling and its potential causes previously. If it continues, it is only a matter of time until the global huckster community does a 180 and finds a way to blame this too on human activity, exploiting this new form of “climate change” as an excuse for more taxation and regulation.

CNN’s guidance on the reporting of the Castro resignation:

* Please note Fidel did bring social reforms to Cuba – namely free education and universal health care, and racial integration. in addition to being criticized for oppressing human rights and freedom of speech.

Appalling.

The tyrant Fidel Castro, called by Diane Sawyer a “dashing revolutionary,” retired today. Here’s a bit of AP’s attempt at even handed treatment of the event:

Castro’s supporters admired his ability to provide a high level of health care and education for citizens while remaining fully independent of the United States. But his detractors called him a dictator whose totalitarian government systematically denied individual freedoms and civil liberties such as speech, movement and assembly.

“Provide a high level of health care.” That would be a laugh if it weren’t tragic. The average monthly salary in Cuba is $16 a month, according to the State Department. Cuba is a nation so poor that people keep the family pig in the bathroom so he won’t get stolen by the neighbors. The fools in the MSM are would also be a laugh, if they weren’t dangerous in their ignorance and smugness.

A story from the alleged news organization Reuters:

Gangs of rioters set fire to cars and garbage trucks in northern Copenhagen on Friday, the sixth night of rioting and vandalism…Scores of cars and several schools have been vandalized or burned in the past week. Police could give no reason, but said that unusually mild weather and the closure of schools for a winter break might have contributed.

“Unusually mild weather and the closure of schools for a winter break might have contributed.” Hmmm. That doesn’t seem as plausible as this explanation. Maybe Reuters should consider a different line of work. They don’t seem to be much interested in the news, after all.

This is the 50th anniversary of the hula hoop fad that swept America in 1958. We seem to have a new version of the same phenomenon today in the Obama craze that has gripped the media and a good chunk of the populace. John Dickerson, Mark Steyn, and Tom Maguire contribute a few more stories and quips in the Ehrenreich genre of ethereal unreality about America’s current instant messiah, King of Kings, and Man of Steel who will save the planet with powers and abilities far beyond those of mortal men:

Barack Obama just seems to get cooler and cooler. He’s the most popular topic on the New York Times topics page…Internet widgets allow you to see what great thing Barack Obama has done for you…on the New York subway Friday morning, one of our copy editors…heard one woman joke to another: “Obama, will you pick me up after my noninvasive minor surgical procedure?” To which the other replied: “Obama, will you hold my hair back when I puke?”…

Many spiritually advanced people I know…identify Obama as a Lightworker, that rare kind of attuned being who has the ability to lead us not merely to new foreign policies or health care plans or whatnot, but who can actually help usher in a new way of being on the planet, of relating and connecting and engaging with this bizarre earthly experiment. These kinds of people actually help us evolve. They are philosophers and peacemakers of a very high order, and they speak not just to reason or emotion, but to the soul…

John Lewis, the venerable civil rights hero and congressman, put words to this feeling recently. “In recent days, there is a sense of movement and a sense of spirit,” he said, suggesting that he might switch his superdelegate vote from Hillary Clinton to Obama. “Something is happening in America and people are prepared and ready to make that great leap.”…On Facebook, people write about dreams featuring Obama. There is only one correct reaction to the will.i.am “Yes We Can” video and that is to start chanting along…

There was the woman in New Hampshire who compared him with Christ. There was Maria Shriver’s comparison of the candidate with the state of California, with the rhetorical fervor usually seen only after a preacher shouts, “You are healed!”…

“Obama’s finest speeches do not excite. They do not inform. They don’t even really inspire. They elevate. They enmesh you in a grander moment, as if history has stopped flowing passively by, and, just for an instant, contracted around you, made you aware of its presence, and your role in it. He is not the Word made flesh, but the triumph of word over flesh, over color, over despair.”…

“Be not afraid; for behold I bring you good tidings of great joy which shall be to all the people: for there is born to you this day in the city of Chicago a Savior, who is Barack the Democrat.”

Questions: (a) the 1958 hula hoop craze lasted two years — how long will this one last? (b) if today’s fad politician is the hula hoop, who will be the frisbee (the second fad invented by Wham-O in the late fifties)? (c) and finally, what’s the deal with all the women who faint at the Senator’s rallies and rather disturbing revival meetings — is it real or is it something else entirely? (The list of these suspicious fainting spells seems to be getting longer and longer.)

We thought that nothing could top the ridiculous Arlen Specter’s desire to have Congress investigate some people in the NFL. We were wrong. The live broadcast of the Congressional circus put on by Henry Waxman in interrogating baseball players was much worse.

Buffoons who think that no minutiae should be beyond the purview of Congress questioned a baseball pitcher and his trainer for hours. Unfortunately we pay for these buffoons. Apparently Waxman has now been hearing from some of his constituents, since he is now distancing himself from his own hearing:

“I’m sorry we had the hearing. I regret that we had the hearing. And the only reason we had the hearing was because Roger Clemens and his lawyers insisted on it.”

The above statement would appear to be entirely untrue. Henry Waxman’s new campaign slogan: “bringing Democrats and Republicans together in revulsion at their elected representatives for over thirty years.”

