We are fascinated by the case that hit the courts this week of commodities traders who manipulated the crude oil market in 2008.
At the time we wondered if this could be happening. It was impossible to tell from the figures and the information available at the time.
It was certainly a possibility.
How do you distinguish between commodity price rises that are caused by supply being insufficient to meet demand …and those that are caused by market manipulations?
Ultimately the consequences at the level of ordinary local people like us are the same. Higher prices at the petrol bowser or the supermarket.
Food commodities also may have been being manipulated.
One of the men accused of the market manipulation comes from Noosa here in Queensland! He is James Dyer. Others are Nicholas Wildgoose and two associated companies: Parnon Energy in the US and the Swiss-based Arcadia Petroleum.
They seem to have illegally boosted oil prices by buying millions of barrels of crude to give the false impression of tight supplies in the market. You certainly have to have a lot of money to do that! Later they dumped it back on the markets. At the same time they were taking short positions on the futures market so they made money both ways.
It is very scary that our essential supplies of key commodities such as oil and food are open to manipulation in this way. These men won’t be the last to try it.
Oil supplies are peaking around the world but illegal activity like this only aggravates the problems.