Between 2003 and 2008, the Amount of Speculative Money in Commodities Grew from $13 Billion to $317 Billion, an Increase of 2,300 Percent

We may never know for sure the combination of circumstances that brought on the energy crisis of 2008. But one factor was almost certainly the Commodity Futures Modernization Act of 2000, which allowed unprecedented levels of speculation in oil futures by investment banks and pension funds, bringing the familiar boom-bust cycle home to the gas pump. - Drill Now? Try Regulate Now., Wall Street Journal, April 7, 2010

And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed. - Matt Taibbi, The Great American Bubble Machine, Rolling Stone, July 2, 2009

We'll Make a Killing Out of Food Crisis, Glencore Trading Boss Chris Mahoney Boasts

August 23, 2012

The Independent - The United Nations, aid agencies and the British Government have lined up to attack the world's largest commodities trading company, Glencore, after it described the current global food crisis and soaring world prices as a "good" business opportunity.

With the US experiencing a rerun of the drought "Dust Bowl" days of the 1930s and Russia suffering a similar food crisis that could see Vladimir Putin's government banning grain exports, the senior economist of the UN's Food and Agriculture Organisation, Concepcion Calpe, told The Independent: "Private companies like Glencore are playing a game that will make them enormous profits."

Ms Calpe said leading international politicians and banks expecting Glencore to back away from trading in potential starvation and hunger in developing nations for "ethical reasons" would be disappointed.

"This won't happen," she said. "So now is the time to change the rules and regulations about how Glencore and other multinationals such as ADM and Monsanto operate. They know this and have been lobbying heavily around the world to water down and halt any reform."

Glencore's director of agriculture trading, Chris Mahoney, sparked the controversy when he said: "The environment is a good one. High prices, lots of volatility, a lot of dislocation, tightness, a lot of arbitrage opportunities.

"We will be able to provide the world with solutions... and that should also be good for Glencore."

Glencore announced pre-tax global profits of £1.4bn. The G20 is considering holding an emergency summit on the world food crisis.

Oxfam was scathing about Glencore's exploitation of volatile world food prices. Jodie Thorpe, from the aid agency's Grow Campaign, said: "Glencore's comment that 'high prices and lots of volatility and dislocation' was 'good' gives us a rare glimpse into the little-known world of companies that dominate the global food system."

Oxfam said companies like Glencore were "profiting from the misery and suffering of poor people who are worst hit by high and volatile food prices", adding:

"If we are going to fix the ailing food system then traders must be part of the cure."

Stephen O'Brien, Parliamentary Under Secretary of State for International Development, said:

"We know that food-price spikes hit the poorest hardest. Ensuring the poor can still access enough food is vital in times of food-price rises, which is why the UK is investing in safety nets that deliver food and cash to the poorest."

A Glencore spokesperson said: "Regardless of the business environment, Glencore is helping fulfil global demand by getting the commodities that are needed to the places that need them most."