“I believe this country was founded on a simple idea: that every person deserves to be treated fairly, by each other and by their government.”
Really?
Several years ago, Joseph P. Kennedy III’s father conspired with Citgo Oil, a Venezuelan state-run petroleum company, and, indirectly, with Venezuelan dictator Hugo Chávez to provide cheap fuel for America’s poor. While Joseph P. Kennedy II’s plan to provide free fuel oil to poor Americans certainly had noble intentions, the ends do not justify the means. Wittingly or unwittingly and despite his good intentions, Joseph P. Kennedy II was a stooge. He furthered a foreign dictator’s interests by advancing Chávez’s anti-American propaganda efforts.
Some might call that treason.
While Joseph P. Kennedy III should bear no responsibility for his father’s actions, he does deserve censure for defending them. In an interview today, the political scion’s defense for his father’s actions was as follows:
In essence, Kennedy is rallying to his clan rather than to his flag. At least, I hope he considers the American flag his own, considering the side on which he puts himself in this argument. In defending his father, he engages in the following tactics:
- Obfuscate his father’s facilitating a foreign dictator’s deliberate propaganda campaign to foster internal strife and dissent during a period of severe economic weakness
- Cast aspersions on the legitimate profit-making pursuits of American business interests engaging in responsible capitalism
Whose side is this guy on?
Kennedy is running for Congressional Representative, not Kennedy clan apologist. He would do well to remember that.
The choice is clear:
Voters in Massachusetts’ Fourth Congressional District can choose either an entitled apologist for his family and that family’s inexcusable collusion with a foreign dictator, or they can choose a military veteran who raised himself up by his own bootstraps like Sean Bielat.
Reflections of a Rational Republican 
How on earth is that wrong – I was strongly supportive of that plan, being from a part of the Northeast where the poor really suffer high fuel oil costs. Of course, I also buy my gas at the local Citgo (for convenience, not out of any political position). How could Joseph Kennedy II’s work to help the poor hurt the US? So what about Chavez’s propaganda — who cares? If letting some dictator spew a few anti-American phrases gets fuel oil to our poor, that’s a price I’m willing to pay!
Let’s reframe it. If Adolf Hitler had offered Americans free fuel oil just before World War II, would it be right to accept it?
It’s usually a sign of a weak argument if you have to start making comparisons to Hitler. I don’t see any comparison in these cases – we buy oil from lots of dictatorships or companies in countries run by dictatorships. If the Saudis offered free oil (and arguably they are more repressive than Chavez) I think we’d grab it with a gusto. Chavez is not a good guy, but he’s more of a Putin than a Hitler (and much less important than Putin).
I don’t think it would be good to accept free oil from the Saudis either unless the terms were explicit. Otherwise, we accept undue foreign influence in our political affairs. After the first Gulf War either the Saudis or the Kuwaitis offered each American serviceman $10k for their service, but President Bush rejected it, declaring that the American military was not a group of mercenaries.
LOL. Yes, Hitler is very relevant, insofar as he’s the patron saint of Republican foreign policy. Everyone is always Hitler– Gorbachev was Hitler, Saddam was Hitler, Qaddafi was Hitler, Ahmadinijad is Hitler. And now the two-bit despot Hugo Chavez is Hitler, because he
launched a war and committed genocideprovided oil for poor families.Apparently you’ve come to terms with the fact that there is no such thing as a rational Republican. I don’t blame you– I certainly wouldn’t want to have to defend anything the Republican Party ever does either.
I’m clearly not arguing that Chavez is an enemy of the US because he’s provided free oil to US citizens. He’s an enemy because he supports terrorist groups like FARC, harbors Iranian Revolutionary Guard Corps personnel in his country, and has sought to destabilize Latin American allies like Colombia.
That’s interesting. Apparently, you become Hitler if you support bad people.
In the 1980s, we armed Saddam Hussein, Guatemala’s Rios Montt, Manuel Noriega, and Jonas Savimbi.
So: Ronald Reagan is Hitler too.
Back here in reality, Chavez is a mere despot. The world is littered with men just like him. Hitlers, happily, are less common.
Fine. You got me for engaging in reductio ad Hitlerium.
