Feds Charge Five Oil Speculators With Manipulating Prices

I find it hard to believe that these are the only people involved. To people like this, $50 million is small change. My guess is, this is just the tip of the iceberg. After all, oil speculation is a major factor in the rising cost of food, too:

New YORK (CNNMoney) -- Federal regulators charged five oil speculators Tuesday with manipulating the price of crude and making a $50 million profit from the scheme.

The Commodity Futures Trading Commission alleges the speculators bought enormous amounts of actual crude oil for sale in Cushing, Okla, during the early months of 2008.

This created a perceived shortage of oil in Cushing -- a major point for oil delivery -- and drove the price of oil futures contracts higher.

The speculators then bet the price of oil would fall by selling so-called "short" contracts to other investors. When the speculators sold their actual oil holdings in Cushing en mass, the price of oil did fall, netting the group a hefty profit.

The alleged scheme took place between January and April 2008, a time when oil prices were gradually climbing toward their all-time record of $147 a barrel set in the summer of 2008.

The price of crude during the months of the alleged misdeeds changed very little, generally staying within a $10 range but the traders made their money off the daily fluctuations. Crude traded at $99 a barrel Jan. 2, 2008, and ended March 2008 at $101 a barrel.

The speculators charged in the suit are Parnon Energy Inc. of California, Arcadia Petroleum of the United Kingdom, Swiss-based Arcadia Energy, James T. Dyer of Australia and Nicholas J. Wildgoose of California.

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