Justice

Sorry to be morbid but there’s a strong statistical possibility that one of the current justices will move on—whether retiring or expiring—in the next four years and that the next president will once again be called upon to nominate someone for the highest Court in the land.

Preamble
We’re a few weeks away from the presidential election and at the halfway point in this series of columns. Therefore, before we tackle this week’s issue, it’s appropriate to pause and assess the current situation.

In the first election column I referred to this series as a summit quest; a challenge to leave more nonsensical items of the campaign silly season behind and equip ourselves only with the truth as we tackle important issues. In it I also laid out a few irrefutable facts and circumstances that would serve as underlying assumptions, or “base camp,” for our climb and warned that the closer one gets to the summit, the thinner the air would become. Little did I know how prescient this analogy was; even former Vice President Al Gore blamed President Obama’s horrific debate performance in Colorado on altitude sickness.

Whether it was his fumbling answers or Mitt Romney’s Cosa Nostra-like threats to public television—kissing Big Bird on one cheek while plunging a knife beneath his wing—our ascent must take into consideration current events and the candidates’ performance. As far as the first debate is concerned, Romney took command of the evening and ran the proceedings as though he was giving a Power Point presentation. He was concise, efficient and direct, never once allowing the facts to stand in his way. Obama was riddled like Sonny at the Causeway as jubilant Romney fans took to the airwaves and social media to pounce on bewildered liberals.

Great fun.

As stunned as I was by this turn of events, it changes nothing with respect to my analysis of the election because both President Obama and Gov. Romney have substantial records and demonstrated beliefs that are far more illuminating than the debates. Moreover, our country’s challenges remain the same, as do the circumstances in which we live. It’s why policies and issues are more important than one’s ability to annunciate them in less than two minutes. I’m not questioning the importance of the debates as far as campaigning is concerned, but nothing said between the two men can alter what they have done in the past or where we are today.

But the home stretch of a campaign puts everything under a microscope, and no one can predict what might become a turning point. The tragic event that occurred at our embassy in Libya on Sept. 11th was immediately and inappropriately politicized by the Romney camp. The White House followed up with its own (ongoing) gaffe by not forthrightly acknowledging the strong possibility that this was an organized terrorist attack and not an impromptu protest that spun out of control. But, here again, as maddening as Obama’s reticence in this matter is, his patience demonstrates why his approach is more preferable to the blustering rhetoric coming from the right.

Here’s why: As the evidence mounts from that night, it seems increasingly clear that this was indeed an organized terrorist attack. Therefore, it should be dealt with in the same covert manner that we have been conducting our affairs for the past four years. Overreacting in this part of the world, particularly in a state as fragile as Libya, can have devastating repercussions. If we had responded with immediate force like the George W. Bush “shoot first, look for WMD’s later” approach when the images first appeared of Ambassador Chris Stevens’ body being carried by unknown Libyans, then we would have missed that they were actually Libyan civilians who had found the ambassador alive and were calling for help. When none were found, they put Stevens into a car and took him to a hospital.

The world around us is so fragile. What some regard as callousness on the part of the president should be viewed as his understanding of this reality.
With that consideration, let us soldier on to this week’s chosen issue. The first few columns in this series took a detailed and practical look at the economy, deregulation, foreign policy and the stimulus. This week is more personal and I will keep it brief.

Justice
One of the most important aspects of the presidency is the opportunity to nominate justices to the U.S. Supreme Court. For some presidents, it has been their most enduring legacies. Four of the justices are currently in their 70s, and the average American lifespan according to the Centers for Disease Control is 78. Sorry to be morbid but there’s a strong statistical possibility that one of the current justices will move on—whether retiring or expiring—in the next four years and that the next president will once again be called upon to nominate someone for the highest Court in the land.

While we believe the collective American conscience has evolved beyond horrifying decisions such as Dred Scott, even the current Court is capable of alarming incompetence. Consider the Citizen United decision or simply read the following remarks made recently by conservative Justice Antonin Scalia at the American Enterprise Institute:

“The death penalty? Give me a break. It’s easy. Abortion? Absolutely easy. Nobody ever thought the Constitution prevented restrictions on abortion. Homosexual sodomy? Come on. For 200 years, it was criminal in every state.”