Uncle. 😉
Ha, ok.
I still don’t see why accepting oil for poor families is a bad thing here. It didn’t give Chavez magic powers or anything. He remained what he was, a blustering dictator. I don’t see what advantage it gave him, or how it hurt us. What’s your non-Hitler reason for being so upset about it?
And I take it you’ve come to accept that, in today’s party, there’s no such thing as a rational Republican. On this blog, you’re looking for Kennedys and colleges and media outlets to get mad at, and wondering whether we’re going to attack Iran, but a quick glance indicates that you haven’t mentioned any Republicans since around January. Like I said, I don’t blame you– I wouldn’t want to have to defend GOP leaders like Rick Santorum, Mitt Romney, Eric Cantor, Mitch McConnell, John Boehner, et al.
The argument is that Americans ought not actively support the propaganda efforts of its enemies.
You’re retreating to the use of emotional language in lieu of engaging in rational analysis.
What did Chavez gain from sending oil to the US? What did the US lose? What were the tangible real world effects?
Certainly, we can all agree that accepting cheap fuel is light years less objectionable than the above-mentioned 1980s US “collusion with foreign dictators” such as Saddam Hussein.
This is in no way comparable to supporting Saddam Hussein in the 80s. He was an ally at the time and a balance against Iran.
We also aren’t talking about the infraction of a government here. We are talking about an individual American citizen colluding with a foreign government hostile to the United States.
Do you think it is okay for American citizens to aid its enemies, regardless of the ends? You are basically arguing that the ends justify the means.
Did this action hurt the US? Probably not, but that has more to do with Chavez being a very stupid dictator, than anything else.
Well, OK, we can compare it to the 1980s-era selling of arms to Iran, then.
You’re retreating to emotionally resonant, fun-to-say, outrage-drenched terms like “colluding with a hostile government,” “aid our enemies,” and “propaganda victories”. But you are unable to specify what, exactly, is the nature of this “aid” that Venezuela received, or what Venezuela “won” with its “victory”.
It appears, then, that the answer to the question, “what is the disadvantage to the US, and the advantage to Venezuela, of this action?” is “none whatsoever”.
It’s not an ends and means thing, but you’re tending toward seeing it that way because Republicans believe that morality is defined by identity. (Certainly, this is the view of the GOP base now marketing itself as the “Tea Party”). This flies in the face of the conventional Western philosophical view that morality has to do with actions.
The classic ends vs. means question is, “is it OK to do bad thing X in order to achieve good result Y?” That’s not our conversation.
I am saying, “Chavez did good thing X, which apparently resulted in zero bad consequences. So, it’s not a bad thing.” You’re saying, “Chavez did good thing X, resulting in zero bad consequences. But Chavez is by definition bad, so when he did good thing X, it became a bad thing by virtue of his badness. Therefore, I don’t like the Kennedys.”
No it is not comparable to selling arms to the Iranians as that was an act of a government, not a private individual. Though I do agree it was equally wrong.
The logic you are using is the same logic that led people like Bradley Manning to commit treason. Just because a private American judges that an action is harmless does not automatically justify his actions.
This isn’t a moral argument at all. The question is: did this American citizen collude with a government that was hostile to the United States? The answer is unambiguously yes.
You cannot judge someone’s actions after they betray their country, and say, “Well, no harm. No foul.” The world doesn’t work that way.
Receiving oil != releasing classified material.
Nor is it “betrayal”.
You’ve said “This isn’t a moral argument at all”, just after claiming that “You are basically arguing that the ends justify the means.” Those views seem to me to be in tension.
You just seem to have this unshakable belief in your heart that Chavez = Hitler, so whatever he did was evil and un-American, and everyone who ever said anything to him other than “rot in hell” is also a bad person. You haven’t offered any reason as to why receiving oil is bad, other than “Chavez is bad, and we must shun him, lest we betray America.” To me, Chavez is a buffoon who happened to do something one time that worked out well for Americans.
