Posted on 06/28/2008 11:18:13 AM PDT by HawaiianGecko
Sen. Obama's plan to attack the "oil speculators" who are "driving" up the price of oil by regulating futures contracts on American oil may not be pandering (America certainly cannot, for example, regulate oil futures on Nigerian crude in Switzerland), but it is sure close, and here is why, and I'm sure all those people who helped him draw up this plan know it.
(Excerpt) Read more at chicagotribune.com ...
To have the shameless Mr.Newt blame speculators for this price escalation made me want to puke. Nothing worse than seeing someone you admired show their true colors. First embracing the charade of man made global warming and now blaming speculators.
Sorry but Newt can be believed only in areas of his true expertise which appears to be adultery.
Three solutions:
1. The price of oil is being BY FEAR (of future price hikes) in turn being EXAGERATED BY the speculators who will only make money IF the future price of oil continues to rise.
Today's exaggerated prices are NOT based by the amount of oil used, nor by the amount available. India's current use is higher than 5 years ago, Chine's is higher than four years ago.
BUT NEITHER country's use (nor the US’s use, nor the world's total use), has doubled in the past two years. Supplies are limited by excessive environmental opposition, but are substantially the same as 10 years ago. Prices are of course higher, rising to something equal to about 2.50 - 2.75 per gallon.
BUT NOT 4.50 per gallon!
Tell me why ANYBODY other those who will use the future oil they are “purchasing” should be allowed to manipulate the futures market. Tell me WHY outside trust funds and outside hedge funds and international common funds (controlled by who ???? in this election season) and for what reason should be able to manipulate everyday oil prices USING “rumors” and “statements” and “warnings” being “randomly” generated by interests who wish to destroy the United States?
Tell me WHY futures “investors can manipulate the prices by bidding UP the hour-to-hour/minute-by-minute oil prices based on new rumors with less than a 5% investment.
Remember, ONLY the headline is needed. Not the oil itself.
Oil futures markets are required. For oil companies, railroads, and industries. Not for market manipulators who can destroy the economy by multiplying 5% “investments” to move 95% prices.
Tell me HOW you are going to fix it.
(If Bush gave a Kennedy speach, “The US will be energy independant in 5 years...”, the price would tank today.
But JFK was more conservative than Bush.)
And I don't mean how you think they are... I want to see actual quantitative evidence...real numbers... not some drive by media opinion piece. Show me hard numbers that indicate that speculators are driving up the price of crude and that will stand up to the kind of scrutiny my bosses have always demanded of me.
I have 20+ years as a quantitative analyst, much of it in the energy market and I'm telling you, that market is NOT BEING MANIPULATED BY ANYONE!!!!!
The price is going up because our energy policy looks like a case of mass mental illness. The price is going up because given the current political situation, and the attention on global warming instead of cheap energy, the people investing in those market believe it will continue to go up.
If the congress announced tomorrow that they will grant a drilling permit anywhere offshore of the US and in ANWR to any established american drilling company, the price of oil would fall like a stone.
That's why the price of oil is up... because the government is pushing it that way. The speculators aren't driving the market they are following it.
you know what really gets to me... if I were a doctor posting something about the genetic predisposition toward encephalitis of some Asian sub-ethnic groups no one would chime in and tell me they know more than me about it. If I were a lawyer and wrote a detailed analysis of some constitutional question it would be the same. But for some reason every two bit chump who ever bought 100 shares of stock thinks they know exactly how markets work.
I've been in the business for 20 years and made hundred of millions of dollars for the firms I've worked for, and even now I don't know everything. But I do know that this market is not being manipulated, an all the freepers who think it is should consider changing sides and voting with the rest of the "know it all's" over at Democratic Underground.
Wholesalers/Speculators provide an invaluable service by spreading the risk against high prices. At these levels nobody can influence the prices. Its completely Supply/Demand driven.
Pray for W and Our Troops
Since President George W Bush has been trying to get drilling for 8 years your lying. No sense letting the truth get in the way of good Bush Dyrangement Syndrome.
Pray for W and Our Troops
A speech means nothing. Bush has repeatedly called for more energy development. He has been blocked on numerous occasions by the Democrats and Rinos. We need more domestic exploration of oil and natural gas, more refinery development, restrictions lifted on coal to gas technologies, more rationalized environmental policies, and a muzzle on third party lawsuits by environmental organizations. If Congress passed this agenda, energy prices would decline over time. Perhaps this oil bubble would even burst in the short run.
