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07-13-2008 06:28 AM  9 years agoPost 21
Rob_T

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Make them take delivery
How?
Well that's the easy bit - stop them selling the paper future on again. They either get the oil, or they lose their money - their choice.

But even if you don't agree with regulating the market - finding out what the trades are so you can see how much it's affecting the price shouldn't be a big issue. We already require visibility into stock ownership.

One problem is that we don't even have hard data on who is buying futures.

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07-13-2008 11:27 AM  9 years agoPost 22
RonHill

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Rob

Well that's the easy bit - stop them selling the paper future on again. They either get the oil, or they lose their money - their choice.
Really? How are you going to get the Commodity Exchange in London or the Dubai Mercantile Exchange to follow along?

The BEST you could do is stop it here....But that is not going to stop anything.

So how do you get everyone to play along?
But even if you don't agree with regulating the market - finding out what the trades are so you can see how much it's affecting the price shouldn't be a big issue.
How many other commodities are tracked like that? Simple fact is that knowing that data could destroy the value of the commodity. You clearly want that, but that does not mean it is in the over all best interest of the economy as a whole.
One problem is that we don't even have hard data on who is buying futures.
Why is that a problem?

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08-07-2008 03:21 PM  9 years agoPost 23
RonHill

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Rob_T

If it were a demand side problem, gas prices should be lower now than they were this time last year, as the demand is down (due to the record prices).
Demand is down and now prices are down.

Notice NOTHING was done about speculation and prices have dropped.

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08-07-2008 11:41 PM  9 years agoPost 24
Rob_T

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Don't start your victory dance just yet

The timing also coincides with the house saying they wanted to start an inquiry into the impact of speculation on oil prices. Maybe the smart money is exiting now before the rush?

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08-07-2008 11:43 PM  9 years agoPost 25
kryptik

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So you mean this has been just another bubble? But...but...but, I thought the sky was falling...

If everyone is thinking alike, someone isn't ...

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08-07-2008 11:53 PM  9 years agoPost 26
RonHill

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Rob_T

The timing also coincides with the house saying they wanted to start an inquiry into the impact of speculation on oil prices. Maybe the smart money is exiting now before the rush?
Nothing they did was illegal, so no reason to bail early. Occam's razor seems to point out that since demand has fallen, like you have been saying, that prices would fall as well.

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08-08-2008 12:25 AM  9 years agoPost 27
Rob_T

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It doesn't need to be illegal to make bailing early the smart move. If the problem is excess speculation all you need is any reasons to start a trend reversal which will then create it's own inertia - just like a short squeeze or a bull run.

(BTW I don't think I've ever said it was illegal, just that it needs to be regulated in the same way the stock market is.)

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08-08-2008 12:35 AM  9 years agoPost 28
RonHill

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RobT

It doesn't need to be illegal to make bailing early the smart move. If the problem is excess speculation all you need is any reasons to start a trend reversal which will then create it's own inertia - just like a short squeeze or a bull run.
OR, the supply and demand curve works just like it should. The price was driven up by short supply worries. This caused a reduction in usage, which you have said over and over, and that is bringing prices down.

Fact is, both could be true...And both probably have some truth to it.

But the data presented does not really support your theory IMO.

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08-08-2008 12:42 AM  9 years agoPost 29
Rob_T

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We'll probably never know for sure, but the timing following public statements from congress and the head of OPEC lends more credence to something that can be driven by emotion (speculation) than a large change in demand.

None of this means we shouldn't have regulations to at least make the market transparent so we can actually answer the question about the impact of speculators.

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08-08-2008 12:45 AM  9 years agoPost 30
RonHill

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Rob

We'll probably never know for sure, but the timing following public statements from congress and the head of OPEC lends more credence to something that can be driven by emotion (speculation) than a large change in demand.
You think MORE than actual drop in demand?????

I disagree, but you are correct we may never know for sure. I tend to think actual market conditions are evaluated by investors and used to their advantage, than entire markets being able to be manipulated by a investors.