As to saying mean things to Chavez, here is King Juan Carlos of Spain– in my estimation, a greatly underappreciated statesman– telling him, “Why don’t you shut up?”: http://www.youtube.com/watch?v=X3Kzbo7tNLg
I agree that releasing classified info is a greater crime. What the two have in common though is they both involve an American citizen acting against the United States government’s interests. Accepting free oil is similar to a politician accepting campaign donations from a foreign government. Will the world end if this happens? No. However, it is frowned upon (and possibly illegal) because it grants a foreign citizen or government undue political influence. By pandering to the poor, Chavez was directly trying to influence the American political process. By aiding Chavez, Kennedy participated in undermining the Republic.
I quit buying gas from Citgo a few years ago because of Chavez’s anti American sentiments, but I must be missing something here. I agree that Citizens Energy should not be buying from Venezuela, but why is it OK for business to do so. I’m all for free market capitalism, but if we use your analogy it would be wrong for us to accept free oil from Hitler but it would be OK for American Businesses to buy oil from Hitler and resell it. That might not be illegal, but it sure would be unethical and I would think twice about doing business with such a company.
The problem is on many levels. First, the Hitler analogy is just wrong – Chavez is a petty authoritarian like so many in OPEC, Russia and elsewhere. We do business with them all the time. Second, oil is an international commodity. We don’t hurt Chavez if we don’t buy oil from him, he’ll just sell it elsewhere. To me that makes a boycott of Citgo misguided. Moreover, the deal for fuel oil was through Citgo, a legitimate business. Finally, who cares about Chavez? He’s a bit of a clown. He gets no real help from the deal and poor people get cheaper fuel oil. We win on that deal.
Chavez certainly is a clown and probably not much of a threat to us, but his rise to power could serve as an important lesson. After a failed coup, he came to power by a legitimate, popular vote. Since then he has socialized his countries’ healthcare, education, and petroleum company. ( some may reasonably argue that our current President has the same aspirations) He successfully overturned term limits for elected officials paving the way for him to become another crack-pot dictator. He has recently repatriated some of his countries gold reserves, possibly to pay some of the debt his socialist programs have incurred.
Chavez aside, the point I was trying to make was that even though I would not want another Kennedy in Washington, His argument that …”To single out my father’s company, Citizens Energy, because they receive a tiny fraction of that and give that away to the poor, and completely ignore the huge multibillion-dollar national and international companies that make huge profits off the oil is hypocritical and irresponsible.” Seemed reasonable to me.
[You’re retreating to emotionally resonant, fun-to-say, outrage-drenched terms] CIP: “…though I would not want another Kennedy in Washington…” Can you objectively discuss this issue when you state things like that?
Yes, I can be objective. I would not have defended JPK3’s argument if I wasn’t. it is possible to understand a specific point a person is trying to make, without agreeing to their fundamental political stance. I was merely trying to clarify that point. The Kennedy family history is fundamentally liberal. Therefore I could reasonably conclude that JPK3 would also be liberal. Because I do not agree with most liberal ideologies I would not like to see another Kennedy in Washington. There’s nothing emotionally resonant or outrageous about that.
Point taken
We should care about Chavez, because he’s been allowing Iranian operatives to operate out of Venezuela. He’s also tried to destabilize allies like Colombia and has supported terrorist organizations like FARC.
The fundamental difference is that by buying something from someone, the quid pro quo is explicit – money for oil. It ends there. When someone gives something for free, there is still a quid pro quo, but it’s not explicit. In this case, the quid pro quo was oil in exchange for undermining the US government. There is a huge difference between these two things.
Undermining the US government? Look, most people don’t even know this happened or care. It didn’t hurt the US a bit. It may have helped some people through the winter. We’ve given aid to regimes run by people worse than Chavez.
Sure it did. The US government has had to spend millions if not billions of dollars to fight a counterinsurgency in Colombia over the last decade or so. It wasn’t in the news much if at all, but Chavez’s actions didn’t help, not to mention the spate of American kidnappings that went on at FARC’s behest.
The bottom line is that unless we want to do to Venezuela what we are doing to Iran – actually boycott buying their oil — it’s not wrong for a private group to work with Citgo to try to get them to give oil for use for the poor. That deal to me is irrelevant to the nature of the counterinsurgency in Columbia. I mean, saying Chavez’s actions “didn’t help” is pretty mild. I don’t see any reason to condemn the idea. That doesn’t say anything about the Congressional race — I’m not trying to say people should vote for Kennedy, it sounds like Bielet is a quality candidate. I just wouldn’t consider this a reason to vote one way or the other, if I lived in that district.
