FacebookTwitterGoogle+RedditEmail

Pension Funds and the Price of Oil

New York City

OPEC’s acting Secretary General Adnan Shihab-Eldin has called the high price of oil “unjustified.” Former Opec master Zaki Yamani has reemerged to say that $50-a-barrel oil is “unsustainable,” and he’s predicted another cycle like the late ’70s/early ’80s (which led to a price collapse), because consumer spending and the US trade balance are being affected.  Meanwhile, Qatar’s oil minister Abdullah Al-Attiyah insists the price of oil is out of Opec’s control.

So what’s keeping the price of oil up at $50+ a barrel? The usual suspects are the unregulated hedge funds and derivatives, i.e., swaps, forwards, options, futures.

Economist Catherine Austin Fitts, founder of Solari, Inc. and a former Assistant Secretary of Housing (Bush I), has described derivatives as having “exploded, far beyond the ability of most public and private leaders to understand or explain.”

In the the past year, hedge fund favorites called “spiders” rose 148% in the energy sector of the Standard & Poor’s 500 index. Now we’re seeing hedge fund divisions popping up at leading private equity firms like Carlyle Group, Blackstone and Bain Capital, where pension funds are heavily invested.  But what is not discussed is how much America’s pension funds ­ with trillions of dollars of total investments ­ influence the price of oil.

On the surface it looks like pension funds are just beginning to get into oil stocks ­ as “late oil peaker” Michael Lynch has told me.  Lynch is Director of Global Petroleum at Strategic Energy and Economic Research, an oil and gas modeler, and does work in the short sell market. So it would seem he would know.

Only bits and pieces of the pension funds oil investment picture are obvious. The biggest headline in the past year has been the case of investors in public funds from eight states — Arkansas, Kansas, Louisiana, Michigan (Detroit), New Mexico, Ohio, Oklahoma, Pennsylvania — suing Shell for misrepresenting its oil and gas reserves numbers from December 1999 to January 2004.  Overstating the numbers led to artificially inflated stock prices and the loss of millions of dollars for pension fund investors. Shell eventually downgraded its reserves numbers by 4.4 bb and executive heads rolled there.

Congresswoman Barbara Lee (D-Oakland, CA) has been pressing Calpers, the country’s largest pension fund, to divest from companies in its portfolio doing business in war-torn “oil-rich Sudan.”   And Pennsylvania’s Public School Employees Retirement System has been under scrutiny for investments in Total Fina and PetroChina, both active in Sudan. PetroChina is a subsidiary of China National Petroleum, the world’s fifth largest oil company.

What has been overlooked is the pension fund investment in the S&P 500, 20% of which is energy-related, with the major oil companies represented such as: Conoco Phillips, Chevron Texaco, Valero Energy Corp, Occidental Petroleum Corp, Exxon Mobil Corp, Apache, Unocal, etc.

Calls I placed to Calpers and to Lacera, a California pension fund with $30b in assets, were not returned regarding the extent of their oil investments. But for company shares to remain high, the price of oil has to remain high. And it appears mum is the official word — nobody wants to rock the boat and crash the market.

However, one pension fund insider confirmed the pension funds do indeed have huge investments in oil through S&P alone, “Yes, we’ve become money grubbers,” they said, “hustling the corporations to make benefits payments.” Moreover, the same source said “the boards of directors of the pension funds can’t possibly manage all the investments so they hire managers, like Barclays, who then do their own thing”.

Calpers has agreed to its pension funds being invested in hedge funds as well; Lacera has not. But Calpers and Lacera are each invested in Carlyle Group, Blackstone and other private equity firms. “And once they [private equity firms] have the funds,” said the source, “they can do almost whatever they want with them domestically.”

And they have! This is what Catherine Fitts calls “the Tapeworm”. And the Tapeworm got a lot fatter this week with the teaming up of most of the country’s private equity firms in an $11.3 billion buyout of Wayne, Pa.-based SunGard Data, a company that services Wall Street’s trades and processing of transactions. What does this say about the deck being stacked?

The players were: Blackstone Group, Texas Pacific Group, Kohlberg Kravis Roberts, Providence Equity, Goldman Sachs (private equity) and Bain Capital (founded by LDS celebrity Mitt Romney, who seved as Bain’s CEO before becoming governor of Massachusetts  SUZAN MAZUR: Bush And The Mormons). This consolidation of private equity money has been going on for a couple of years, but the SunGard Data deal was the show stopper.

Fitts, sensing the urgency of starving the Tapeworm, has been advising people through her weekly teleseminars to pool money amongst friends ­ $10, $20, whatever and invest in gold and silver in order to start controlling strategic resources ­ food, water, farmland, seed. She characterizes today’s money as fiat currency and says the Treasury doesn’t control it, that it’s controlled by the Federal Reserve Bank, which is privately-owned and managed, doesn’t provide full disclosure and engages in insider trading and “backdoor huge profits to financial players”.