The Democrats are not about to pass any legislation with this agenda however. The Democrats want high energy prices. They live a fantasy world of alternative energy. Alternative energy will not be viable for decades. We are still going to need lots of oil and natural gas even when alternative energy becomes viable. The most likely outcome will be non viable alternative energy technologies such as corn-based ethanol. The Democrats will panick and mandate additional non viable solutions just to convince the public that they have the answers.
Energy independence is a dumb idea. We need energy from reliable partners and more domestic development. Oil is a world wide commodity. If alternative fuels become viable, they will be world wide commodities also. We want to be able to purchase energy sources in open markets without the influence of cartels and stifling government regulations.
1. Oil is a very price-inelastic commodity, in the short term. Perhaps only food is more price-inelastic. It only takes a very small shortfall of supply, to send prices skyrocketing. Similarly, a very small surplus would send prices diving. (You won't see that effect from a small surplus though — because OPEC would dial back production just enough to eliminate the surplus, and keep prices high. OPEC can't keep large surpluses from forming — but, they can keep small ones from happening. Even OPEC’s market-manipulating powers are limited — and they have far, far more power to manipulate the markets than the speculators in futures markets.)
2. Commodities futures market speculators (any futures market) provide liquidity. Without them, a large spread would open up between bid and ask prices. Producers and large consumers would have a more difficult time using the futures market to hedge (protect themselves from price rises or drops). Punters at a horse race bet on the race results — but they don't determine the race results. Oil futures speculators bet on the future price of oil — but, they don't determine that price.
3. Speculators are on both sides of the market. There are both longs and shorts — one every single trade.
Consider who wants you to believe that the speculators are the blame for high oil prices. Don't let the real culprits trick you.
In a nutshell. Well put.
I agree. The head of OPEC basically came out and said if he puts more oil on the market, no one will buy it equating that supply and demand are in harmony. Bottom line, I think speculators are hurting the price of oil, but there are also other factors as well.
Well you can go ahead and thing that, but you would be wrong.
From the article........
“World crude oil production is about 80 million barrels of oil a day.
U.S. crude production is about five million barrels a day, or four percent of world.”
Huh? Neil. Where did you learn to cipher? Using your figures it should be 6.25%. You missed it by over 50%. If you don’t have the intellect to do the basic math then how can you even understand the world of Oil Futures?
You're wrong. It's the speculators. They're runnin' wild doing that speculating thing that they do. Driving up the prices. They're bad for America. They should be taken out and shot. And SUV drivers. Don't get me started.
You can have the last word.
Bill O'Reilly is an idiot ... and a pinhead!
If you want off my ping list get over it!
I’ve ranted several times on FR, about the rampant innumeracy in the MSM. It does cut into one’s credibility. However, I’m always to cut anyone who agrees with me some slack. :-)
He’s right on the big point — futures speculators don’t affect the cash price of oil. It’s a big diversionary trick by the real culprits — Democrats and “environmental” organizations. To them, $5.00/gallon gas isn’t a problem — it’s part of the solution.
Riiiiight - that’s why he signed an executive order, extending the drilling ban.
Moron.
Worth a repeat my FRiend!
Speculation investing is what it is, speculation and is a "free" minded directive.
To lay blame on speculation for the price of oil is nothing more than a ploy to deffer blame for oil prices from the real problem....government intervention politically and a public who trusts government more than freedom.
If it were mandated via Congress tomorrow that we can drill for oil, the same day the market would jump and the cost of oil would drop via speculation.
You know it’s speculation, in large part, that is driving the market when insignificant news blurbs (Nigerian pipeline attacked, OPEC calling for oil to go to $170/bbl, GS calling for oil to $200/bbl, hurricane season will be active, etc) cause the price to jump by as much as $10/bbl almost immediately.
The supply/demand (as measured by global excess production capacity) situation has not gotten worse than when oil was at $50-$70/bbl. Lots of new supply coming on line in the next 18 months with demand continuing to wane, yet the price of oil seems to go up every week. Call it either speculation or manipulation, but fundamentals alone don’t explain it.
I agreed with his point also.
However, he also needs to get a better grip on basic math.
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