Posted on 07/08/2008 7:27:19 PM PDT by Kaslin
Despite Congress' periodic hauling of weak-kneed oil executives before their committees to charge them with collusion and price-gouging, subsequent federal investigations turn up no evidence to support the charges.
Now oil company executives are getting a bit of a respite as Congress has turned its attention to crude-oil speculators, blaming them for high oil prices and calling for tighter control over commodity futures trading.
Let's look at the futures market and for simplicity use corn futures. While corn is different from oil, both obey the laws of supply and demand, just as humans are very different from bricks but both obey the laws of gravity.
Say that today's price of corn is $7 a bushel. I have a hunch that because of Midwest flooding, higher demand due to droughts and war in other parts of the world, that in May 2009, corn will sell for $12 a bushel.
I stand to make a lot of money by buying corn now for $7 a bushel, holding it, and in May 2009 selling it for $12 a bushel. If many speculators share my hunch and buy more corn now, today's price, sometimes called the spot price, is going to rise, let's say to $10 a bushel.
Higher prices for corn, and everything made from corn, might give rise to consumer complaints. While Congress can't stop the Midwest rain, droughts and wars in far off places, it can scapegoat speculators.
Let's say that Congress outlaws the corn futures market, or makes futures trading more costly. Doing so will definitely lower the spot price of corn. The price might return to $7 a bushel, making corn consumption once again "affordable."
You might exclaim, "Isn't Congress wonderful?" But what about May 2009?
(Excerpt) Read more at ibdeditorials.com ...
that makes too much sense
and you will not see it on tv.
Capitan Obvious, but no one in Washington gets it. If the US showed they were serious about drilling, alternative energy, selling reserves, we would have sub $100 oil is a month.
Nine months ago the oil was at $ 75 dollar a barrel. During this nine month period neither the increase in supply nor decrease in demand nor the decrease of the dollar value justify what so ever an oil barrel at $ 140 dollar which is over 85% increase. All these factors combined should not lead to more than $ 90 a barrel.
I think some people are so stuck in this absolutely silly idea that an attack on oil speculators is an attack on capitalism or free market economy and they want to defend them at any cost. In fact what the oil speculators are doing is exactly opposite to the basics and the essence of our free market capitalist economy.
This is the problem, prices based not on supply and demand but on "hunches". It really is no different than Las Vegas gambling and the odds are always with the house. Worse, the same people that raise the prices because of their "hunches" collectively are enriched if their "hunches" are somehow all the same. The manipulation of the market is transparent and the ones that could stop it, the oil producers, have a huge incentive to keep it going.
Speculators are not causing the rising oil prices. Neither are the U.S. oil companies . Pelosi and the Democrats have used these same talking points. Democrats are Marxists. Why are there so many freepers who are blaming the speculators like Democrats are?
What is really causing the price of oil to skyrocket?
Could it be that actually demand has been much higher than world oil supply in the last few years? Yes that’s the answer, Economics 101, the law of supply and demand.
Could it be that most of the worlds large oil fields are in decline? Yes. Face it we have reached peak oil. : http://www.speroforum.com/site/article.asp?idarticle=15622&t=End+of+the+Petroleum+Age%3F
The only thing that would increase oil supply significantly is if Congress would repeal the ban that Democrats put on developing shale oil in Colorado.Congress and Democrats must allow oil companies to get the trillion barrels of oil in oil shale in the western United States. But we know Democrats/Communists will not allow this. The only way is for the public to find out about this and make them do it.
http://www.americansolutions.com/General/?Page=1c1a10c1-15fd-4ad8-a426-b9a87f635903
U.S. Oil Shale Resources Are Three Times Larger Than the Current Oil Reserves in Saudi Arabia
YET CONGRESS RECENTLY VOTED TO MAKE IT ILLEGAL TO DEVELOP U.S. OIL SHALE RESOURCES
With oil prices at an all-time high, Americans are facing escalating gas, diesel, and aircraft fuel increases. Oil prices are projected to increase further.
Congress, however, has made it illegal to develop vast domestic oil resources in large parts of the United States.
The most startling Congressional prohibition on domestic oil production concerns the recently enacted ban on the development of oil shale resources in parts of Colorado, Utah, and Wyoming in the Green River Formation. According to a Rand Study estimate, this reserve contains over one trillion barrels of oil, with 800 billion barrels fully recoverable, or three times the current oil reserves as Saudi Arabia:
Yesterday, Lehman was barred from trading oil futures at a key window due to credit concerns, the price per barrel of oil fell, energy stocks in general fell, and so did financial stocks. Coincidence?
