Oil traders illegally inflated oil prices in 2008, commodity watchdog says
In 2008, two commodities traders conspired to drive up the price of oil, says the Commodity Futures Trading Commission. The two traders, one of whom is named Nicholas Wildgoose, the other of whom is Australian, bought up two-thirds—4.6 million barrels—of the crude oil available in Cushing, Okla., the delivery hub that sets prices for American oil.
According to the CFTC's suit, the traders weren't planning on using the oil. They knew that if they bought up a whole bunch of oil, other people would see a shortage, freak out, and start paying more for it. But these guys knew that once they re-released the oil they'd bought to the market, the price would go down again. They laid bets that the price of oil would decrease, released the oil, and made bank. The CFTC's suit holds the two accountable for $50 million in illegal profits.
The investigation that ferreted these two out grew from the idea that speculators played a role in creating 2008's record oil prices. This scheme allegedly went down before prices skyrocketed, though, so it's mostly evidence that some traders are greedy jerks, not that they collectively decided to stick the rest of us with $4 gas.
- Cornering the oil market is easier than you think , Mother Jones
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