This type of spiteful and irresponsible attitude must be quelled by stacking the Court with thinking and feeling individuals.

Hopefully, Citizen United will someday be repealed. Ironically, perhaps an Obama Court will someday reverse one of his most dangerous acts thus far, which was to sign into law the indefinite detention provision of the NDAA 2012 bill last year, one of the greatest encroachments on our civil liberties in decades. Lastly, as the father of two daughters, I have no choice but to take the Republican Party at its word with respect to its desire to take away a woman’s right to choose. Sticking our heads in the sand and saying, “Oh, that will never happen,” ignores the Republican platform, their campaign promises and actual bills Republicans have put forward in Congress.

Because Obama has already demonstrated his tendencies with respect to the Court through his appointments of Elena Kagan and Sonia Sotomayor, we know where he stands. During his political career, Mitt Romney has stood on all sides of virtually every issue and therefore offers little insight into the type of nominee he would proffer. But his acquiescence to the most radical conservative wing of the Republican Party is troubling enough to inform my decision in this case.

This court once again sides with the incumbent.

 

Senator Schumer Responds (and so do I…)

Senator Charles Schumer responds to last week’s column in which I claim he is responsible for the high price of oil. This is his full response along with some helpful commentary that illustrates the fact that he never actually answers the question. Welcome to Washington.

I'm not done. I have 400 other ways to not answer your question.

Last week I authored a rebuke of the financial regulatory system in the United States, particularly with respect to the rising cost of fossil fuels. Americans, and in fact all citizens of the world, are being fed what I consider to be utter nonsense from our elected officials, and the Wall Street puppeteers who control them, about the reasons behind the high oil prices.

My findings were published in my regular column, Off The Reservation in the Long Island Press and archived exclusively here, as always, on JedMorey.com. In it I concluded that because irresponsible deregulation spanning two decades is the most dominant factor in the price of oil, a responsible regulatory correction is the only solution to mitigate the current crisis. Further, because Senator Charles Schumer (D-NY) sits on every governing body with the ability to restore accountability in the markets, he is therefore quite logically the one man on the planet responsible for the price of oil. This is not to say that he was responsible thus far, but that because control is within his ability and purview, it is therefore incumbent upon him to reverse this horrendous trend.

You are welcome to review my assertions and follow my logic in arriving at this conclusion by clicking here. Then, you can read the Senator’s response below. Here is my take (spoiler alert) on his rebuttal: It is exactly the type of benign platitudinous response Americans have been conditioned to accept from the people who occupy the highest offices in the land.  748 words of nothing designed to throw us all off the scent. This is what we refer to in the newsroom as “gorilla dust” whereby two gorillas face off against one another in a spectacle of chest-thumping and screaming, throwing dirt in the air to create a commotion for the purpose of actually avoiding an altercation.

With that said, below is Senator Schumer’s response to my column that appeared in the Letters section of the Press this week. You be the judge. (Oh, and I’ll help a little along the way…)

Dear Editor,

I know that with oil prices surging day after day, Americans are being squeezed at the pump and paying more for everything from groceries to plane tickets. The bottom line is, Americans need relief from soaring gas prices. (Yes we are. Thank you for acknowledging that.)

That’s why, as a short term solution, I’ve called on the administration to tap the Strategic Petroleum Reserve (SPR). Established by the U.S. government in the wake of the 1970s Arab oil embargo, the reserve has been used since then to deal with crises that disrupt oil production. And it’s worked. When President Bill Clinton released 30 million barrels in 2000, in part because of my constant prodding, gasoline prices fell 10%. When President Bush released oil from the SPR in 2005 following Hurricane Katrina, oil prices fell more than 9 percent. If accessed today, the reserve would not only provide much needed relief to New Yorkers and Americans across the country – but also help ensure that our economy doesn’t slip back into a decline. (Wait, what? The 70’s embargo was a forced supply crisis and Katrina was a natural disaster. Supply is at an all-time high and experts agree supply has nothing to do with prices.)

