Quoted: I get the sense that you aren't even making an attempt to understand what we're saying, but whatever, I have another half-hour at work, I can for a bit. I shall correct your analogy. You are person A, wanting to buy a widget. Person B is making widgets. Person C is the eeeeeeeevil speculator. You go to Person B and ask to buy widgets. He says they aren't done yet, but he can give you a contract for delivery of widgets at $87 per. You are very at that price and believe it'll go down if you wait. A week later, you return, $87 in hand, because now you need a widget and can't wait any longer. Person B says, sorry, Person C arrived just after you did last week, bought the contract on all my widgets and paid my asking price of $87 per - now you'll have to deal with him. You go to Person C, who is now charging $100 for the widgets, because people are paying it.  You scream and wail and eventually hand over the $100, because you gotta have your widget. Person C smirks and uses your $100 bill to light his giant evil capitalist cigar. Alternatively: Person C guessed wrongly, and finds that the widgets he purchased a contract on at $87 per can only command a selling price of $66 per, because no-one is willing to pay more, or perhaps because a competitor has undercut him. His flood of tears puts out his cigar and you take your extra $21 and spend it on ammo.

Well done.

Deregulation - get used to how your government works when it's limited in areas that affect you.

you wont be singing this tune when the speculators lose their asses when the bubble bursts.

Quoted: you wont be singing this tune when the speculators lose their asses when the bubble bursts.

Then the speculators will just declare bankruptcy and their firms will be bailed out by the taxpayers(a la Bear Stearns). The market goes up, they make money. The market goes down, they lose nothing. The working class taxpayer pays for it either way.

Quoted: I thought demand increased supply ? Another one we hear all the time. For supply and demand to work it needs to not be tampered with. People don't want government tampering , why should others be allowed to ?

Demand increases prices.

Maybe you really shouldn't advocate economic policy when you clearly don't understand basic economics.

Quoted: Quoted: Speculation is as much a part of capitalism as any other. I will never support restrictions on capitalism. In the old days that was IMO a correct way to think. Today with all the corruption, you are so wrong. Insider trading for example. But the typical person is to  ignorant of the facts to know this.

There is less corruption and insider trading today than in the good old days.

The price of oil is rising due to the simple factor of supply and demand.

At present the price of oil is measured in $. The dollar is pretty weak right now, which is making the rises roller coaster slightly. But it wouldn't matter if it were pegged in Euros, Pound or Dong; the price would be steadily going up.

What The West demand is sweet, light crude. There still plenty of oil out there, but it's of the medium or heavy type (most of Saudi Arabia falls into this category) - and that means it needs cracking in a refinery. Welcome to choke point #1, cause there's not enough refineries and the NIMBY attitude has ment precious few get built.

As has been said, the East is a major factor in all this. While the West pays market rates for its fuel, the growing nations (China, India etc) have their fuel subsidised. This, of course, ramps up demand by a significant amount. To give you an idea how cheap they get it (from the pumps), Malaysia finally cut its fuel subsidy, as the economy couldn’t afford it any more. The price of petrol at the pumps went up by 45% overnight.

Now, you may notice that diesel - traditionally the 'cheap' fuel source - is now more expensive than petrol. This isn't because we're all driving diesel cars or sales of tractors are through the roof. It's cause of China (in part). There, the country has (and still has) major problems supplying electricity and so offered state 'discounts' on diesel generators so factories could carry on working in a power cut. And EVERY damn factory got one (along with towns and villages etc). And then they twigged that with the cheap subsidised diesel, it was cheaper (for many of them) to them to run the generators rather than use the national grid. And when there's a power cut (happens allot - been going on all the time since the earth quake), all the others kick in too. That's put demand for diesel through the f-ing roof.

On top of all this you have OPEC - a cartel - who give not a fig how much pain you go through - as long as your economy doesn't collapse you'll continue to buy the stuff. It's not in their interest to have the price of oil tumbling, so expect little help on this score.

