Grand Theft Oil Futures: Insider traders keep making a killing at our expense
Allegations of politically connected insiders profiting from oil futures trades placed just before abrupt U.S. announcements on Iran have reignited concern over corruption and market manipulation. Commenters debate whether such trades mainly hurt individual counterparties or impose a hidden “tax” on all participants by widening spreads, discouraging honest speculators, and undermining price discovery. The thread also contrasts illicit use of confidential government information with legal information-gathering tactics by hedge funds, and raises broader worries about weakened enforcement, presidential impunity, and erosion of public trust in institutions.
Nature of the “insider trading” problem
- Many distinguish between:
- Legitimate informational edges (e.g., satellite/helicopter observation of oil tanks) that anyone with resources could replicate.
- Abuse of non-public government decisions (e.g., war moves and public statements) by political insiders who owe a duty of confidentiality.
- Several argue the key harm is not just “being smarter,” but misappropriating information that belongs to the public and then trading on it.
Market impact and the “corruption tax”
- One camp claims the direct counterparty to an insider can even benefit (better price than without the insider), so harm is diffuse or marginal.
- Others, invoking market microstructure, argue:
- Market makers widen spreads when they fear informed insiders.
- Hedgers and ordinary traders face higher transaction costs.
- Over time, this raises a “corruption tax” on everyone and deters honest participation and price discovery.
- Some say insider-induced instability is particularly bad because it creates incentives to manufacture volatility, rather than reflect real information.
Legality, enforcement, and unequal treatment
- Multiple comments note that commodities are regulated by the CFTC, and a criminal probe reportedly exists, but there is deep skepticism that enforcement under the current executive will be meaningful.
- Broader frustration: petty crime is punished aggressively, while large-scale white-collar and political corruption is tolerated or even normalized.
- Some tie this to structural weaknesses: presidential influence over enforcement, court decisions expanding executive immunity, and a Congress seen as abdicated.
Futures markets and hedging
- Debate over how much real-economy players (airlines, producers, manufacturers) still hedge via futures versus simply adjusting prices or cancelling capacity.
- Some insist hedging remains important for previously sold tickets and physical delivery; others say speculation dominates short-term price moves.
Political and societal context
- Many frame the issue as emblematic of late-stage imperial decline, oligarchy/kakistocracy, and bipartisan foreign-policy and energy strategies.
- Side discussions examine voter responsibility, two-party lock-in, weak civic education, and media narratives.
- A few ask pragmatically “what can be done,” with responses ranging from pessimism to calls for systemic reform.
“At whose expense?”
- One skeptical view: the main losers are hedge funds or sophisticated counterparties, not the general public.
- Others counter that higher, more volatile energy prices and wider spreads ultimately flow through to consumers and real businesses.