But we cannot rely on the SPR alone. We must do more over the long-term so we are not constantly at the whim of what happens in places like Libya, Iraq or Venezuela. The way to do that is by reducing our dependence on foreign oil and investing in clean energy. We can do that by: (Golly, I hate to be rude but Libya doesn’t supply the U.S., we pretty much took care of the whole Iraq thing – wouldn’t you say? – and Venezuela owns Citgo… Can’t force them out of business in America, can you?)

1)      Passing NOPEC, the No Oil Producing and Exporting Cartels Act. This legislation would prevent future price increases of gasoline by permitting the Department of Justice to bring actions against foreign states – such as members of the Organization of Petroleum Exporting Countries (OPEC) – for collusive practices in setting the price or limiting the production of oil.  (But I think it’s been established that they’re not setting the prices, the investment banks on our own commodities exchanges are. Sounds like gorilla dust to me… )

2)      Ending subsidies for oil companies and putting the money into renewable energy sources. We need to make sure that oil companies, that are currently making record profits, aren’t receiving billions of billions of dollars in subsidies. Astonishingly, that’s what’s happening. I’ve called for the elimination of these subsidizes to help reduce our deficit and stop wasting taxpayer money subsidizing oil companies that don’t need any help. This week, House Speaker John Boehner stated his openness to ending some taxpayer subsidies for oil and gas companies, and I am urging my Republican colleagues in the senate to follow his example. (Again, this has NOTHING to do with why prices are so high given the extraordinary supply. Fostering renewable energy is a great idea, but it’s a way to create an additional supply of energy, not mitigate the current price. Of course the subsidies are ridiculous but given that logic shouldn’t prices be lower because we’re subsidizing part of the cost of production through tax breaks Senator? Hmmm. Something doesn’t quite add up here.)

3)      Passing the Use It or Lose It legislation. Under current law, oil companies can lease possible oil reserves on Federal land regardless of whether they are producing oil on that land or have plans to produce oil there. In some cases, oil companies are leasing – but failing to develop – federal land in order to book more reserves on their balance sheet and inflate their stock price. This legislation would force companies to report how they plan to use millions of federal acres already under lease for energy exploration and innovation. (Um, okay. We’re not talking about land use or stock prices here. We’re talking about the price of oil TODAY. Hey, are you trying to change the subject?)

4)      Promoting renewable energy sources.  This month, I helped secure over $57 million dollars to support solar photovoltaic technologies at Albany University that will produce clean power from domestic renewable energy. Additionally, in 2008 I supported a two billion dollar investment in wind power for New York. We must build off these successes and continue to promote clean and renewable energy investments. (Wow. $57 million dollars. Here’s a fun fact… Did you know that ExxonMobil just released their first quarter earnings of more than $10billion in profit?! This section doesn’t fall under the category of gorilla dust. This is what we call ‘pissing in the ocean to warm it up’.)

5)      Promoting cleaner energy sources. Also this month, I helped to protect a $100 million loan guarantee to build the Taylor Biomass Energy facility in Orange County that uses a process called gasification to convert over 95% of the waste received at its facility into cleaner energy.  We must also promote and fund similar projects across the country. (“Gasification” I see. There’s only one thing spouting hot gas right now and it ain’t the Taylor Biomass Energy facility.) 

6)      Using new sources of oil in the US where we can and it is safe to do so. I was one of 6 Democrats to support expanding a portion of the east Gulf to oil exploration, so long as it’s safe, with the greatest environmental protections, and small businesses and workers are not put at a financial risk. (Ahhh. Drill baby drill. Where have I heard this before?)

In this still-recovering economy it is vital that we do everything we possibly can to help middle class families stretch their paychecks. Every additional dollar spent on filling the gas tank is a dollar that could go toward paying for college, a much-needed family vacation, or paying the grocery bill.  By focusing on long-term fixes to our dependence on foreign oil and immediate short-term relief at the pump, we can bring down the costs of gasoline now and finally end the stranglehold that oil producing countries have on the New York and Long Island economies.  

Sincerely,

U.S. Senator Charles E. Schumer

Well, there you have it. Hope my helpful cues along the way illustrated what an absolute load of “gasification” this response was. Pity. Like I said, I guess Chuck Schumer is responsible for the price of oil.

