How predictable. Just as the presidential horserace starts to gain velocity, so do oil prices. The Feb. 26 Reuters headline reads "Oil price rise raises specter of global recession." We are informed: "Oil rose to a 10-month high above $125 a barrel Friday, prompting responses from policymakers around the world including US President Barack Obama, watching US gasoline prices follow crude to push toward $4 a gallon in an election year." The Reuters account cites jitters over a new military conflagration in the Persian Gulf, which is certainly a factor. But some are seeing an intentional manipulation by the most reactionary sectors of the petro-oligarchy to undermine Obama...

In April 2011, when the current price surge began, Lee Fang wrote a piece for ThinkProgress entitled "The Contango Game: How Koch Industries Manipulates the Oil Market For Profit." Here's the critical sections:

While much of the attention on oil speculators has rested on the backs of investors and commodity traders, the petrochemical conglomerate Koch Industries occupies a unique role in manipulating the oil market. Koch has little business in the extraction process. Instead, Koch focuses on shipping crude oil, refining it, distributing it to retailers — then speculating on the future price. With control of every part of the market, Koch is able to bet on future prices with superior information... Koch along with Enron pioneered a number of complex financial products to leverage its privileged position in the energy industry.

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.

A recent presentation from Koch Supply & Trading, the Koch unit devoted to selling financial products, confirms that Koch has taken advantage of a lax regulatory environment to aggressively trade on future oil prices. "The return of speculators to Oil, the 'macro trade' is alive and well," reads slide 36...

The slideshow, given to an industry association for oil speculators, describes Koch as the "world's top five crude oil traders and actively trades about 50 types of crude oil around the world." Notably, Koch "has trading operations in London, Geneva, Singapore, Houston, New York, Wichita, Rotterdam, and Mumbai."

As a recent Center for Public Integrity report uncovered, Koch lobbied aggressively against Obama's financial reform bill, particularly on provisions related to transparency in the energy trading market. Is Koch again buying up supply in expectation of higher crude prices during the summer or beyond — as many analysts have predicted? No one knows, especially when the energy speculation and trading industry currently operates with virtually no regulation.

Various bloggers and Facebook posters have revived this telling piece nearly a year later, to suggest that a political agenda and not just sheer profiteering lies behind the manipulation. Now, we hate to say we told you so, but, um... we told you so. In 2006 oil prices were falling, and there was widespread speculation that the Bush administration was manipulating them down to help the Republicans in that year's mid-term elections. (Of course, the elections were a sweep for the Democrats anyway.) We predicted at the time that oil prices would rise again right after the midterms, so that Bush and his pals could try to pull the same trick for the 2008 elections. We reminded readers of this prediction when oil prices surged again in 2007—and when they dropped again, right on schedule, in October 2008!

Even though Barack Obama has continued the wars for oil launched by the Bush White House, his administration lacks his predecessor's organic ties to the oil industry. So while the Bush boys were (almost certainly) able to manipulate oil prices to their advantage, Team Obama has little such capacity.

For a year at least, the Koch brothers (Charles and David) have been exposed as underwriters of the Tea Party movement. (US News & World Report, Feb. 2, 2011) Like Ron Paul, they are well ensconced in the John Birch Society. (ThinkProgress, June 10, 2011) They represent the perfect amalgam of the petro-oligarchy and fast-mainstreaming radical right.

Note that the Koch brothers were key underwriters of 2010's failed Proposition 23 in California, which would have gutted the state's greenhouse gas emissions law. Koch Industries also has a hand in running the Alaska Pipeline.

See our last posts on the global struggle for control of oil, petro-oligarchical rule and the crisis of capitalism.

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