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To: gas0linealley
What would prevent oil producers from bidding up their own product thru frontmen, aka. speculators?

Markets like oil are too big to be manipulated easily. If Shell sends a guy into the crude oil pit in New York to buy futures to boost the price, it might well have an effect for a few moments or even a few minutes, or, very rarely, hours. But other market participants will recognize in due time that the price is too high. They will sell, driving the price back down.

That's what is so great about the futures markets. What used to be back room deals are now public events with thousands of observers all over the world keeping things honest.

208 posted on 06/03/2007 7:55:42 AM PDT by SupplySider
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To: SupplySider

Good day to you too.

I had in mind bigger players than one oil co. For instance, what would prevent a cartel of oil pumpers from using the futures market to bump up prices. By doing so they could avoid the appearance of collusion, since, as you say, the market is so transparent?

Thus, they may be able to stave off a public outcry since it appears that the prices are being set in the good old American competitive way.


209 posted on 06/03/2007 8:06:05 AM PDT by gas0linealley
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