Have a Pair of Crystal Balls?

Contributor Dorian Dale takes a present day look at predicting the future. It’s Barack Obama vs. Dick Vitale and google vs. the government in this mashup of prognostication that might ultimately prove that groupthink and a precocious fourteen year-old know better than experts and even the President.

Do you have a pair of crystal balls?  IARPA would like to know.  The acronym that stands for U.S. Intelligence Advanced Research Projects Activity is out for a random walk.  The operative premise is that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.”* If our expansive and well-equipped intelligence apparatus can be blindsided by the collapse of Evil Empires on life-support, what’s to say that the likes of Joe the Plumber could do any worse placing bets on the fate of North Korea’s quackocracy?

I was driving along several weeks back with my globally aware fourteen-year old son, Jed.  We were considering the Twitter revolutions in Tunisia and Egypt.  I posed a challenge: which neighborhood tyrant would be the next to go down?  There was already some stirring in Yemen and Bahrain.  What other candidates for collapse might there be?  Oman?  Iran?  Jed went with Algeria, not a bad choice given the military suppression of an Islamic party election victory twenty years ago.  I chose the monkey in the middle of Egypt and Tunisia – Libya’s Qaddafi.  Can’t say precisely what it was in my caldron of knowledge of all things Qaddafi and Libyan.  Maybe it had something to do with Keeping Up with the Ghonims, Google’s young social media man next door in Egypt.  Qaddafi, being Qaddafi, hasn’t gone quietly into the night to join his Egyptian counterpart, Mubarek, so I haven’t collected my bet with Jed.

Qaddafi is every inch the devil-incarnate that we know.  But who are these rebels that we don’t know?  When asked to characterize the opposition, Secretary of Defense Robert Gates said, “It’s pretty much a pick-up ballgame…with no command and control.”  The future government, Gates suggested would probably be worked out among Libya’s numerous powerful tribes.  It is sobering, given Gates’ compound authority as former Acting Director Central Intelligence and SecDef, that Jed could have expressed equal uncertainty. 

If Libya is a pick-up game played with tanks and RPGs, then it plays to a core skill of our President.  It is Obama’s half-court game and die-hard fan’s eye that got him on ESPNs panel of forecasters for the NCAA men’s basketball tournament.  This year his bracket choices went 29-3 through the second round placing him in the 99th percentile on ESPN.com after three rounds.  His Final Four choices, number one seeds all, didn’t escape the Elite Eight, dropping Obama to a, nonetheless, respectable 83rd percentile when the net was cut down by the champions.  Snoop Dogg came panting in at the 43rd while Dick Vitale, the voluble former coach turned b-ball bloviator dogged it out at the 21st along with ESPN pundit Scott Van Pelt. 

These results line up with the findings of “Expert Political Judgment: How Good Is It?” by Penn Professor Philip Tetlock.  The takeaway – acclaim of so-called experts is inversely proportional to the accuracy of claims they make about the future.  It is far better to go with the “wisdom of crowds,” perils of groupthink and the lowest common denominator of consensus, notwithstanding.  By Tetlock’s reckoning, the average of all five million March Madness predictions registered at ESPN will beat 80-90% of the individual predictions.  Faced with a world checkered with unknown unknowns, IARPA’s Aggregative Contingent Estimation (ACE) Program has retained the professor to lead one of five teams in capturing this oracular phenomenon algorithmically. 

ACE aims “to dramatically enhance the accuracy, precision, and timeliness of forecasts for a broad range of event types, through the development of advanced techniques that elicit, weight, and combine the judgments of many intelligence analysts.”  Tetlock’s Good Judgment Project (GJP) team, has been soliciting recruits with no specialized background to conjecture on 100 impending possibilities on the world stage.  “Will former Pakistani President Pervez Musharraf return to high office?”  “Will Hamas recognize the state of Israel by the end of 2012?”  Researchers from the GJP will evaluate combinations of individual forecasts to optimize the yield of “collective wisdom.”