Says Fitts: “When supply and demand forces can be artificially balanced through covert operations and black budget market manipulations financed by warfare and organized crime, the price can stay managed forever . . . ”

And that roughly explains a $50 barrel of oil.

SUZAN MAZUR reports have appeared in the Financial Times, Economist, Forbes, Newsday, Philadelphia Inquirer (partial list), and on PBS, CBC and MBC. She has been a guest on McLaughlin, Charlie Rose, and various Fox television programs. Email: sznmzr@aol.com

 

 

 

 

 

 

 

More articles by:

Suzan Mazur is the author of  The Altenberg 16: An Expose’ of the Evolution Industry and of a forthcoming book on Origin of Life.  Her reports have appeared in the Financial Times, The Economist, Forbes, Newsday, Philadelphia Inquirer, Archaeology, Connoisseur,Omni and others, as well as on PBS, CBC and MBC.  She has been a guest on McLaughlin, Charlie Rose and various Fox Television News programs.  For a few years along the way she was a runway fashion model, visiting Iran in 1976 as part of a US bicentennial goodwill tour of the Middle East (former CIA Director Richard Helms was then ambassador to Iran and attended the Tehren fashion gala). 




 
  

Weekend Edition
December 14, 2018
Friday - Sunday
Andrew Levine
A Tale of Two Cities
Peter Linebaugh
The Significance of The Common Wind
Bruce E. Levine
The Ketamine Chorus: NYT Trumpets New Anti-Suicide Drug
Jeffrey St. Clair
Roaming Charges: Fathers and Sons, Bushes and Bin Ladens
Kathy Deacon
Coffee, Social Stratification and the Retail Sector in a Small Maritime Village
Nick Pemberton
Praise For America’s Second Leading Intellectual
Robert Hunziker
The Yellow Vest Insurgency – What’s Next?
Patrick Cockburn
The Yemeni Dead: Six Times Higher Than Previously Reported
Nick Alexandrov
George H. W. Bush: Another Eulogy
Brian Cloughley
Principles and Morality Versus Cash and Profit? No Contest
Michael F. Duggan
Climate Change and the Limits of Reason
Victor Grossman
Sighs of Relief in Germany
Ron Jacobs
A Propagandist of Privatization
Robert Fantina
What Does Beto Have Against the Palestinians?
Richard Falk – Daniel Falcone
Sartre, Said, Chomsky and the Meaning of the Public Intellectual
Andrew Glikson
Crimes Against the Earth
Robert Fisk
The Parasitic Relationship Between Power and the American Media
Stephen Cooper
When Will Journalism Grapple With the Ethics of Interviewing Mentally Ill Arrestees?
Jill Richardson
A War on Science, Morals and Law
Ron Jacobs
A Propagandist of Privatization
Evaggelos Vallianatos
It’s Not Easy Being Greek
Nomi Prins 
The Inequality Gap on a Planet Growing More Extreme
John W. Whitehead
Know Your Rights or You Will Lose Them
David Swanson
The Abolition of War Requires New Thoughts, Words, and Actions
J.P. Linstroth
Primates Are Us
Bill Willers
The War Against Cash
Jonah Raskin
Doris Lessing: What’s There to Celebrate?
Ralph Nader
Are the New Congressional Progressives Real? Use These Yardsticks to Find Out
Binoy Kampmark
William Blum: Anti-Imperial Advocate
Medea Benjamin – Alice Slater
Green New Deal Advocates Should Address Militarism
John Feffer
Review: Season 2 of Trump Presidency
Rich Whitney
General Motors’ Factories Should Not Be Closed. They Should Be Turned Over to the Workers
Christopher Brauchli
Deported for Christmas
Kerri Kennedy
This Holiday Season, I’m Standing With Migrants
Mel Gurtov
Weaponizing Humanitarian Aid
Thomas Knapp
Lame Duck Shutdown Theater Time: Pride Goeth Before a Wall?
George Wuerthner
The Thrill Bike Threat to the Elkhorn Mountains
Nyla Ali Khan
A Woman’s Selfhood and Her Ability to Act in the Public Domain: Resilience of Nadia Murad
Kollibri terre Sonnenblume
On the Killing of an Ash Tree
Graham Peebles
Britain’s Homeless Crisis
Louis Proyect
America: a Breeding Ground for Maladjustment
Steve Carlson
A Hell of a Time
Dan Corjescu
America and The Last Ship
Jeffrey St. Clair
Booked Up: the 25 Best Books of 2018
David Yearsley
Bikini by Rita, Voice by Anita
FacebookTwitterGoogle+RedditEmail