Sunday night, Steve Kroft of 60 Minutes, presented a story intended to enlighten the TV audience about what exactly happened with those crazy oil prices.
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Eddy Elfenbein of Crossing Wall Street wrote an excellent analysis of the piece for those who live in the real world.
According to 60 Minutes, the surge in oil prices was due to…(wait for it)…deregulation! Yes, it seems that “hedge funds” (cue Darth Vader’s theme) and “speculators” were buying oil in order to make money. If you just toss around these scare words long enough, people will think it makes sense. Somehow this was all due to deregulation. Of course, oil is traded all over the world, but logic doesn’t play a major role in this story.
It’s definitely worth your time to read the whole article.
60 Minutes seems to diss the idea of supply and demand having any influence on oil prices, but deregulation and Enron are prominently featured. Smallpox, anthrax anyone?
Here’s another look from Todd Sullivan, featured on Seeking Alpha. His cribb notes:
A Wall St. cabal controls oil markets that Enron set up to manipulate prices.
In his analysis, Sullivan uses the actual EIA data to set the record straight. (Read the whole article. Great charts and graphs.)
Now, reset your TiVo season pass for this program.