Part two about the Koch Brothers and their shady business practices.
"Koch along with Enron pioneered a number of complex financial products to leverage its privileged position in the energy industry."
Bet you think the Koch Brothers are a couple of Texas oilmen who get out there in the fields with their workers and let that black Texas gold wash over them. Bet you think they are hard at work drilling new reserves so that America’s cars can keep rolling, and its factories can keep manufacturing. Bet you would be surprised to read this:
In 2008, Koch called attention to itself for “contango” oil market manipulation. A commodity market is said to be in contango when future prices are expected to rise, that is, when demand is expected to outstrip supply. Big banks and companies like Koch employ a contango strategy by buying up oil and storing it in massive containers both on land and offshore to lock in the oil for sale later at a set price. In December of 2008, Koch leased “four supertankers to hold oil in the U.S. Gulf Coast to take advantage of rising prices in the months ahead.” Writing about Koch’s contango efforts to artificially drive down supply, Fortune magazine writer Jon Birger noted they could be raising “gasoline prices by anywhere from 20 to 40 cents a gallon” at the time. Speaking with the Business Times, Koch executive David Chang even boasted that falling crude prices in 2008 provided an opportunity remove oil from the market for future delivery:
CHANG: The drop in crude oil prices from more than US$145 per barrel in July 2008 to less than US$35 per barrel in December 2008 has presented opportunities for companies such as ours. In the physical business, purchases of crude oil from producers and storing offshore in tankers allow us to benefit from the contango market where crude prices are higher for future delivery than for prompt delivery.
http://thinkprogress.org/economy/2011/04/13/153206/koch-industries-price-gouging/I seem to remember hearing about another energy giant that made its money from driving up the costs of energy. Who was that? Oh yes,
Enron. As in the manipulation of electricity on the nation’s energy grid in order to price gouge California.
Four years after California's disastrous experiment with energy deregulation, Enron energy traders can be heard – on audiotapes obtained by CBS News – gloating and praising each other as they helped bring on, and cash-in on, the Western power crisis.
"He just f---s California," says one Enron employee. "He steals money from California to the tune of about a million."
"Will you rephrase that?" asks a second employee.
"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.
http://www.cbsnews.com/stories/2004/06/01/eveningnews/main620626.shtmlWe all know what happened at Enron. After the Bush administration failed to act to keep its best campaign contributor from manipulating market prices, a federal judge stepped in to cry “For shame!” That lead to a spate of defections (Skilling), whistle blowing (Watkins) and finally bankruptcy when the Democratic controlled Senate refused to follow the lead of the Republican House and Bush administration which wanted the U.S. taxpayers to give Ken Lay a huge sum of money (read “bailout”) as part of a “financial stimulus package” in the wake of 9/11. Oh, and don’t forget the reason Rice had the plans for the invasion of Afghanistan on her desk and ready on
9/10----the Taliban had nixed a pipeline deal with Enron which was supposed to save the house of cards from collapse.
The Kochs are not oilmen. Oilmen pump oil. The Kochs have a history of making money by
not selling oil. The Bush administration paid them to stash a bunch of the stuff away in the nation’s Strategic Oil Reserve. Just think about that for a moment. Let it settle in. The U.S. taxpayers
paid the Kochs to do what they do anyway---sequester oil in order to make the price rise. Is this a great country or what?
http://www.fossil.energy.gov/news/techlines/2002/tl_spr_rik2002_koch.htmlWe are talking 700 million barrels taken off the market, never to return---until Obama decided to throw a monkey wrench into the Koch Brother’s favorite game by releasing some of that oil this year, just as the Kochs prepared to sell oil at inflated prices. I wonder how much money the Koch’s lost on that financial debacle? And how much more will they stand to lose if regulations aimed at preventing oil speculation go into effect?
The Kochs have been giving money like crazy to the GOP.
http://fightforbetterus.blogspot.com/2011/07/koch-money-fuels-afp-misinformation.htmlAnd that does not count the soft soft money---you know, their political groups like Cato and the Tea Parties which exist to help the candidates who are good for their shady business. Again, I am reminded of Enron and Ken Lay, who, according to one source, gave up to
$25million over the years to the Bushes. Enron got a lot for its money---and when it went bankrupt, it took a lot of people’s pensions and jobs with it.
http://southernstudies.org/2006/01/how-much-did-ken-lay-help-bush.htmlSome may look at the Koch Brothers and their Tea Parties and see hubris and megalomaniacs waiting for a fall. I look at them and see a company that is going to collapse like a jelly fish out of water one day. All it will take is someone in the federal government with the spine of the 2001 Democratic Senate, which "Just said no" to the Enron bailout. Maybe it will be an honest federal prosecutor. Maybe a judge will make an unexpected ruling in a federal case---like saying Dodd-Frank is Constitutional and should be enforced.
http://www.legalnews.com/grandrapids/1006035/ One thing I know for sure, if the Kochs ever decide to start selling shares, I am not buying. But that isn't likely to happen. Once you sell shares, you have one more group to be accountable to. And I am not sure the Koch family accounting would stand up to that much scrutiny.
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