April 11, 2012

A Major Oil Speculator Is Bankrolling The Latest Karl Rove Attack Ad Accusing Obama Of Raising Prices At The Pump

The latest anti-Obama ad, which blames Obama for rising gas prices, is being financed in part by a hedge fund manager whose firm has engaged in the type of reckless oil speculation that is causing pain at the pump.

Karl Rove’s attack ad network just launched the first major ad campaign of the campaign season against Obama. The commercial, called “Too Much,” is being aired by Crossroads GPS, a nonprofit controlled by Rove that does not have to disclose a single donor. Despite oil production levels at the highest point in recent years and Obama’s move to open up new areas to domestic drilling, the ad knocks the president for high gas prices. Unlike ordinary Super PACs, which fall under F.E.C. disclosure requirements, Crossroads GPS is organized as a 501(c)(4), meaning it never has to divulge any donor information.

But thanks to the work of Peter Stone, an investigative journalist with the Center for Public Integrity, we do know one major donor who has given “seven figure” gifts to Crossroads GPS: Paul Singer.

Singer, who’ve I’ve written about several times in the for ThinkProgress, is a wealthy hedge fund manager. His firm, Elliott Management Corporation, speculates in a number of areas. In the past, Singer has been called a “vulture capitalist” for buying the debt of Third World countries for pennies on the dollar, then using his political and legal connections to extract massive judgments to force collection — even from nations suffering from starvation and violent conflicts. A blockbuster Wall Street Journal story in 2006 revealed that Singer’s firm was among several hedge funds that paid lobbyists to gain political intelligence on an asbestos bill working its way through Congress — with the hope of using inside information to profit off of asbestos-related companies. But what makes Singer interesting in the context of this latest attack ad is how his business interests conflict with the message about Obama causing high gas prices.

If anything, Singer should be blamed for high gas prices. Last year, I reported on a leaked document from the CFTC — the regulatory body that is set up to monitor commodity speculation — revealing the one day oil trading information from 2008. This list of speculators (view a copy of the documents here, a table organizing the information here) shows that Elliott Management is among the top financial firms with the highest volume of trades in the country. Though the documents did not reveal much about the trading strategies of individual firms, the sheer number of oil contracts from noncommercial speculators confirmed reports that excessive Wall Street speculation fueled to the historic oil price spikes in 2008. The commodity markets are still largely unregulated; the speculative-limits mandated by Dodd-Frank have been watered down and won’t even be implemented until next year.

According to regulators, little has changed since 2008. Bart Chilton, a commissioner with the CFTC, explained to ABC News how oil reckless oil speculation is rapidly raising the price at the pump for all drivers:

By Chilton’s calculation, if you drive a car like a Honda Civic, you’re paying $7.30 more than you should every time you fill up — to Wall Street speculators. If your car is a Ford Explorer you’re paying an extra $10.41. For a Ford F150, he says owners pay an additional $14.56 per fill up -or more than $750 a year.

Speculation can play a healthy role in the economy, helping commercial users of oil (like airlines) lock in prices down the road with producers of oil. But a series of loopholes in the law, starting in the early 90s, have allowed the number of noncommercial players to swamp the market, buying up huge numbers of oil contracts with no interest in actually refining or delivering the oil. Singer’s hedge fund

To add insult to injury, he’s now blaming President Obama for those prices at the pump with millions of dollars in misleading advertising.

  • eps62

    Excellent article. It’s the speculators who are responsible for the high gas prices not the president.

    I would say that most of the speculators are Republicans and all they want to do is defeat POB.

    We have to vote Democratic for all, the president, the blue dogs, and all members of congress.

    DEFEAT THE REPUBLICANS!!! We have to get our country back!

    • mlnw

      The problem of speculation in the energy markets has been known for years. Remember Enron. The attempt to regulate the derivative market hedge funds, (and this market) was sabotaged even during the Clinton Administration when Robert Rubin (former CEO of Goldman Sachs) and Larry Summers were able to prevent the CFTC and its Chair, Brooksley Born, from exercising oversight authority, and even went so far as to go to Congress to strip the agency of that authority. (PBS Frontline produced an excellent program on this.) Fast forwarding to today, the Chair of the CFTC, Gary Gensler, a Goldman Sachs alumnus, cut in the mold of Rubin and Geithner, has done nothing significant, and even though, since 2009 or 2010, the CFTC now has the regulatory power to control oil speculators, IT HASN’T ISSUED REGULATIONS.

      So there you have it- even though Paul Singer, the oil speculator, has hidden his own direct role in this, the Administration has in effect been complicit by continuing to sit on it after Congress specifically authorized the agency to do something about it. So much for “pragmatic government” and “pragmatic leadership”.

    • I <3 REbubs

      “Get your Country back?” The DEMOCRATS CONTROL THE WHITE HOUSE AND THE SENATE, the house DEMOCRATS have 192 seats in the house?! The had the entire congress and the Presidency for 2 years.

      Are you telling me that 49 extra Republican seats in the House are enough to nullify TWO BRANCHES of Government + almost 50% of the house?!”

      Man you guys must SUCK at governing…

      • good3person3

        When I read comments like yours, I feel frustration. Don’t you watch the news or read the newspaper? The Republicans in the Senate demand 60 votes or they threaten filibuster, therefore, even though the Dems have more members, (I believe 51 or 52 members) they cannot pass anything because they can’t get 60 votes. The Dems DO NOT have control of the Senate; the Rs have control because they can kill all proposed legislation.The Ds had control of the House for two years, but even so, they were at the mercy of the Senate and the 60-vote requirement. Please keep this vital fact in mind before you make wild inaccurate statements.

