The Weekly Screed (#579)

What if commodities traders 
actually bought commodities?
by David Benjamin

BROOKLYN — Cursing the interruption, Grosscup, hardball commodity trader, broke away from his bank of computers and rushed to answer the doorbell. He opened the door to a large man in a smudged and smelly workman’s jumpsuit. A name badge on his left breast read, “Norm.”

“Yes. What is it?” snapped Grosscup impatiently. “Who are you?”

“Hi, pal. I’m Norm,” said the intruder mildly. “I got your oil.”

“Oil? What in God’s name are you talking about? What oil?”

“The oil you ordered yesterday. You’re Grosscup, right?”

“That’s Mr. Grosscup to you. But I didn’t order anything yesterday. I was too busy, trading on the market. I put in a 16-hour day, every day, mister.”

“It’s right here, see?” Norm held out his clipboard, revealing an order form, soiled by oily fingerprints. Grosscup’s name was clearly legible. “One hundred thousand barrels of sweet Canadian crude, at $97.26 a barrel. Man, you got a great price on this shipment. Where you want us to unload it, sir.”

Grosscup realized that a fleet of eighteen-wheelers was idling in the cul de sac outside his mansion. Each trailer bowed under the weight of hundreds of black, shiny 55-gallon drums. Grosscup reeled. “I don’t want you to unload anything. That’s not my oil.”

“Well, yeah, it is,” said Norm. “It says right here.”

“But I didn’t order any damned oil.”

“Well, Mr. Grosscup, it says right here that at exactly 2:10:33 p.m. yesterday, you issued an electronic order for 100,000 barrels of sweet Canadian crude at $97.261134. Jeez, Mr. Grosscup, you mean this is wrong? You didn’t do that?”

“No, no, wait,” said Grosscup, relaxing. He now understood the mistake. “Yes, I did place that order. But I wasn’t really buying oil, Norm. I was just manipulating the price ruthlessly upward. If you check your records, you’ll see that I re-sold the entire order three minutes later at $97.53, scoring a cool profit of $27,000.”

“Yeah, I got that all here,” said Norm. “But that second part? It didn’t go through.”

“What do you mean, it didn’t go through? I hit the key on my Mac. I made the sale. Then I went on to other trades, in wheat, sugar, bananas, Indonesian virgins.”

“Yeah, well, you prob’ly should’ve checked back on this deal here, Mr. Grosscup, ‘cause it didn’t go through,” said Norm sympathetically. “I guess you didn’t notice that the CFTC — that’s the Commodity Futures Trading Commission — they put an ETC cancellation on your re-sale of your oil here. See, it says right here: ETC.”

“That’s not my oil!” exclaimed Grosscup. “And what the hell is ETC?”

“Well, sir, it stands for Enough of This Crap. Y’see, the CFTC sort of got sick and tired of speculators like you jacking up the price of commodities by trading them around every five minutes, treating the future of key markets like the sports book at the Golden Nugget casino. So, they decided that America had had enough of this crap — excuse my French — and they said, ‘OK, these guys want to buy oil and corn and sowbellies, even though most of ‘em wouldn’t know a sowbelly from a silk purse? Well, maybe they should get what they’re paying for — in the flesh. So they started this ETC program.”

Grosscup clutched his head. “ETC program?”

“Yeah,” said Norm. “Every now and then, the CFTC sees a guy like you flipping a purchase in less than five minutes to make an obscene profit ,while raising the price for consumers of these vital goods, making it harder for real producers and real buyers to set a fair, stable price. I mean, you can see why nobody really likes bloodsuckers like you. Anyway, once in a while, the folks at the CFTC — on behalf of all those consumers, farmers and gas-station franchisees — they get fed up. They say, ‘Enough of this crap already,’ and they cancel a flip, like yours yesterday. Surprise! Which means you get actual delivery on the oil you bought. Which is where I come in.”

“I won’t let you in!” cried Grosscup, crossing his arms and blocking the door.

“That’s OK,” said Norm gently. “We’ll just stack it in the yard here. You got any room out back?”

Norm waved an arm and a crew of burly workmen began rolling barrels of oil onto Grosscup’s property. Grosscup said, “Well, I guess I could sell it, huh?”

“Sell it? Well, good luck on that!” said Norm. “If you could get a refinery to accept it, we could haul it there. Trouble is, well, the big oil boys, Exxon/Mobil, Chevron, BP, they’re all reducing refinery capacity right now.”

“Reducing capacity? Why the hell are they doing that?”

“Well, it’s all tied in to the election, sir. The big oil boys need to push the pump price sky-high, so voters’ll be pissed off at Obama, who says he’s gonna cut corporate welfare and make the big oil boys get by on their actual earnings — like I have to do. Heck, Mr. Grosscup, you should know this stuff. It’s been in all the newspapers.”

Grosscup groaned as a plaster deer on his lawn was crushed beneath an oil drum.

“So, anyway, Mr. Grosscup,” said Norm, “including delivery costs, 100,000 barrels of sweet Canadian crude, comes to $9,247,807.73. Will that be cash or credit?”

Grosscup began to weep. Norm backed off compassionately and gave Grosscup a few minutes to grieve. Finally, however, he said, “I hate to trouble you, sir. But the CTFC’s ETC policy is strictly COD.”

Grosscup staggered back to his office, got his checkbook and paused to stare bleakly at his balance. Suddenly, he regretted his daughter’s private school in Switzerland, his wife’s personal tennis pro and his yacht in Newport

“If I can’t sell it to an oil company, can I use it myself? Or sell it to Pennzoil? Or NASCAR? Or somebody? Isn’t there anything I can do with this filthy stuff?”

Norm sighed. “Well, crude oil is pretty useless. But there is one silver lining.”

“Really?” asked Grosscup, grasping at straws. “Please, Norm. Tell me.”

“Well, if you end up filing for bankruptcy and plummeting into the 99 percent with slobs like me, well… look around. You’re gonna have plenty of grease for the skids.”