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Wednesday, 18 October, 2000, 17:47 GMT 18:47 UK
Only in the oil market...
Oil Refinery on the banks of the Mississippi
Distribution and trade is a sticky business
Oil and funny money have gone hand in hand since this cousin of coal and tar was discovered to have industrial uses - and commercial value. Rodney Smith looks at the shadier side of America's trade.

When the 1973 oil crisis blew up the world economy, London pubs were alive with characters in sheepskin carcoats who could sell you a share of a tanker cargo, or who knew someone who could.

They always knew someone who needed only a little capital to secure a contract with a small oil producer somewhere in the Middle East.

Well, they haven't gone away, they are back again, in the capital of entrepreneurial effort, New York.

Traders in oil furtures
Some oil traders have slipped up
When US Energy Secretary Bill Richardson confirmed President Clinton's plan to sell oil from the US Strategic Petroleum Reserve, he little guessed he would be dealing with a new breed of entrepreneurs who have felt no need of special knowledge or experience.

The result is that oil could be distributed in some parts of the United States by people with no history of oil trading, oil markets, or distribution.

Congressional drilling

Washington's grey suits don't like to be made fools of, so two Congressional committees are now probing how three oil traders with no previous experience won the contracts to sell reserve oil.

One of them clearly hasn't benefited from previous oil deals: Lance Stroud, apparently lives with his mother in a Harlem tenement.

He has also failed to make significant progress with New York's huge and fairly open banking and financial community.

He is understood still to be trying to finance the four million barrels he is contracted to distribute around America.

He's not alone, there are two other one-man operations.

Euell Energy and Burhany Energy Enterprises also won contracts to distribute three million barrels each from the Strategic Reserve, something they have never done before.

The US Oil and Gas Association says it has never heard of them.

Congressional concern hinges on the gap in the rules that could allow operators like these to sell their oil anywhere they want, including abroad, where they could get higher prices than at home.

Whatever they do, their own problems may be just beginning.

Their contracts say they must replenish the National Reserve between August and November next year.

Some professional oil market observers are beginning to believe that the present shortage, and the high prices that go with it, could last for much longer than we might expect .

So prices could still be high or higher when today's new entrepreneurs have to pay back Uncle Sam in kind.

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See also:

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