Dorian Dale seen here with his ghostwriter, Babbo

A decade ago IARPA’s cousin DARPA over in Defense sponsored “Futures Markets Applied to Prediction.”  FututreMAP was to harness collective intelligence through market-based trading mechanisms for predicting geopolitical instability and threats to national security.   After all, orange juice futures, as we saw in Trading Places, are better predictors of weather than the National Weather Service’s forecasts.  Detractors accused the Pentagon of wasting millions of taxpayer dollars on “terrorism betting parlors,” and “fantasy league terror games.”  Defenders pointed out that traders in the Iowa Electronic Markets have been betting since 1988 with remarkable accuracy on the likely winner of the US presidential elections.  As circumstances unfolded, it was left to Tradesports.com, a Dublin-based online trading exchange to take bets on the “survivability of Saddam.”  But now Google has legitimized this approach by using prediction markets to “forecast product launch dates, new office openings, and many other things of strategic importance.”

For the C-Spanners out there who have longed to have their very own version of ESPN bracketology, the call is out for wonks looking to improve their “forecasting ability as part of cutting-edge scientific research.”  Pay is a mere $150, but GJP will be providing an invaluable reality check.  So go to http://surveys.crowdcast.com/s3/ACERegistration and get in touch with your inner Nostradamus.    

*Random Walk Down Wall Street, Burton Malkiel

Crude Behavior

A new president trying to sell American involvement in a new Middle-East conflict with a straight face is an old story, and the cracks are beginning to show. It’s becoming increasingly clear that the only defined foreign policy we have is being crafted by oil companies. And it’s not a very good one.

On now to Libya where the beat goes on. Another day, another despot, another billion barrels of crude. Our foreign policy since World War II has become so narrow and predictable it’s laughable. The whole world is onto us and has been for years but our national myopia allows our politicians to repackage decades-old malarkey and sell it to Americans with a bright, yellow starburst that says, “New and Improved!”

The idea that some sort of twisted moral imperative prompted the Obama administration to act forcefully against Libyan forces is tough to swallow. You can almost detect in his speeches and mannerisms how uncomfortable the Nobel Peace Prize-winning president is in authorizing force and intervening in a foreign civil war. That’s not to say Obama can’t sell. Of course, he can sell. He’s the president.

But selling hope ain’t selling war. If this was still the Bush administration, old Muammar el-Qaddafi would already be locked up in Guantanamo and his nation renamed Halibyarton. Hell, Obama is so non-committal compared to Bush that even the French beat us into Libya! And the French haven’t beaten us into a conflict since Vietnam.

It has to be understood by now that we only quarrel with nations in which we have either a current or potential vested interest in oil. Following through with these interventions and selling it with purpose and pizzazz is a lot easier when you control the timetable like we did in Iraq. But when the world is in freefall, our decision to only aid protestors in oil-rich countries exposes our hypocrisy in the worst way. The contrast is too stark for our public line of promoting democracy to be credible any longer.

Let’s go back to the French and dissect their actions for a moment. For years I’ve assumed French foreign policy consisted of doing the exact opposite of America because, well, they’re French. That’s what they do. It turns out their motivations might be more similar to our own than I thought. They have routinely criticized our military actions abroad for being examples of disingenuous imperialism. America being America. Then, before you know it, they’re bombing Libya first and asking questions later.

Makes you wonder who’s in charge over there. Consider the following: Total S.A., the largest company in France, is a $150 billion oil company with massive holdings in Libya and considered one of the “Big Six” in private, non-state-controlled oil companies globally. Now consider that Qaddafi declared that he would ban Total S.A. and all “western” petroleum companies from Libya if the insurrection continued. Sacre bleu! Them’s fighting words, even for the French. Hence the military action. Remember, though. They’re fancier than we are. They like their hypocrisy with a side of arrogance and a glass of disdain.

That still doesn’t answer why the Obama administration would choose this “humanitarian” mission over involvement in other nations whose citizens are being abused by dictators. As Americans we would like to think we are there to stand behind and beside anyone in the world being oppressed and abused. But we’re simply not. We are intervening in Libya because it poses an interesting financial proposition to the oil barons who truly run this country. Make no mistake, the world is experiencing Peak Oil. It’s a natural and unavoidable phenomenon that is beyond theory. It’s real. More to the point we are experiencing Peak ‘Cheap’ Oil. We have discovered new, incredible ways of obtaining fossil fuels but they are expensive to acquire and often difficult to refine. The type of crude oil that Libya offers is the stuff dreams are made of. With China fast acquiring African contracts and (get this) ignoring human rights in places like Sudan (shocking for China, no?) the race is on to tap into the last remaining pure crude on the planet.