I think we have to agree to disagree. I believe J3K is defending the actions of his father, who furthered the agenda of a foreign government with interests that oppose those of the United States. It is that simple to me.
I don’t see any concrete way he ‘furthered the agenda’ of Chavez. One could argue he hurt Chavez concretely by getting oil. I guess I can’t see any concrete result of that deal that hurts the US in any way.
I get what you’re trying to say here, but your statement has to do with economic ideals that might be, (not to sound condescending) a little over the head of most average Americans. Most people are going to look at the moral arguments that it if it is wrong for the government to do business with a regime hostile to American policy, then it would be immoral for American businesses to deal with them as well. Another more liberal argument,( one with which I disagree), would be that it is OK to do business with our enemies as long as it is for humanitarian reasons and nobody profits monetarily from it. Based on the quote in your post, JPK3 seems to have that smooth tongued ability to make a moral argument that most Americans can understand. Add that to his cache as a Kennedy and, despite his inexperience, he might be a hard candidate for Bielat to beat.
That’s fair.
What IS germaine here is that Josheph Kennedy III is running, not on a platform for his record of service, but on the legacy of his family. He is uniquely unqualfied to be a U.S. Representative. It is the mystique of the Kennedy name that has anyone even paying attentiion.
What Hugo/Citgo represent is not a major national security threat to the United States, but the symbolic end point of the decline of the Kennedy name. Made famous by the heroic service of Jack Kennedy, both as a Naval officer in the South Pacific in WWII, and staring down Castro and Kruschev in the “Cuban Missile Crisis” as President, it has declined to a family most recently pandering to Fidel Castro’s newest incarnation, Hugo Chavez. And, of course, in the process, the wildly rich Joe II is making high 6 figures to seal his hypocracy.
The Kennedy family has gone “From HERO to HUGO” in two short generations….
I agree, Chip.
What I find entertaining is how he has been labeled. For once a leader stands up to the mighty USA, refuses to follow the protocols of the Chicago Project, and there is nothing we can do about it. So he gets labled a tyrant, a dictator, and US televangelist actually says he should be assasinated. The only reason Chavez is an enemy of he State is that he refuses to obey our orders. How horrible of him. Nice article Sean. I find it not very rational but rather dogmatic….maybe you should call Chavez a slut.
Eric,
Chavez has clearly done more than just not agree with US dictates. He’s become a conduit for the transfer of Iranian agents into the Western hemisphere, he’s sought to destabilize our Latin American allies like Colombia, and supports terrorist organizations like FARC.
How you can admire someone like that is beyond me, but hey, you think it’s rational, so who am I to stand in your way?
Sean,
It isn’t that I admire him (well, I guess I do in some ways) as much as I believe I understand his perspective. Growing up I was always one of those kids that chose to spit in the eye (literally and figuratively) of bullies. Yes, I had my share of ass-beatings. But I never cow-towed to bullies and I stood with dignity. Likewise, Chavez has thumbed his nose at the US. I am not trying to justify all of his activities. But in comparison you certainly can’t label all of our foreign policy decisions as altruistic.
Historically any time a leader thumbs his nose at the US he is labeled as a tyrant and we facilitate regime change. It is no different in Venezuela. Just so you know I am a veteran, I love this country, and I believe in Democracy. But I do not think that every stance and the resultant protection of US interests are justifiable, ethical, or moral. Sometimes “tyrants” just want respect and to sit at the big boy table. And if they aren’t subjugating the rights of their citizens or marauding the respective country’s coffers, why shouldn’t they receive some level of respect?
Is it okay for the US to engage in espionage but bad for others? If your answer is an unequivocal YES, then we have a major philosophical chasm between us. But keep in mind we have been engaging in the same activities for 50 years. Just because it is in our best interest does not make it righteous.
I find it hypocritical that the United States is labeled as a bully by many regimes that treat their own people with inhuman disrespect. We have labeled certain men as tyrants because of the way the treat their people and neighboring countries. We supply a lot of humanitarian aid to other counties and when we free the world from an evil dictators(again with the Hitler analogy) we help to rebuild the county afterward. That is the opposite of what a bully would do.
