Connelly on Commerce

Terry Connelly is dean of the Ageno School of Business at Golden Gate University and is frequently quoted on business, financial, and economic issues by Bay Area local, as well as national, news media.

Several media commentators and reporters have recently raised the question (even at president Obama’s press conference) why the US Government has not commandeered a fleet of supertankers to proceed to the Gulf of Mexico  and siphon-up the oil spill into their gigantic holds  before it reaches the shores of the Gulf states and the wetland breeding ground for endangered fish and waterfowl. They point out that this method was used in the case of a massive spill in MidEast waters by the Saudis, with considerable success.

No direct answer has been forthcoming, from the President or anyone else in authority.

The reason may be that the vast majority of the world’s supertankers are already floating around the world full to the brim with oil purchased for future delivery by commodity traders betting on a rise in future spot prices. Most of these traders took their position, of course, prior to the BP spill in April. But even though the price of oil in today’s  market has declined over 10% e from its 2010  peak due to concerns of about global economic growth being stunted by the European debt crisis that emerged full-blown this May, the traders bets still look pretty good given the prospect of substantial curtailment of offshore drilling activity in US coastal waters for what the Federal Reserve might call ‘an extended period”.  The longer the spill goes on, the more valuable the oil in the holds of the worlds’ supertankers may become.

So the traders who own the oil already fuilling the tankers have no interest in bringing that oil to port just now so that the ships can be emptied for a Gulf of mexico clean-up operation.

And guess who has been one of the biggest speculators in oil for future delivery: that’s right, Goldman Sachs, led by  premier commodities trader Lloyd Blankfein, out there doing God’s work on God’s ocean.

So could one of those inquiring commentators of reporters put in a call to Goldman headquarters and a number of other well-known traders in oil futures to see just who is holding what oil in what tankers parked idly somewhere on the Ocean Blue (or that part which remains blue) waiting for oil prices to head back-up after the ‘offshore shortage’ that is bound to come?

Is it possible that Goldman and others are holding out on the President when his folks call about maybe borrowing the supertanker fleets they have chartered to hold their crude?

Or is it possible that the folks at Goldman could be so  ”crude’ as to be holding out for, you guessed it, some sort of “trade”? Like, we’ll let you have a tanker or two if , say, the SEC could be persuaded to  let us off on a “lesser charge”?

Someone should at least get an answer as to why the  supertankers that are merely storing oil for suture price speculation cannot somehow  be pressed into national service.

blank bounty?

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