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.
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.
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.
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.
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