Call to end rogue speculative oil trading

Former Malaysian Prime Minister and architect of developed nation status Tun Dr. Mahathir Mohamad also talked about the ending of speculative and rogue futures oil trading, that has adversely affected so much in the world economy lately and coloured the fabric of societies and lifestyles, across the globe.

The Star has the story:

Thursday July 3, 2008

End oil speculation, says Dr M

By FLORENCE A. SAMY

KUALA LUMPUR: Asean countries should make a united stand at a world forum and demand an end to oil speculation to stop rising oil prices, says former Prime Minister Tun Dr Mahathir Mohamad.

“This (skyrocketing fuel prices) whole thing is due to speculation and not because there is a shortage of oil.

“If there is shortage, then an increasing price will result in increased production. But now, the price keeps increasing but the production remains the same. It is manipulation.

“A few people are making a lot of money. Oil companies are making tons of money. Oil producers are also making lots of money and the people who have this money have to keep it somewhere. If they keep it in any country and buy bonds there, then that country makes money,” he said in an interview on Monday.

Dr Mahathir said it was important to make a stand, just like during the currency crisis previously, but a stronger, and more united one this time.

“For example, we took a stand and condemned currency trading but of course, in the end, we had to devise our own way of overcoming it.

“The world has to tackle this (oil price) problem but it requires a lot of people. Asean countries should demand that this should not go on,” he added.

Dr Mahathir said the Government and people had a role to play in dealing with the current situation.

“The Government must know how to manage the economy during difficult times, and not just in cordial, simpler times.

“They have to sit down, study, get all the details and try to analyse them, and get others who have the expertise to tell you. Only then can you can find a formula to resolve the problem,” he said.

He said one had to face the reality of increasing oil prices, and find ways to reduce consumption.

“During my time, the price of oil was US$30 (RM98  ) per barrel. Today, it is US$143 per barrel. Obviously, you cannot insist on paying the same price.

“It has to be higher but how much higher and at what rate, that is a different matter.”

He said there were many ways to reduce consumption but the Government had to find ways to help the people.

“Every individual has a way of managing himself and the household but the Government has a role to play. It cannot say this is your business and you have to live with it, no. The Government must find ways,” he added.

Dr Mahathir, who is also Petronas adviser, said the national oil company needed to source for oil investments overseas to make preparations before the oil supply ran out.

**************************************

It is now imperative that the Government advocate very strongly the issue of speculative and futures oil trading at international forums and create global level awareness and active discussions, so that this rogue trading is checked and curbed. The price of oil can be reflected on production, actual cost and realistic demand and proper economic forces will determine the market price, instead of artificial forces being manipulated. The price of other commodities, which include food, the most important ingredient to sustain life, will be stabilized and normalized in very realistic positions.

This is something very serious that the Government should do and the nation building rest on the ability to control and manage oil price, the most important commodity in modern everyday lives all over this globe.

*Updated 11.50am

Tun Dr. Mahathir posted a very interesting discussion about this subject in “Malaysia and a world in turmoil”

Published in: on July 3, 2008 at 10:22  Comments (2)  

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2 CommentsLeave a comment

  1. BD,

    Unfortunately Dollah took Tun Daim and Lee Kuan Yew as his advisor. You knowlah Tun Daim – a speculator himself.

    By the way. how’s TDZ banks in Africa doing, especially in Zimbabwe ?

  2. […] 2008, nothing could beat the adrenaline of month of July. First was the caution and later the call to end speculative oil trading, which is the main factor world economy is brought down to its knees. Then its about a month of […]


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