So here the rub: You've got a commodity, run by a cartel, with runaway demand, finite supply, a shortage of refining capacity and - at present - pegged to a falling currency. Expect oil to hit $150 a barrel by July.

Quoted: Quoted: That is why futures trading exists.  If it occured the way you described, the price would swing wildly....   I'm not questioning why futures traders do what they do..I'm asking what the process is from the ground to the refinery,and what takes place in that process.

Basics of what happens:
An oil company has a producing well, estimated to produce say 1k bbl per month for the next 20 years.  They sell a futures contract (whenever they like, the contracts can be for dates out to 2016) on the NYMEX or similar exchange, to a (speculator) refiner/consumer of crude.  When the date of the contract rolls around, there are entities who own contracts for the current date (buyers, generally refineries), and entities short those same contracts (oil producers).  The producer is obligated to physically deliver a set amount (generally 1k bbl/contract) of a certain grade of crude (eg Light Brent or TX Permian) on a certain date (the expiry date of the contract) in a certain manner (generally in a pipeline which the buyer must take delivery from).  

The seller pumps the oil, the buyer receives, everyone is happy.  Both sides put up a significant bond in case of non-performance.  

Quoted: Quoted: So they are worthless humps of flesh serving absolutley no purpose other than collecting or losing 1's and 0's on a computer.yet they have HUGE control over MY everyday life based on nothing but thier word !!! Gottcha!!! Now that makes everything all better now. THEY SERVE NO PURPOSE !!!!!!! ELIMINATE THIS CRAP . If you never actually physically control the commodity , you have no right to be dealing in it .I will never understand how people fall for shit like this. Speculators take risks as much as anyone. They gamble that the price will increase between the time they buy and the time they sell; sometimes they win, sometimes they lose. Recently they've been winning a lot...just like the people in the housing market, until that bubble popped and the housing speculators who hadn't already sold got caught with devalued properties. Speculation provides the liquidity today to make sure that there will be oil flowing tomorrow. Without the ability to trade futures, you run the risk of disrupting supply. And, thankfully, it's not up to you to determine who has the "right" to trade in whatever they choose to trade in.

This explains the bailout of Bear Stearns.

If a speculator wins big, he collects the money.

If he loses big, he declares bankruptcy (or calls in some favors from some of the politicians he made 'campaign contributions' to) and walks away. Or it is written off as a loss, tax breaks are taken, and others are laid off.

And of course there are always the Pollyannas who believe that insider trading is a rarity.

The system is rigged, and they throw just enough crumbs to the regular schmucks to keep the game appearing legit.


For every ensuing post about 'how my portfolio has grown' there will be a dozen who will not post as their investments did not fare so well.



As for Soros, his track record with the Bank of England is well documented. He talks things (in which he has an interest) up and down depending on whether he is taking a position or dissolving one. Why they invite him to talk in front of Congress should be crystal clear: those who bring him in are supported by him, and the 'official stage' of a Congressional Hearing' gives his 'comments' more weight.

Oil is the next housing bubble

Quoted: This explains the bailout of Bear Stearns. If a speculator wins big, he collects the money.

The problem isn't the speculator, it's the Federal government stepping in and labeling institutions as "too big to fail", which in turn creates a risk less moral hazard for the institutions.  They have a period where credit is cheap, almost free, their theoretical downside losses are capped by the Federal government, and so they are unbound by risk.  The solution here is to stop the Federal government from bailing out private enterprise when private enterprise takes excessive risk in the market.  The solution is NOT further regulation and restriction on the market place's pricing, hedging, and speculation options.  

Quoted: Fine , you want to speculate , actually purchase the oil , then store it , then sell it at a profit if you can. Anything else is nothing more than a common numbers game open to being corrupted. I think that is a fair comprimise don't you ? If you want to be in the oil business you should have the oil. The only value added by speculators is whatever they can spook the sheep into paying.If the commodity is over priced it should sit on THIER SHELVES correct?