I would never deny the great amount of foreign aid the US supplies. However, you are fooling yourself if you think the US is not often a bully. You are also fooling yourself if you believe the only leaders labeled as tyrants receive that title simply because of their domestic policies. There is a loooooong history of the US imposing policies on nations and then facilitating regime change when the leaders don’t want to honor those policies. If you don’t believe me then you need to read some more political history. The US has done it again and again. Read about Keynes and the Chicago Project. Read about the Shah of Iran. Read about Saddam Hussein (most definitely a tyrant). Saddam did not become who he was without help. And then he became crazy with his lust for power and control. But who helped him get there? We did. We sold him weapons of mass destruction which is the only reason we believed he had them and that he had initiated his own development programs.
I am not for a second proposing that foreign leaders labeled as tyrants are heroes. Yes, the world would be a different place had the US not jumped into WWII. But please don’t be naive in thinking that all of our foreign policy is based solely on the US being heroes.
Yes, Chavez’s approval ratings are much lower than they were. And he is now manipulating their democratic processes. But to my knowledge he isn’t torturing or killing people and he is not building mega-palaces or statues to fulfill his ego. I have trouble understanding why you think of him as a crackpot?
Eric,
I understand the underdog mentality. I’m the same way, just not with Chavez.
I also am fine with countries engaging in espionage so long as everyone who is caught understands that they can be executed for treason – for any country.
Agreed, all should be accountable for their actions.
Since when does standing up to the “mighty USA” make one heroic? Chavez is labeled a dictator because of his political stance, not because he is anti-American. Like most crack-pot dictators he greatly overestimates how much he is loved by his people and the rest of the world. He doesn’t stand up to the US because of idealogical differences, but because he thinks it makes him look powerful in the eyes of the world. It reminds me of an experience my husband had back when we were dating. He used to do part time security work at some really rough bars. He is a fairly big man, over 6ft. Men of much smaller stature, who would rather spend their time and money drinking, womanizing, and otherwise behaving disrespectfully, would regularly try to pick fights with him,not because they were intimidated by his morals, but because their machismo caused them to think that if they could take down a big man, then that would make them a bigger man.
Last time I checked, the standard of living in Venezuela had a slightly lower standard of living than the US…ie their middle-class are our poor and their poor are our homeless. Yet instead of getting every dollar he can from oil exports to help his own people, he takes a lower price for what he exports to Joe for Oil for propaganda purposes.
That’s very true. Chavez has nationalized nearly every sector of Venezuela’s economy, to the point that entire industries are languishing. In fact, Chavez had to cancel his free oil program in 2009, because he was running his economy into the ground. The Economist magazine did an excellent piece on this mismanagement a few months back and actually quantified the impact. Food shortages are more common, steel production is down, oil production is down, and electricity blackouts are more common. It’s exactly what one would expect from a socialist dictator.
My support for Sean Bielat has nothing to do with who his opponent is. I supported him ($) in the last Congressional election. I think he would be a much better Congressman than any of his opponents.
I agree, Bee!
Hi Sean,
Why did the 2002 Chávez coup d’état fail?
Good point dugmaze. I am sure there weren’t any (American) “foreign advisers” helping to try and stop Chavez.
The CIA funded the business leaders who overthrew Chavez but millions of people flooded the capital in protest and the conspirators returned him. Hardly an oppressed people by any definition. One of the tactics the right used was controlling the media. I believe that’s why Chavez nationalized the media.
Nationalizing is what we should be doing because the alternative is complete corporate control like here in the US where our media ranks about 47th in the world. Nationalizing doesn’t mean takeover. it means run by the government for the sake of the people. Feel free to watch Venezuelan TV to see news stations bashing Chavez. He does not control the content of the media. Would it be the same if corporations owned them?
Everything the right puts out against Chavez can be easily researched.
“The CIA funded the business leaders who overthrew Chavez but millions of people flooded the capital in protest and the conspirators returned him. Hardly an oppressed people by any definition.”