WOW... I did not know this thank you for the information and I am glad to hear this. I am sure that at least 40% of the current oil price is only due to crazy and irrational speculations.
Everyone loves the free market and capitalism until it works. Speculation is part of the free market.
I love this guy.
Amazing. Many freepers including 3 on this thread,RegulatorCountry,jveritas;count-your-change ,
to me sound just like Marxist/Democrt Nancy Pelosi.
http://news.yahoo.com/s/usnw/20080627/pl_usnw/pelosi__democrats_are_taking_action_to_help_americans_at_the_pump
Speaker Nancy Pelosi released the following statement :
Nancy Pelosi:
“First, we put oil speculators on notice. In an overwhelming vote of 402 to 19, the House by passed legislation to direct the Commodity Futures Trading Commission to use its emergency powers to take immediate action to curb speculation in energy markets.”
Speculators are not causing the rising oil prices. Neither are the U.S. oil companies . Democrats are Marxists. Why are there so many freepers who are blaming the speculators like Democrats are? It is actually the Democrats who have caused the rise in oil prices by restricting oil drilling , banning shale oil development, stopping nuclear, stopping coal, stopping coal to oil liquefaction, stopping refinery construction etc.
What is really causing the price of oil to skyrocket?
Could it be that actually demand has been much higher than world oil supply in the last few years? Yes that’s the answer, Economics 101, the law of supply and demand.
Could it be that most of the worlds large oil fields are in decline? Yes. Face it we have reached peak oil. : http://www.speroforum.com/site/article.asp?idarticle=15622&t=End+of+the+Petroleum+Age%3F
“How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.
Few people understand how reliant we have become on a relatively small number of mammoth fields for the lion’s share of our daily petroleum intake”
Speculators have not caused the largest oil fields in the world to go into steep decline and have diminishing oil output. Democrats and the media would like you to believe that but that just isn’t true.
I repeat 9 months ago the oil barrel was at $ 75. Now it is over $ 140 i.e. an increase of over 85%. Please bring me any free market data such as supply and demand and decrease in the dollar or any other factor that justify this incredible increase. You cannot of course because this data does not exist. This current trend of crazy and irrational oil speculations run against all the fundamentals of our free market capitalist economy.
I paraphrased a news article, noted a few other occurences on the same day, and asked a question. I also provided a source. Would you like to refute the news article, or continue with the pointless ad hominem schtick?
China's stock market has declined nearly sixty percent in less than a year, manufacturing plants are being shuttered by the tens of thousands, and US companies are reconsidering their decision to go with manufacturing in China due to container shipping costs that have more than tripled in the past five years. India and China both have reduced their domestic fuel subsidies. India has weakened considerably since last year as well. These are no longer quite the juggernauts that you wish them to be.
Rather than calling you pointless names, I'll merely suggest that you're talking your book. Trees don't grow to the sky, rurgan. Not true of dot.com stocks, not true of real estate, and not true of oil.
No market that was transparently being manipulated, or even suspected to be, would have any buyers. Only sellers. Or, vice-versa. Thus, there would effectively be no market at all. It takes a buyer and a seller coming together to establish a price, each thinking he has the better deal. One thinks it is not going any higher and will soon go lower, the other convinced it is going higher still.
The peak oil theory has the stench of global warming about it.
Could YOU bring US some data to prove your claim that the price would be $90 without speculators?
Speculators have not caused the largest oil fields in the world to go into steep decline and have diminishing oil output which is the cause of the escalating oil prices. Where will that supply to replace the mammoth oil fields come from? You think speculators don’t know that there is no replacing that lost oil output?
You really think that these declining oil feilds and supply and demand are not causing the rise in oil prices? If you do I suggest you put down the NY times and read about economics, Adam Smith , Hayek, Milton Friedman (”Free to Choose”).
What you say is crazy. There is no formula for determing how fast the price of oil is to rise accordding to an imbalance in supply and demand and a decline in the dollar. I personally think oil is low now and will rise much higher because of Peak oil: http://www.speroforum.com/site/article.asp?idarticle=15622&t=End+of+the+Petroleum+Age%3F
Eau du Pelosi, even.
It exists, but the data that exists also lacks justification. It is called a bubble, and we have seen it in internet stocks (valuations absurdly high relative to worth), real estate (ditto), etc. We saw precisely the same thing in the 1970s. I bet with a normalization to today's prices, it would be almost exactly the same graph. That, too, proved to be a big bubble that burst in a big way, with prices going from $40 a barrel (1970s dollars) down to $10 a barrel in just a very short time.
I look at it a different way. I see it as a golden opportunity for the GOP candidates to hang this squarely around the Democrats' collective necks and pound them with it from now through Nov.
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