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(The Street)   Congress could cut $23 a barrel from the price of oil overnight if only oil companies would let them   (business-news.thestreet.com) divider line 150
    More: Obvious, Lundberg Survey, futures contracts, Strategic Petroleum Reserve, gas pumps, crude oil, Energy Information Administration, derivatives markets  
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8659 clicks; posted to Business » on 11 Apr 2012 at 11:41 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-04-11 11:45:23 AM
this thread should be fun..

popcorn and comfy chair at the ready...
 
2012-04-11 11:51:56 AM
i.thestreet.com

upload.wikimedia.org

hmm...
 
2012-04-11 11:52:17 AM
If so, then the same speculation that is pushing up prices is likely to go into reverse, causing prices to right back down again.

Well then, everything is solved and the speculation that hurt millions of people so a handful could get a little bit richer is of no consequence.
 
2012-04-11 11:53:40 AM
everything is constantly retarded right now
 
2012-04-11 11:53:48 AM
There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.
 
2012-04-11 11:54:19 AM
And then rep. Joe barton will apologize to the oil companies because the population dared to think congress should intervene against rampart speculation.
 
2012-04-11 11:55:31 AM
Oh man props to the cemetary recruitment spot. That's some good low-hanging fruit right there.
 
2012-04-11 11:56:30 AM
No shiat. I worked as a commodities analyst in the past and the increasing prevalence of CPO's and CTA's in the market really drive prices upward and add a lot of unsystematic volatility.
 
2012-04-11 11:57:08 AM

IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.


Freedom?
 
2012-04-11 11:58:42 AM

IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.


I think they should be allowed to, but they must take physical possession of the commodity before reselling it.
 
2012-04-11 12:03:33 PM

jigger: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

Freedom?


Freedom for people who have more money than me is racist.
 
2012-04-11 12:27:54 PM

Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.


So since we're talking about futures, they need to create a place to store the non-existent oil until it does exist, at which point they can resell it?

/Ankh-Morpork Pork Futures Warehouse
 
2012-04-11 12:29:34 PM

null: So since we're talking about futures, they need to create a place to store the non-existent oil until it does exist, at which point they can resell it?


Think of all the jobs that will be created in the building and maintaining of these places.
 
2012-04-11 12:33:07 PM

IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.


IMO, there's no reason that inelastic commodities of any kind should be open to investors. Such items should be controlled on a governmental level, with price constraints on both the high and low end.

Allowing the market to place bets on commodities that the public relies on is like asking to be hit by a train.
 
Zel
2012-04-11 12:39:48 PM
As soon as we ban such lucrative speculation, they will change jurisdictions and take that same profit for another country.
 
2012-04-11 12:43:53 PM

Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.


No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.
 
2012-04-11 12:46:46 PM

Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.


I think they should be allowed to, but they must take physical possession of the commodity before reselling it.
I think they should be allowed to, but they must take physical possession of the commodity before reselling it.
I think they should be allowed to, but they must take physical possession of the commodity before reselling it.


/Insert favorite [bears_repeating.jpg] //HERE//.
 
2012-04-11 12:48:00 PM
Repeal Phill Gramm's Commodities Futures Modernization Act which lets ANYONE buy and sell Oil.

It will NOT get us all back to 1 buck a gal gas but its a BIG FARKING start!
 
2012-04-11 12:52:42 PM

Debeo Summa Credo: Aarontology: IrateShadow:
No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.


The bold part up there is a bald-faced lie.
Do I really have to link any of the thousands of studies?

Thanks for the reminder, putz:
Debeo Summa Credo: (favorite: Capitalist Tool Latin for "I blow donkeys." for all values of donkey == plutocrat.)
 
2012-04-11 12:53:19 PM
I don't normally count myself among the tinfoil hat wearing brigade, but I sometimes wonder if the run-up in oil futures over the past year or so hasn't been a semi-coordinated effort by a small cabal of anti-Obama people (like the Koch bros?) to try to make the economy worse in an effort to unseat him in November.
 
2012-04-11 12:59:27 PM

Dinobot: rampart speculation


www.the-numbers.com
 
2012-04-11 01:03:20 PM

StoneColdAtheist: I don't normally count myself among the tinfoil hat wearing brigade, but I sometimes wonder if the run-up in oil futures over the past year or so hasn't been a semi-coordinated effort by a small cabal of anti-Obama people (like the Koch bros?) to try to make the economy worse in an effort to unseat him in November.


Nothing is beyond what the Cock Bros would do; but doubt it. If they alone were doing this, they would stand out too much.
 