That doesn’t mean Venezuela is doing right by his people. The poor support him because he provides them with handouts. Anyone with even a rudimentary knowledge of economics knows that this sort of policy is unsustainable in the long run. Nearly a decade into his dictatorship, there are chronic food shortages. No one in Venezuela is better off.
“Nationalizing is what we should be doing because the alternative is complete corporate control like here in the US where our media ranks about 47th in the world.”
Please tell me you’re joking. After Venezuela’s widespread nationalization, the country is in a shambles. Don’t take my word for it. I derived these statistics from The Economist, a British newspaper that is far less biased than most American sources:
After almost a decade of Bolivarian socialism:
1. By mid-2011, food prices were almost 9 times higher than when Chavez instituted price controls vs. wages that rose 40% less
2. Consumer prices increased by 27% in 2010 vs. the 6% average for Latin American countries
3. Price controls have reduced the availability of staple goods including cooking oil, chicken, powdered milk, cheese, sugar, and meat
4. Thanks “to incompetence and corruption, vast shipments of food rotted before reaching the shops.”
5. Chavez packed PDVSA, the state oil firm “with loyalists, starved it of investment and used it for social spending, cutting its output from 3.3m barrels per day (b/d) in 1998 to around 2.25m b/d, according to industry estimates. Of that, some 1m b/d is sold at subsidised prices at home or to regional allies, leaving just 1.25m b/d for full-price exports.”
6. “Meanwhile, the president’s hostility to business has devastated the rest of the economy. He has nationalised hundreds of companies and trumped up charges against their owners, causing much of Venezuela’s private sector to shut up shop and flee. As a result, the country has seen vast capital flight, and must import many goods that it used to produce. Non-oil exports have ground to a halt: petroleum now accounts for 92% of its dollar intake.”
7. “Since the 2006 election Mr Chávez has nationalised the main telecoms, steel and cement companies, the Caracas electricity distributor, and a string of oil-service and food companies”
8. Chavez’s nationalization of electric utilities has predictably been disastrous. Many “towns and cities have suffered daily power cuts of two hours or more, as well as unscheduled blackouts that sometimes last several times as long.”
9. “Paradoxically, despite the takeovers, the state’s share of GDP seems still to be around 30%, the same as it was in 1998. That is partly because the private sector expanded rapidly during the 2004-08 oil boom. But it is also because many nationalised companies now produce less than when they were in private hands.”
10. “Much of the food industry has been confiscated in order to “ensure food sovereignty”. But the result has been a sharp increase in imports. Earlier this year, more than 130,000 tonnes of decomposing food imported by PDVAL, an arm of the state oil company, was found in ports and on wasteland.”
11. “The construction industry has been badly hurt by nationalisation. Cement and steel rods have become scarcer (there is a thriving black market in both). Sidor produced 4.3m tonnes of steel in its last year in private ownership; this year it hopes to make 2m tonnes. Another reason that housing schemes have slowed or halted is that the government has banned developers from adjusting prices in line with inflation, which is running at over 30%. Earlier this month Mr Chávez expropriated six new estates under construction, to the horror of most buyers. Developers, the president says, are “bandits” who will not be compensated for the seizure.”
12. “By the government’s own reckoning, it has confiscated some 3m hectares (7.4m acres) of farmland, and plans to seize another 450,000 hectares next year. Although the 1999 constitution guarantees property rights, successive changes to the land law have given the government the right to seize any farm it takes a fancy to, in most cases with little or no compensation.”
Do you really still support nationalizing American industries? REALLY?
“Don’t take my word for it. I derived these statistics from The Economist,”
This is why I encourage everyone to do their own research. It’s ok to read these author-less opinion pieces but follow up with real historical research.
for example:
“1. By mid-2011, food prices were almost 9 times higher than when Chavez instituted price controls vs. wages that rose 40% less”
All the world’s oil and food prices have risen due to capitalists manipulating the futures market, namely Goldman Sachs.
Plus, you fail to mention the neoliberal 90’s in which corporate controlled farms intentionally left farmland idle to raise imports of food. This left Venezuela dependent on food imports from the United States. They are still developing their own independence from imports by increasing people owned farms.
So the Venezuelan government took back their land from international corporatists and attempt to feed their own people. Good for them.
