"Speculators are driving up prices at the pump".
Let's take that assertion for a moment, as fact. What does that mean?
That means, there is a massive amount of speculative investment money, which is betting that the price of oil will continue to rise. That money is all, uniformly, locked in what is referred to as "long" positions, in oil futures.
What's being overlooked in all this hand-wringing, and all the claims "drilling won't help anything" obstruction, is the simple fact: speculators can be long. Or speculators can just as simply, be "short".
All it takes, is one mouse click, or one phone call - and all that money can switch sides... and bet on the price of oil, decreasing. Just one decision, is all that's needed. One program trader, whose software switched from "green", to "red".
That's all it will take.
Billions of dollars, are currently "long" oil - that's been the trend for several months. Betting that supplies will continue to be limited, and demand will continue to grow. Betting ... on FUTURE prices of oil.
That's the rub. Markets (never) go one direction. But oil, has been going ... one direction.
That's the reason drilling now for our own oil, will bring prices down IMMEDIATELY.
All it will take in this environment to bring prices back down, is for those billions of investment dollars which are currently betting "long" on oil ... to go "short".
And we will see:... the Mother of All Price Drops.
AND they will get burned and not speculate with oil in the future
Agreed....we don’t have to punch a single hole in the ground....When (and unfortunately, if) we make a firm commitment (repeal the moritorium on offshore drilling, open up ANWAR to exploration, etc.) to increased domestic production, the price of oil will start to collapse.
I hope this is correct, but this notion always causes me to wonder:
1. How far out are oil futures contracts traded?
2. How soon can new US domestic oil actually hit the market?
I think the answer to the first is months and the second years, but maybe not.
Democrats don’t want prices to go down. They’re too busy investing in “alternative” sources of energy, i.e., Tom Daschle has a large investment in ethanol. They want to starve the poor. They’re starving children!
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