The United States already imports almost two million barrels of oil per day from the African nations of Nigeria, Angola, Algeria and Gabon. Getting rid of the Qaddafi dilemma and adding Libya to the mix would be a huge win for the Big Six oil companies in the world. Crude like this is hard to come by, and so is a straight answer from politicians controlled by oil companies. C’est la vie.

$4 Per Gallon: Beating The Oil Drum

America and oil. Perfect together.

Americans are being warned about $4 gasoline at the pumps as an impending and potentially persistent reality. In actuality we’re really being sold on this proposition by the same people who are obfuscating the facts behind what is essentially a looming consumer economic crisis. The triumvirate of the federal government, oil companies and major financial institutions are at the core of disseminating information about, and controlling the pricing of, oil and the varying distillates it produces. I use the term “triumvirate” loosely as it presupposes a separation among the three entities when it has become increasingly apparent they are fused into a singular, inseparable juggernaut where players move freely through revolving doors interconnected through a labyrinth of commissions and exchanges that empty into the special bureau of greed and codependence.

Listen closely to what it is we’re being sold. We’re being fed a barrage of reports about two major drivers of oil prices: demand and unrest. The latter refers to the remarkable and unrelenting spread of democratic uprisings in the Middle East and Northern Africa. While the situations in Egypt and Tunisia had little immediate impact on oil prices because they are marginal players in the energy field, Libya and Bahrain have had a dramatic effect on oil prices because they are fundamentally oil-based economies. (Bahrain, by the way, is half the length and width of Long Island.)

Yet not only does the United States maintain a military base in Bahrain where demonstrations have been organized and peaceful after a shock of initial bloodshed, but Libya produces surprisingly little oil considering the ripple effect the burgeoning civil war is causing. Moreover, the war is being funded by the continuance of oil production operations, which neither side can afford to sabotage to the point of paralysis. The upshot there is that of the 2 percent of global oil production Libya claims, most of it will continue to flow. That being said, suppose for a minute it is halted completely. How could losing temporary access to 2 percent of global production account for a 33 percent increase in pricing? It doesn’t, which leads us to the demand question.

The purported rise in global demand is being attributed to the growth in demand from developing economies and the global economic recovery. Yet in real GDP terms and with respect to indicators such as manufacturing, shipping, job creation – in short, anything that isn’t the Dow Jones Industrial Average – the global economy is still limping toward pre-recession, pre-housing bubble crash levels when oil hovered around $70 per barrel. And even at this level, several commodities experts and economists theorized that as much as 40 percent of the $70/barrel figure was pegged to speculation in the financial markets and not market forces such as supply and demand.

In regards to new demand from developing nations, new areas of production in Canada and Africa as well as deep-sea, offshore drilling are keeping pace with demand as evidenced by the sustained levels of reserves around the globe. Even the Obama administration, which has stated that tapping our own strategic oil reserves is a viable option to increase supply and suppress oil prices, admits in the same breath that supply isn’t the issue. This is hocus-pocus to distract us all from what the actual issue is. For clarity on the real reason behind the spike in oil prices, one need look no further than the mini-oil crisis in the summer of 2008 and the federal government’s response in the months, and now years, that followed.

CLICK HERE TO READ THE LONG ISLAND PRESS COVER STORY ABOUT THE OIL SCANDAL OF 2008

When the price of a barrel of crude oil topped $145 in 2008, rampant speculation was ultimately blamed for the anomaly but only after the major banks and trading institutions could no longer blame increasing demand with a straight face. They simply pushed that line too hard to keep up the ruse. If ever there was even a question about the role of speculation and the government’s willingness to cover for the big banks, all was answered in my mind by the U.S. government response, or lack thereof.