You should research historical poverty levels, infant mortality rates, education levels, and what ever subject you wish. Venezuela is a role model not an example. Just because they are going through some hard times has nothing to do with their long term goals.
No. Oil, food, and other commodities like gold are up for a variety of reasons, tied mostly to the depreciation of the US dollar, peaking oil production, and uncertainty in the Middle East.
Since global commodities are denominated in US dollars, their prices have skyrocketed. Their prices have skyrocketed because the dollar has depreciated. The dollar has depreciated because the Fed has been printing money to keep the United States out of a recession.
The speculation argument betrays the lack of understanding many on the left have about how the global economic system works. Even in futures trading, there are two sides on every trade. If buyers bid up prices too high, they will lose money for their firms.
Another reason oil prices are so high is that it is becoming more costly to extract it, and production is close to peaking – simple supply and demand. Since food requires fuel for agricultural machinery, and it must be transported to markets, high oil prices push food prices up as well.
“The speculation argument betrays the lack of understanding many on the left have about how the global economic system works. ”
In 2008, Parnon Energy, Arcadia Petroleum, and Arcadia Energy purchased very large quantities of WTI (West Texas Intermediate light sweet crude oil) in Cushing, Oklahoma. They stockpiled this oil driving prices up since WTI set the benchmark for world oil prices.
If you look at chart 1 then you will see oil prices lagging directly behind the oil stockpile.
http://seekingalpha.com/article/272009-the-great-cross-market-crude-oil-speculation-scheme-of-2008
This increase in oil prices raised the value of the oil futures and options contracts. After some profit taking and taking out shorts on the WTI derivatives, they sold off their holdings and profited from the fall in prices.
Here’s the charges the CTFC brought against the speculators for inflating the price of oil in the 2008 crisis:
http://www.cftc.gov/PressRoom/PressReleases/pr6041-11
I understand everyone’s thinking on the value of a dollar and oil prices. It sounds logical but I don’t see any historical evidence for this. Plus, in my opinion, there is always a corruption element in every profit scheme. I’m more likely to believe information if it has a shred of conspiracy theory than one that is just reactionary.
“In 2008, Parnon Energy, Arcadia Petroleum, and Arcadia Energy purchased very large quantities of WTI (West Texas Intermediate light sweet crude oil) in Cushing, Oklahoma. They stockpiled this oil driving prices up since WTI set the benchmark for world oil prices.”
You do realize that when they released the stockpiles they bought in the quantities they bought them, supply and demand would dictate that prices would fall. By releasing the barrels of oil on the market all at once, they would also stand to lose money on their original purchase. In advance of such an action, it is logical for them to short oil futures contracts to hedge against this loss.
Again, this is a typical case of populist politicians not understanding anything about basic economics. They are simply trying to find dragons to slay.
“I understand everyone’s thinking on the value of a dollar and oil prices. It sounds logical but I don’t see any historical evidence for this.”
It happened during the Carter administration. Remember stagflation? The country got out of it when Volcker raised interest rates to the high-teens to rein in inflation.
“It happened during the Carter administration. Remember stagflation? The country got out of it when Volcker raised interest rates to the high-teens to rein in inflation.”
I’ll check that out.
Goldman Sachs speculators are directly responsible for the 2008 food crisis by creating the Long-Only Index Fund. They speculated by continually buying even though prices would fall. This inflated world food prices and led to the Arab Spring and the overthrow of several world leaders.
Did the people investing in these futures do so because of the dollar value? I don’t know.
“Goldman Sachs speculators are directly responsible for the 2008 food crisis by creating the Long-Only Index Fund.”
That’s a fairly specific claim that is difficult to prove.
People who buy and sell commodities know that a depreciating dollar puts upward pressure on commodities prices.
However, I do agree with you that high food prices were the spark that set off the Arab Spring:
https://reflectionsofarationalrepublican.com/2011/02/23/architecture-of-anarchy/
To all posters:
I just wanted to thank everyone for the discussion. While my opinion is of course correct (j/k) I appreciate the differing perspectives and the civil discourse. I am glad this forum exists for that purpose.
Thanks, Eric. We at least strive to be rational here, though sometimes we occasionally miss the mark. 😉