Blame the commodity traders at the fuel station

Consider an Olympic sized swimming pool being continuously filled with water. The toddlers who first enjoy the water will soon begin to realize they are drowning as the water reaches their neck, soon after the teenagers begin to feel the same, eventually adults and the old ones also drown in them, only the tall folks who are taller than the swimming pool survive if the water is filled up to the brim, Inflation works the same way when money is being printed, the first ones to drown are those at the bottom of the pyramid.

One of the main causes of inflation other than printing insane amounts of money and poor governance, is the rise of fossil fuel prices and natural resources. These inflation causing commodities are controlled by a handful of people who barter earth`s resources for their greed with little regard to climate change, geo-political situations or the economic impact they unleash around the world.

A quick glance at the table below depicts the magnitude of their influence        

These startling numbers where once generated purely through trading activities by solving the demand and supply dynamics all around the world.

Vitol CEO Ian Taylor private jet lands in Benghazi (Libya) to cut a deal with the rebels who are fighting with Gadaffi. The rebels barter the oil fields for finished crude oil products with Vitol. The result of this barter is Gadaffi being killed in broad day light on the streets thereby altering the geo political situation of the country entirely.

Jamaican oil reserves are running dangerously low (even their foreign reserves). Marc Rich (March Rich + Co later becomes Glencore) picks up a call late in the night from the Jamaicans and diverts a ship on its way to the American continent to offload oil barrels to Jamaica there by striking a deal in his sleep to barter oil for Jamaica`s rich bauxite (ore of aluminum). Thereby selling bauxite whenever the prices shoot up in the market.

Ever heard of a country called Burundi? OPEC countries allowed $7-$8 discounts on barrels for poor African nations, which March Rich + Co purchased and later sold most of its inventory at spot price to other nations. Grafts kept Burundi quiet.

On Wall Street, when oil futures were being introduced, before the internet, these traders had useful data to predict price movements. Along with these they could hedge their bets as well. When prices of oil went down from that of the contract they would sell the contract to make profits; and when the price went up they would sell the physical barrel of oil at higher prices there by winning either way the prices moved.

The Probo Koala incident tells the story of how Ivory Coast bore the environmental hazard created by Singaporean-based Trafigura. Toxic and hazardous ships were dumped on Ivory Coast due to its weak regulatory laws regarding environmental principles.

These are few of the several examples in which these traders exploited and looted resources. The World for sale by Javier Blas and Jack Farchy was shortlisted for the Business Book of the Year 2021 by McKinsey & Company. It is a highly recommended book which gives you insight into the nether worlds of how commodities are bartered and exploited by a selected few people to gain immense wealth at the expense of inflation for the common man.