Federal regulators made a big fuss over the creation of more stringent regulation on the commodities exchanges by moving oil trading from opaque over the counter (OTC) exchanges to more “legitimate” exchanges with greater transparency. Or so we were told. The big winner in this move: The Intercontinental Exchange, or the ICE. The ICE is aptly named because any attempt to investigate this exchange ends up cold. Here’s where it gets interesting and perfectly illustrates the symbiotic relationship between the federal government and big banking.

The most helpful context I can place this explanation in is to stress the point that the ICE is a business. It was established for the purpose of providing an efficient electronic trading infrastructure for energy commodities. Trading energy futures before the Atlanta-based ICE was established was confusing, inefficient and antiquated. But the ICE was a small operation until then-President George W. Bush granted it status as a foreign exchange because it purchased a trading desk in London even though the entire trading infrastructure was based in Atlanta. Foreign exchanges aren’t subject to the same oversight as domestic ones. So even though the Commodities Futures Trading Commission (CFTC) interacts with and governs some of the procedures at the ICE, no one can actually see who is doing the trading. This one small regulatory change put the ICE on the map and set the groundwork for one of the greatest, yet most obscure, con jobs ever pulled on the American people.

I call it a con job because the ICE falsely professes to be a bastion of transparency, going so far as to describe itself as “an alternative to the previously fragmented and opaque markets.” So let’s be transparent about this supposed transparency the ICE purportedly affords. It has nothing to do with the ability to witness transactions or those who are doing them, but to simplify the transaction process. It’s the equivalent of your bank offering online banking for your checking account. It’s fast and easy but doesn’t mean your neighbor can see you doing it.

Now consider who is doing the trading. Are you? My guess is no.

The only ones with the financial strength to risk betting on oil futures that would also benefit from anonymity are financial institutions and oil companies themselves. And that’s precisely what they’re doing. Now that you’re armed with an understanding of the fundamentals behind the commodities market, take a gander at the incestuous family tree of oil trading. Once you follow the money you’ll never again question why prices at the pump are so high.

• The ICE is a public, for-profit business traded on the New York Stock Exchange that takes in almost one billion dollars in transaction fees from commodities trading and has performed better than all other major exchanges in recent years.

• The founders of the ICE are Morgan Stanley, Goldman Sachs and British Petroleum (now BP)

• Morgan Stanley is not only a financial institution. If you add up their direct holdings in the oil business, they would be one of the world’s biggest oil companies.

• Gary Gensler, chairman of the CFTC, is a former Goldman Sachs partner

• Jeffrey Sprecher, chairman and CEO of the ICE, is on the CFTC Energy and Environmental Markets Advisory Committee alongside representatives from JP Morgan, Morgan Stanley, Goldman Sachs and Merrill Lynch

The takeaway: The government has cleared the way for banks and oil companies (sometimes one in the same) to determine the price of oil by investing large sums of money no one can see on a trading exchange they own and direct.

If you follow this logic, dig this scenario. (Or “digg” it if you’re reading this online – thanks in advance for the plug). Instead of cracking down on this legalized price-fixing and collusion scheme, the government rewarded everyone involved. In 2009 it granted the ICE the ability to trade credit default swaps (remember those?) in order to provide “more transparency” to these troubled investment vehicles by moving them from OTC exchanges. Sound familiar? The ICE got this part of their exchange up and running in 2010 ahead of schedule.

With the regulatory wind of the White House at their backs and a gullible public duped by propaganda about unrest in the Middle East being responsible for the spike in oil prices, Wall Street is having its way with us all.

In case you were wondering what their take on this sorry state of affairs is, Morgan Stanley analysts David Greenlaw and Ted Wieseman offer the following sentiment: “Of course, the increase in oil prices transfers income (and wealth) to oil producers, and the effect on global growth will depend on how the producers spend their windfall.” A rhetorical question if ever there was one; after all, when’s the last time ExxonMobil cut you a check? 

So the next time you’re gritting your teeth at the pump and cursing the day you walked into the SUV dealership, you’ll know who’s really taking your money. Unfortunately, you’ll also realize that there’s not a damn thing you can do about it. 

CLICK HERE TO READ JED MOREY’S RESPONSE TO THE BP OIL SPILL AND OUR OIL ADDICTION