- 75% OF THE OIL PRICE IS HEDGE FUND SPECULATION
TIME FOR TAX MEASURES AND A SUPRISE ATTACK TO SHUT DOWN THE SPECULATORS AND
CUT PRICES FOR THE CONSUMER
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- Oil has now reached the astronomical price of $126 per
barrel, with gasoline at $4 per gallon in many parts of the United States.
The basic economic survival of this country and of much of the world is
now threatened. The current price levels are unsustainable, and are destroying
vital sectors of the economy, while placing an intolerable and unsustainable
burden on working families. It is evident that there are abundant world
supplies of oil indeed, there is a glut of oil on the world market.
There is no shortage. The charlatans who talk about "peak oil"
are stooges of the oil cartel. Exxon-Mobil, Chevron, BP etc. are posting
unprecedented superprofits. Even more important, Wall Street and City of
London hedge funds and investment banks are driving up the price of crude
oil, gasoline, heating oil, natural gas, and other petroleum products.
Every barrel of oil is bought and sold hundreds of times before it reaches
the refinery, and every gallon of gas is bought and sold hundreds of times
before it reaches the pump. The tools of this obscene speculation are derivatives
especially futures, options, and other forms of financial paper based
on financial paper that go to make up the $1 quadrillion world derivatives
bubble which is causing the present world economic depression.
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- It is evident that between two thirds and three quarters
of the present price of oil is the direct result of hedge fund and investment
house speculation. There are indications that the now-bankrupt Bear Stearns
alone accounted for 6 to 7% of the price of oil through its reckless and
irresponsible speculative activities. Goldman Sachs, Morgan Stanley, Citibank,
and JP Morgan Chase, and numerous foreign entities are now totally committed
to oil speculation. If these manic speculators are not stopped, they will
strangle the US economic and bring production of vital goods and services
to a halt. The oil price is also a key factor in creating the sky-high
prices at the supermarket, which now represent a world food crisis, a famine
of vast proportions. The choice is clear: if the speculators have their
way, the American people will perish. We propose to stop the speculators.
Urgent action is now required to enact the following
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- 1. Windfall tax on superprofits
of the oil cartel. All profits above a five-year baseline average should
be taxed at the rate of 50%, to be adjusted upwards as needed. Use the
proceeds to lift the gas tax on motorists, farmers, truckers, taxi drivers,
and the general public, while funding the Federal Highway Construction
Fund at increased levels to create infrastructure jobs at union pay scales
under the Davis-Bacon Act.
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- 2. A Tobin tax or securities
transfer tax (STT) of 1% paid by the seller to apply to all turnover in
stocks, bonds, futures, options, derivatives, and other trading. This would
represent a sales tax on all speculative paper that is bought and sold,
whether or not a profit is realized. This Tobin tax will make all futures
and options trading in crude oil, gasoline, natural gas, heating oil, coal,
and other energy products reportable to the federal government by the speculators,
so federal authorities can pinpoint the worst offenders and denounce them
to the public. The 1% Tobin tax on all futures and options traded on the
forward oil market will apply the brakes to the speculators of all kinds,
including the oil and gas speculators.
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- 3. Impose a 75% tax on
all speculative profits realized through futures and options trading in
the forward markets of crude oil, gasoline, natural gas, heating oil, diesel
fuel, etc. Use the proceeds to create jobs building and maintaining modern
high-technology infrastructure. This will discourage the parasitic hedge
funds and investment houses of Wall Street and London from driving up the
price. Severe penalties in federal prison for those who attempt to evade
of circumvent this tax.
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- 4. Sneak attack to destroy
speculators. The United States now possesses a very substantial strategic
petroleum reserve. This large reserve must not be dribbled away pointlessly,
but must be used for a concerted action to bankrupt speculators and drive
them out of business, while deterring all those who might seek to follow
in their footsteps. Without no advance warning or leaks whatsoever, the
President must release about 25% of the strategic petroleum reserve onto
the market. This must be done by a stealth attack, with the announcement
being made without warning at 3 AM on Sunday morning to take the speculators
completely by surprise.
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- The resulting abrupt fall in the forward price of oil,
gasoline, etc. will bankrupt those hedge funds and investment houses that
are holding long derivatives-assisted positions in the oil market in the
expectation that prices will continue to rise. Other investment firms will
suffer severe losses, and will think long and hard before they ever attempt
to speculate in oil and gasoline again. When the worst offenders line up
in bankruptcy court during the following week, the public will know who
the speculators have been all along. The firms going bankrupt must be thoroughly
audited to determine whether other criminal activity has been taking place,
such as laundering dirty money from illegal narcotics transactions, flight
capital, and other violations of applicable law. The Federal Reserve must
be prevented from extending any credit lines of bail-out assistance to
the hedge funds and investment banks that are caught red-handed and thrown
into insolvency by this operation.
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- It is estimated that this package of measures will reduce
the price of gasoline by about 40-50% within two weeks, and by 65-75% over
six months
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- ACT-INDEPENDENT.ORG
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