2012-04-11 01:10:24 PM
Anybody else notice that now that oil prices might start dropping they no longer say it is Obama's fault?

That way, when prices do drop, they can claim he had nothing to do with it.
 
2012-04-11 01:14:24 PM

IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.


There was a reason, but it is gone.

There was a time the markets needed more liquidity. Speculators provided that liquidity. By selling futures farmers and other producers could have the cash to plant their crops and run their wells.

Now there is too much liquidity and, as always happens when there is too much cash floating around, you have inflation. Also, the producers for the most part are not depending on the sale of futures for their survival.
 
2012-04-11 01:17:10 PM

madgonad: Anybody else notice that now that oil prices might start dropping they no longer say it is Obama's fault?

That way, when prices do drop, they can claim he had nothing to do with it.


It's pretty simple really. The "cause" of the recent runup -- "the Fed is printing so much money!". Ok, let's pretend that's true. You also believe that there is no end in sight to the printing, so if that's the cause, a drop in price would mean.... And that's where the discussion always ends because the logic fails. Dropping prices would mean they stopped printing money, but that's not a possible scenario (in their world).
 
2012-04-11 01:19:43 PM

madgonad: Anybody else notice that now that oil prices might start dropping they no longer say it is Obama's fault?


Might start dropping to what? People are going to say thanks for getting gas "down" to $3.99 from $4.10.
 
2012-04-11 01:29:15 PM

Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.


You mean the supply that is currently high, and the demand that is currently low, even as gasoline prices continue to rise? Interesting theory...
 
2012-04-11 01:42:41 PM
vygramul notably missing from this discussion. Is Wednesday the day he fellates Paul Krugman?
 
2012-04-11 01:47:02 PM

Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.


Yes. Supply and demand are the only factors that matter when it comes to the price of oil...

raisethehammer.org
 
2012-04-11 01:47:39 PM
DrewCurtisJr
Smartest
Funniest
2012-04-11 01:19:43 PM
madgonad: Anybody else notice that now that
oil prices might start dropping they no longer
say it is Obama's fault?
Might start dropping to what? People are going
to say thanks for getting gas "down" to $3.99
from $4.10.
`
* $4.89 for the cheap gas here when I filled the tank Monday. $4.99 a gallon for the Premium.
But who cares, it IS down from the $5.29 I paid last year.
That was BEFORE the 2nd largest refinery in the Western hemispere was shut down because it was losing money.
Thanks Hovensa, that's just what we needed! Several hundred people out of work and nobody within a thousand miles of here is hiring refinery workers.
On a related note : Land prices are dropping a little and if you have $cash$ you can buy up what ever is left of these peoples lives (house, car, furniture etc) real cheap since shipping off island by boat (too slow) or plane (too expensive) isn't an option when you have no place to go and no work if you could get there.
 
2012-04-11 01:56:39 PM
Hemisphere not hemispere Damn it !
 
2012-04-11 02:02:28 PM

Eatin' Queer Fetuses for Jesus: Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.

Yes. Supply and demand are the only factors that matter when it comes to the price of oil...

[raisethehammer.org image 300x208]


It's true. You mock Paul Krugman and his belief that speculation, absent physical hoarding, can't cause price spikes, but alas its true and I suspect you find his other views agreeable.

Price elasticity affects prices = if price elasticity of demand is low, a small increase in demand can cause large price increases.
 
2012-04-11 02:08:33 PM

Eatin' Queer Fetuses for Jesus: Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.

Yes. Supply and demand are the only factors that matter when it comes to the price of oil...

[raisethehammer.org image 300x208]



That does seem to be exactly what your graph is saying actually....

So, starting around 2004, you have a period where production is relatively flat, while comsumption is rising. In 2007, you get a sustained period where production is well under consumption, and prices start to rise. Once prices start to rise, and get above $80/barrel, production increases as new more expensive sources of oil are suddenly profitable. Once prices get above around $110/barrel, consumption begins to drop off a bit as people reduce their usage. Once production and consumption are back in line, the price quickly drops off.
 
2012-04-11 02:12:07 PM
FTA:

So there is an excellent chance that Obama will tap into the Strategic Petroleum Reserve -- and that Britain and France will take similar measures -- if prices don't fall of their own accord. Obama may have many shortcomings as a president, but he's still a Chicago pol. Chicago pols have been known to recruit voters from the cemeteries when it has meant the difference between victory and defeat. Tapping into the SPR is child's play by comparison.