Dr. Krauthammer diagnoses the kind of feeling that produced the Ehrenreich piece below:

the Obama campaign has the feel of a religious revival with, as writer James Wolcott observed, a “salvational fervor” and “idealistic zeal divorced from any particular policy or cause and chariot-driven by pure euphoria.” “We are the hope of the future,” sayeth Obama. We can “remake this world as it should be.” Believe in me and I shall redeem not just you but your country — nay, we can become “a hymn that will heal this nation, repair this world, and make this time different than all the rest.”…

Obama has an astonishingly empty paper trail. He’s going around issuing promissory notes on the future that he can’t possibly redeem. Promises to heal the world with negotiations with the likes of Iran’s President Ahmadinejad. Promises to transcend the conundrums of entitlement reform that require real and painful trade-offs and that have eluded solution for a generation. Promises to fund his other promises by a rapid withdrawal from an unpopular war — with the hope, I suppose, that the (presumed) resulting increase in American prestige would compensate for the chaos to follow.

Democrats are worried that the Obama spell will break between the time of his nomination and the time of the election, and deny them the White House. My guess is that he can maintain the spell just past Inauguration Day. After which will come the awakening. It will be rude.

Many years ago we attended a tent meeting of a rather well known gentleman in that field. For the first little while the energy in the place seemed positive. But soon it began to seem self-referential and downright creepy. We’ll just have to see whether America’s current swoon lasts as long as Krauthammer thinks it might. Will the Feiler Faster Thesis apply?

Barbara Ehrenreich in the Huffington Post:

When did you begin to think that Obama might be unstoppable? Was it when your grown feminist daughter started weeping inconsolably over his defeat in New Hampshire? Or was it when he triumphed in Virginia, a state still littered with Confederate monuments and memorabilia? For me, it was on Tuesday night when two Republican Virginians in a row called C-SPAN radio to report that they’d just voted for Ron Paul, but, in the general election, would vote for… Obama…

Thanks to Iraq and water-boarding, Abu Ghraib and the “rendering” of terror suspects, we’ve achieved the moral status of a pariah nation. The seas are rising. The dollar is sinking. A growing proportion of Americans have no access to health care; an estimated 18,000 die every year for lack of health insurance. Now, as the economy staggers into recession, the financial analysts are wondering only whether the rest of the world is sufficiently “de-coupled” from the US economy to survive our demise…

Obama is different, really different, and that in itself represents “change.” A Kenyan-Kansan with roots in Indonesia and multiracial Hawaii, he seems to be the perfect answer to the bumper sticker that says, “I love you America, but isn’t it time to start seeing other people?” As conservative commentator Andrew Sullivan has written, Obama’s election could mean the re-branding of America. An anti-war black president with an Arab-sounding name: See, we’re not so bad after all, world!

Once upon a time there was a serious country called the United States of America. It often had serious men, from all over the political spectrum, as leaders and as citizens. That was before “the re-branding of America,” however. Heaven help us all.

Like Roger Simon, we wondered just how much spare time Republican Senator Arlen Specter had on his hands. Specter has called for a possible Congressional inquiry into the NFL’s destruction of six videotapes made by the New England Patriots, spying on the practices of other teams (something that would seem to be a good idea but is illegal under league rules). Specter wrote to the NFL commissioner (the son of a former GOP Senator, by the way) and later commented:

“I am very concerned about the underlying facts on the taping, the reasons for the judgment on the limited penalties and, most of all, on the inexplicable destruction of the tapes…The American people are entitled to be sure about the integrity of the game. It’s analogous to the C.I.A. destruction of tapes. Or any time you have records destroyed…It’s the same old story…What you did is never as important as the cover-up. This sequence raises more concerns and doubts.”

Just what kind of bonehead is this busybody and fool Specter, we wondered. Finally, in paragraph 31 of a 33 paragraph NYT story, we found out: “Mr. Specter, a lifelong Eagles fan who still calls Philadelphia sports radio stations most Monday mornings…” Aha. It was all about the 2005 Super Bowl.

Thugatarian Hugo Chavez is beginning to remind us a certain movie character. The Miami Herald has details:

”I chew coca every day in the morning…and look how I am,” he is seen saying on a video of the speech, as he shows his biceps to the audience. Chávez…added that just as Fidel Castro ‘’sends me Coppelia ice cream and a lot of other things that regularly reach me from Havana,” Bolivian President Evo Morales “sends me coca paste…I recommend it to you.”

It was not clear what Chávez meant. Indigenous Bolivians and Peruvians can legally chew coca leaves as a mild stimulant and to kill hunger. But coca paste is a semi-refined product — between leaves and cocaine — considered highly addictive and often smoked as basuco or pitillo.

Regarding those forms of coca, one source says this: “Initially, a crude chemical extraction process takes place to form a smokeable base (alkaline) form of the drug sometimes called basa, basuco, or pasta, paste, pitillo. This base form of the drug is extensively used in South America as a cheap, potent form of the drug usually smoked with tobacco.”

Sounds like a fun way for a dictator to jumpstart the day. It is then perhaps no wonder that Chavez and Spicoli get along so well.