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08-13-2008 08:44 PM  9 years agoPost 31
Rob_T

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Demand is at a 5 year low (source). If supply/demand is the only factor in play one should reasonable ask why prices are at a 5 year high not low? Note that the article cited refers to the first 6 months of 2008, so demand was at it's lowest while prices continued to climb.

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08-13-2008 09:16 PM  9 years agoPost 32
RonHill

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Rob_T

If supply/demand is the only factor in play one should reasonable ask why prices are at a 5 year high not low?
US demand is at a 5 year low. And that is only down 3%. The world demand grew 3%

Also from your source:
The trade group said part of the decline could be attributed to a 2.1 percent increase in the demand for distillates, which include diesel fuel and home heating oil....

Crude oil inventories totaled 301 million barrels at the end of June, down 54 million barrels from the same period of 2007 and the lowest first-half level since 2003. U.S. crude oil production fell by 2.2 percent for the first half of 2008 compared with 2007.
So, demand is down and prices ARE going down. That supports the supply/demand side of the argument.

US inventories are down, but US production is down also. World consumption is up...In fact World consumption is expected to increase 50% by 2030....Which comes out to about 2.3 % per year.

http://www.eia.doe.gov/oiaf/ieo/electricity.html

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08-13-2008 09:43 PM  9 years agoPost 33
Rob_T

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You still don't explain a runup in price during a period when consumption dropped. There is a 6 month lag between consumption dropping and prices starting to move down. Oil and gasoline are priced daily (in fact more often), and we have all seen that prices increase over night in response to a small refinery problem or political instability. Yet you still say a 6 month lag in supply/demand is natural and refuse to believe recent attention to speculation isn't a factor - a factor which you're not even prepared to allow to be documented.

US energy markets have been manipulated in the past to create an artificial shortage and increased prices, so it does not require belief in some new theory to accept that the market is being manipulated. We even have a reason why it should be now - big financial companies have lost money over bad decisions in the mortgage market and so are desparate to find new profits to maintain their overall performance.

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08-13-2008 10:06 PM  9 years agoPost 34
Sealerman

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We even have a reason why it should be now - big financial companies have lost money over bad decisions in the mortgage market and so are desparate to find new profits to maintain their overall performance.
Bingo, Rob T gets a STAR.
The Dems know this, so anyone looking for Obama to change anything that will help the average American is a fool.

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08-13-2008 10:07 PM  9 years agoPost 35
Tintin

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Akershus, Norway

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What is slightly interesting about oil is that not that many years ago it was sold directly between seller and buyer, worked just fine if you ask me (hardly anyone does tho...) Any fluctuations were due to actual shortage/surplus. Now we have these fine lads at the exchanges making money on oil not even produced yet creating fluctuations because of possible shortage in future deliveries.....

In Europe we recently did the same with electricity and wadda ya know, it got much more expensive as soon as they started. We live mainly on hydroelectricity here. It has been raining for 3 weeks, all reservoirs are flooding over, yet the suits expect a shortage in the fall so they expect prices to increase a lot very shortly....

In a normal summer the plants will empty the reservoirs during summer selling off the electricity to German industry so that when the winter comes the price is tripled....go figure....earlier on around here the powerplant was owned by the local community, we had the same price all year around and it was fairly cheap. Our local council sold the plant, speculated in stock, lost the profit from the sale and now it's the suits that decide the price of electricity...I somehow can't see them performing the same service to the local community...

Same goes for the oil, there is an extra link (or 5) in the chain between producer and consumer and we're paying for their suits and beemers even if they in fact donæt produce anything useful at all..we managed just fine without them before...

However, sadly enough there is alot of truth in the Inspectors post..:
I can't figure out why folks are so upset about this. We had nearly FREE oil for 20 years. Time to pay the piper.
And of course we as country and a net exporter is making a fortune from it, at least my pension is secured and my healthcare paid for...

“Getting an inch of snow is like winning 10 cents in the lottery.”

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