If speculation is truly causing prices to be higher than they would be if determined solely by supply/demand, why bother tapping the physical SPR at all? Just have the Treasury put a guy on the floor of the CME or whatever exchange and have him short oil futures. Hell, hire Eddie Murphy and Dan Aykroyd to do it for fun. Sell oil futures until the price reaches underlying economic equilibrium, which won't be long once these evil speculators realize that the massive balance sheet of the US Government is going short.

We'll make a tidy profit for the taxpayers, bring prices down to equilibrium levels, burn these Wall street speculators, while not having to tap the physical reseve that we should only be using for national emergencies anyway! It's win-win-win-win, and would take a week or less! Why aren't we doing this?
 
2012-04-11 02:13:54 PM

Grand_Moff_Joseph: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

IMO, there's no reason that inelastic commodities of any kind should be open to investors. Such items should be controlled on a governmental level, with price constraints on both the high and low end.

Allowing the market to place bets on commodities that the public relies on is like asking to be hit by a train.


Short answer: No.

Long answer: Economic Calculation Problem.
 
2012-04-11 02:16:14 PM
Grand_Moff_Joseph
Smartest
Funniest
2012-04-11 12:33:07 PM
IrateShadow: There is really no reason that
non-industry investors should be allowed to
speculate on an in elastic commodity. None.
IMO, there's no reason that in elastic
commodities of any kind should be open to
investors. Such items should be controlled on a governmental level, (BUT, BUT Socialism!)with price constraints on both the high and low end.
Allowing the market to place bets on
commodities that the public relies on is like
asking to be hit by a train. (BUT,BUT FREE Market/Capitalism!)
`
It's okay if you're the guy in the cab of the train adding more fuel to the boiler and your rich ass buddies are just along for the ride
and the money - low risk, nice profit and no actual work more strenuous than holding a pen or tapping on a keyboard.
 
2012-04-11 02:23:01 PM
Grand_Moff_Joseph: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

IMO, there's no reason that inelastic commodities of any kind should be open to investors. Such items should be controlled on a governmental level, with price constraints on both the high and low end.

Allowing the market to place bets on commodities that the public relies on is like asking to be hit by a train.


Energy is a matter of national security in the end. So is Infrastructure. Or making sure our economy doesn;t collapse because the big 5 banks are 10% of GDP / 90% of the industry.

Just goes to show you how dumb the Dem's are. Not framing the debate in these rightful terms is hurting them and the country.
 
2012-04-11 02:23:30 PM

demaL-demaL-yeH: Debeo Summa Credo: Aarontology: IrateShadow:
No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.

The bold part up there is a bald-faced lie.
Do I really have to link any of the thousands of studies?

Thanks for the reminder, putz:
Debeo Summa Credo: (favorite: Capitalist Tool Latin for "I blow donkeys." for all values of donkey == plutocrat.)


Is there a better source where they explain just how they disentangled everything? I'm sure it exists, but that essay seemed to basically read "we aimed to do this, we did it, speculation was responsible for 15% of the price increase... TaaDaa!! But we're not gonna get into it."

/not an economist, probably obvious
 
2012-04-11 02:24:49 PM

Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.


Demand has been falling and supply is actually up despite the sanctions on Iran.

Meanwhile, prices are still near $4 / gallon.

How is this supposed to work again?

The fact is the oil and gas prices were only rarely this out of control before deregulation occurred in the commodities markets in 1999. For the last decade it's been a regular occurrence.
 
2012-04-11 02:25:49 PM
demaL-demaL-yeH: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.
I think they should be allowed to, but they must take physical possession of the commodity before reselling it.
I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

/Insert favorite [bears_repeating.jpg] //HERE//.


This is true.

Right now they don't have to if they can resell it before X amount of time. The last guy that get's caught holding the stick has to physically hold it. Typically that's when you see drops in prices and increases in inventory. When the last duck becomes the goose and has to eat the costs of playing the game.

Commodities trading has turned into a bad joke.
 
2012-04-11 02:29:12 PM
America where other peoples speculating causes you to go broke
 
2012-04-11 02:37:51 PM

Debeo Summa Credo: FTA:

So there is an excellent chance that Obama will tap into the Strategic Petroleum Reserve -- and that Britain and France will take similar measures -- if prices don't fall of their own accord. Obama may have many shortcomings as a president, but he's still a Chicago pol. Chicago pols have been known to recruit voters from the cemeteries when it has meant the difference between victory and defeat. Tapping into the SPR is child's play by comparison.

If speculation is truly causing prices to be higher than they would be if determined solely by supply/demand, why bother tapping the physical SPR at all?