        • I <3 Repubs

          Well, if the fact that you have a numerical majority in the WH and the Senate don’t count, what, pray tell, is your definition off a majority? And you need to remember that the Dems had a SUPER-majority before the last election. And if THAT doesn’t count, could it be that you are pushing a none-too-popular agenda?

          The mental gymnastics you have to go through to reach your conclusion is amazing.

          • factchx

            These “mental gymnastics” are called facts. Sad to see these uneducated responses.

    • good3person3

      yes, you’re absolutely correct. Everyone take heed!

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  • Jimward52

    vote republican, screw yourself.

    • atafis

      Vote Republican – get screwed.

    • Babson

      it’s better to remain silent and be thought a fool than to speak out and remove al doubt. Your hatefulness is very unattractive.

  • withering_fire

    Even Bill O’Reilly said that Presidents can’t control global oil markets— oh wait, I guess that only goes for when a Republican is in the White House ( George W. Bush ).

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  • clarenceswinney

    Simple– are we dumb
    14,000 Inocme
    3800 Budget
    Borrow 1300

    Simple answer
    cut spend 10%=380
    Increase tax 10%=1400
    Total 1780=pay our way pay down debt

    Why do we rank in OECD as #2 on Least Taxed–#2 as least tax on corporations and #4 on inequality
    Tax Book since 1980 is answer
    10% own 73% Net Wealth–83% Financial Wealth–Take 50% individual Income
    70,000,000 get 13% of income

    In 1980, we ranked in bottom 5 on Inequality
    clarence swinney political historian lifeaholics of america

  • guest

    Thomas makes me sick. My govt. is so corrupt, trust in God folks, only he can change things.

  • D Leatherman

    The article states: “Speculation can play a healthy role in the economy, helping commercial users of oil (like airlines) lock in prices down the road with producers of oil.”

    When an airline (or other commodity user) goes to the futures market, this is not _speculation_. It is simply planning, much as if I buy a month’s supply of toilet paper in advance, instead of buying it day by day, or week by week. _Speculation_ is when someone who doesn’t intend to use the commodity, and probably doesn’t even intend ever to take possession of it, buys the right to resell it at a higher price without doing anything productive (such as drilling, pumping, transporting, refining, distributing or retailing the product). Basically, speculation is a way for people who already have lots of money (i.e., lots of claims on other people’s productivity) to get _even more_ claims on other people’s productivity without doing anything productive to contribute to the well-being of anyone else.

  • elaine

    This guy is probably Romney’s best friend as I am sure he likes to fire people also and pay his ‘housekeepers’ tiny salaries, less than the going rate. Remember Leona Helmsley, the wealthy ‘socialite’, who is well known from saying that ‘it’s the little people who pay the taxes’.

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  • Joe Ratliff

    Obama and the Securities Exchange Commission could take some positive steps to control, or at least slow down oil speculation. However, there are some positive sides to higher fuel prices. People usually buy less gas, or reduce their driving. If prices get high enough, some individuals will actually buy more fuel-efficient vehicles. But, where I live in rural Nevada, where gold/silver mining is booming, thousands of mindless idiots here, who are prospering from the mines, are still buying brand new big 4 WD, fuel guzzling trucks and SUV’s. I don’t what it will take for them to conserve-they just don’t care what the fuel prices are as long as they are making good money. And, that is where there is a need for federal regulations, controls and conservation measures. Hell, if the national highway speed limit was dropped to 65 mph, we would save billions of gallons of fuel and thousands of lives annually-it’s a no brainer. I’m sure the oil industry and speculators are also lobbying against any conservation measures such as that.

    Boy, there more stupid people in this country then ever before! They all have their heads shoved up their I Pods/Pads and smart phones (what an oxymoron).

  • solo_poke

    I built my own wind turbine and converted my Jeep to electric drive, to get these criminals hands out of my pockets. Payback on my investment less then 20 months. There is too much money being made by a select few corrupt individuals like Singer and it is in their best interests to corrupt government and maintain the status quo.

    I have a couple of inventions hidden, because there is no money for the average honest person to bring their products to the market.

    As for the individual Singer, he is obviously misleading voters and should be in prison.

    • Eddar6

      congratulations – for your ingenious inventions – so sad this corrupt country cannot used them
      vote democrats no matter what – better gamble by far

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  • Out of one side of their mouths they saber rattle over Iran to drive the futures prices higher with fear, uncertainty, and doubt.

    Out of the other side of their mouths, they divert accountability by blaming Obama for the consequences of their self-enriching actions.

    Unfortunately, the bulk of the media will never shed light on this relationship, and most of the electorate is too busy working or looking for work to discover this for themselves.

  • Gammco

    I knew it, I knew it, I knew it. Tooting my own horn I speculated that this was the case about two months ago. It’s an almost perfect dirty trick. Heavy long future positions with minimal down side and a good chance at outrageous profits coupled with a chance to blame Obama for gas prices.


    Mr Sanders reports that 80% of the commodity’s market is controlled by Morgan Stanley and Goldman Sak’s. While Karl Rove’s Super PAC just took in 10 million dollars from Iran so he won’t be running out of money anytime soon.

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