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). 




 
  

September 18, 2018
Conn Hallinan
Britain: the Anti-Semitism Debate
Tamara Pearson
Why Mexico’s Next President is No Friend of Migrants
Richard Moser
Both the Commune and Revolution
Nick Pemberton
Serena 15, Tennis Love
Binoy Kampmark
Inconvenient Realities: Climate Change and the South Pacific
Martin Billheimer
La Grand’Route: Waiting for the Bus
John Kendall Hawkins
Seymour Hersh: a Life of Adversarial Democracy at Work
Faisal Khan
Is Israel a Democracy?
John Feffer
The GOP Wants Trumpism…Without Trump
Kim Ives
The Roots of Haiti’s Movement for PetroCaribe Transparency
Dave Lindorff
We Already Have a Fake Billionaire President; Why Would We want a Real One Running in 2020?
Gerry Brown
Is China Springing Debt Traps or Throwing a Lifeline to Countries in Distress?
Pete Tucker
The Washington Post Really Wants to Stop Ben Jealous
Dean Baker
Getting It Wrong Again: Consumer Spending and the Great Recession
September 17, 2018
Melvin Goodman
What is to be Done?
Rob Urie
American Fascism
Patrick Cockburn
The Adults in the White House Trying to Save the US From Trump Are Just as Dangerous as He Is
Jeffrey St. Clair - Alexander Cockburn
The Long Fall of Bob Woodward: From Nixon’s Nemesis to Cheney’s Savoir
Mairead Maguire
Demonization of Russia in a New Cold War Era
Dean Baker
The Bank Bailout of 2008 was Unnecessary
Wim Laven
Hurricane Trump, Season 2
Yves Engler
Smearing Dimitri Lascaris
Ron Jacobs
From ROTC to Revolution and Beyond
Clark T. Scott
The Cannibals of Horsepower
Binoy Kampmark
A Traditional Right: Jimmie Åkesson and the Sweden Democrats
Laura Flanders
History Markers
Weekend Edition
September 14, 2018
Friday - Sunday
Carl Boggs
Obama’s Imperial Presidency
Joshua Frank
From CO2 to Methane, Trump’s Hurricane of Destruction
Jeffrey St. Clair
Maria’s Missing Dead
Andrew Levine
A Bulwark Against the Idiocy of Conservatives Like Brett Kavanaugh
T.J. Coles
Neil deGrasse Tyson: A Celebrity Salesman for the Military-Industrial-Complex
Jeff Ballinger
Nike and Colin Kaepernick: Fronting the Bigots’ Team
David Rosen
Why Stop at Roe? How “Settled Law” Can be Overturned
Gary Olson
Pope Francis and the Battle Over Cultural Terrain
Nick Pemberton
Donald The Victim: A Product of Post-9/11 America
Ramzy Baroud
The Veiled Danger of the ‘Dead’ Oslo Accords
Kevin Martin
U.S. Support for the Bombing of Yemen to Continue
Robert Fisk
A Murder in Aleppo
Robert Hunziker
The Elite World Order in Jitters
Ben Dangl
After 9/11: The Staggering Economic and Human Cost of the War on Terror
Charles Pierson
Invade The Hague! Bolton vs. the ICC
Robert Fantina
Trump and Palestine
Daniel Warner
Hubris on and Off the Court
John Kendall Hawkins
Boning Up on Eternal Recurrence, Kubrick-style: “2001,” Revisited
Haydar Khan
Set Theory of the Left
FacebookTwitterGoogle+RedditEmail