In the past, on the few occasions the SPR was tapped, it had little effect on the price at the gas pumps. It's basically sleight of hand to make people think the government is doing SOMETHING to solve the problem, even though it really doesn't solve the problem.

Like the TSA giving everyone pat downs at the airport.
 
2012-04-11 02:39:16 PM

Dog Welder: Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.

Demand has been falling and supply is actually up despite the sanctions on Iran.

Meanwhile, prices are still near $4 / gallon.

How is this supposed to work again?

The fact is the oil and gas prices were only rarely this out of control before deregulation occurred in the commodities markets in 1999. For the last decade it's been a regular occurrence.


Nonsense! Oil prices fluctuated plenty before 1999. Prices fell to about $10 per barrel after the Asian crisis in 1998. Houston had a huge bust after the oil prices tanked in the mid 1980s.

Prices are higher now because emerging market (China) demand has increased. Why is this so difficult for people to accept?

Do you not buy any of Krugman's arguments?
 
2012-04-11 02:41:38 PM
We need a new bubble.
 
2012-04-11 02:43:41 PM

Dog Welder: Debeo Summa Credo: FTA:

So there is an excellent chance that Obama will tap into the Strategic Petroleum Reserve -- and that Britain and France will take similar measures -- if prices don't fall of their own accord. Obama may have many shortcomings as a president, but he's still a Chicago pol. Chicago pols have been known to recruit voters from the cemeteries when it has meant the difference between victory and defeat. Tapping into the SPR is child's play by comparison.

If speculation is truly causing prices to be higher than they would be if determined solely by supply/demand, why bother tapping the physical SPR at all?

In the past, on the few occasions the SPR was tapped, it had little effect on the price at the gas pumps. It's basically sleight of hand to make people think the government is doing SOMETHING to solve the problem, even though it really doesn't solve the problem.

Like the TSA giving everyone pat downs at the airport.


That's fine. Then going into the futures market will do the same or more. If speculators are driving prices above economic equilibrium, the second they hear Obama/Geithner/Gensler are headed to the trading floor with an intention to short the market until prices reach that equilibrium, then the speculators will flee. By the time Geithner walks in the door, prices will have dropped. And knowing he's willing to short the market will keep the speculators from bidding up prices again.

Of course, if economic equilibrium is actually close to observed market prices, then the government would take a bath on such an endeavor if it sold prices below that price.
 
2012-04-11 03:00:02 PM

IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.


Really, you can't think of a reason?

theboldcorsicanflame.files.wordpress.com
 
2012-04-11 03:01:05 PM

Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.


No.

As I've stated before, if that's the only rule you require, then they will simply buy an empty stadium, seal it up, then fill'er up.
 
2012-04-11 03:01:50 PM

null: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

So since we're talking about futures, they need to create a place to store the non-existent oil until it does exist, at which point they can resell it?

/Ankh-Morpork Pork Futures Warehouse


we've got some room in our crawl space if ya need to store your oil from the future
 
2012-04-11 03:39:54 PM

Debeo Summa Credo: Dog Welder: Debeo Summa Credo: Aarontology: IrateShadow: There is really no reason that non-industry investors should be allowed to speculate on an inelastic commodity. None.

I think they should be allowed to, but they must take physical possession of the commodity before reselling it.

No, that is the opposite of what should be required. Speculation, absent physical hoarding, has no material impact on prices of commodities. If you go long June oil, you have to sell it before June unless you want a to rent a tanker to store the oil that shows up at your door. You've bought once and sold once, net demand on June oil = 0.

This speculation witch hunt just distracts us from the true factor causing long term increases in oil prices- supply and demand.

Demand has been falling and supply is actually up despite the sanctions on Iran.

Meanwhile, prices are still near $4 / gallon.

How is this supposed to work again?

The fact is the oil and gas prices were only rarely this out of control before deregulation occurred in the commodities markets in 1999. For the last decade it's been a regular occurrence.

Nonsense! Oil prices fluctuated plenty before 1999. Prices fell to about $10 per barrel after the Asian crisis in 1998. Houston had a huge bust after the oil prices tanked in the mid 1980s.

Prices are higher now because emerging market (China) demand has increased. Why is this so difficult for people to accept?

Do you not buy any of Krugman's arguments?


Demand has gone up, but supply has also gone up.

Why is this so difficult for you to accept?
 
2012-04-11 03:48:52 PM
If commodity speculation causes commodity pricing to be artificially inflated then why have natural gas prices been at historic lows and now just went under $2 per MMBtu?
 
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