If you remove liquidity from the oil market you'll reduce its fungibility as well.  You'll increase risks carried by extraction and transportation.

You'll increase costs.

There is no "extra" profit being made here.  If someone could undercut the "evil traders" they would.

Have some fucking faith in the market and quit whining like bitches.

You guys are as bad as liberals when it comes to economics.

Quoted: Quoted: So they are worthless humps of flesh serving absolutley no purpose other than collecting or losing 1's and 0's on a computer.yet they have HUGE control over MY everyday life based on nothing but thier word !!! Gottcha!!! Now that makes everything all better now. THEY SERVE NO PURPOSE !!!!!!! ELIMINATE THIS CRAP . If you never actually physically control the commodity , you have no right to be dealing in it .I will never understand how people fall for shit like this. Speculators take risks as much as anyone. They gamble that the price will increase between the time they buy and the time they sell; sometimes they win, sometimes they lose. Recently they've been winning a lot...just like the people in the housing market, until that bubble popped and the housing speculators who hadn't already sold got caught with devalued properties. Speculation provides the liquidity today to make sure that there will be oil flowing tomorrow. Without the ability to trade futures, you run the risk of disrupting supply. And, thankfully, it's not up to you to determine who has the "right" to trade in whatever they choose to trade in.

The problem, is, UNLIKE SILVER, oil gets used up. And, unlike silver, we depend on it for our very lives.

Most of you are probably to young to remember in the early 70s when silver hit $50 an ounce, all because the hunt family decided to buy it all up, just like DeBears in Russia, and sit on it. That bubble popped in ONE DAY.

What these super rich people and hedge funds are doing is buying a tanker in the middle of the indian ocean (for example), and SITTING ON IT.

They are rich enough to sit on it forever if they want to.

It IS a bubble, but while it lasts we are getting screwed over big time, and  the sad thing is, the American people ahve such a short attention span, if gas ever falls to $3.50 a gallon, we will be HAPPY"

If it falls to $3 a gallon, we will be dancing inthe streets!!!

We will ahve forgotten that it should be $2 a gallon. OR $1.50 a gallon.

And a big part of this is foreingers mesing with the USA.

I'm all about free enterprise, but futures trading is different.

Quoted: The oil companys are paying for todays operations to ensure there is oil tommorrow. the speculators have nothing at stake but legal paper and thier reputation.Niether of which have any real bearing on the physical supply of oil. They are a drag on a free economy as is anyone who doesn't directly interact with the product.They never should have been allowed to do what they do. The refineries don't give a shit where the oil comes from , hell the consumer REALLY doesn't care. The oil companies say they can deliver and do so. Speculators do nothing. There was high praise here the other night for Walmart cutting out the middle man , yet no one wants to get rid of THESE middle men, when they add no value. Why is that ?

preach, brother!!!!!

Quoted: Quoted: The price of oil and gasoline is NOT supply/demand based. Blah, blah, blah, lets bring back a Communist style command economy to fix all of our economic woes!

what I ment was that the current extream rise in price is not supply (producer) / demand (end user/consumer) based.

Quoted: Quoted: Quoted: The price of oil and gasoline is NOT supply/demand based. Blah, blah, blah, lets bring back a Communist style command economy to fix all of our economic woes! what I ment was that the current extream rise in price is not supply (producer) / demand (end user/consumer) based.

It is being caused by a variety of factors combining to create a perfect storm.  The market will correct it.  The only question is whether or not it will be allowed to correct without some hero finding a villain and slaying it.  Even if it is caused by speculators, it does not mean they should go away.  They have a crucial role to play, and take a lot of risk doing it.  Hint:  A lot of your hated speculators ARE frying in hell right now since they got roasted over the coals holding leveraged short positions friday.  Wouldn't that suck!

Quoted: Quoted: I get the sense that you aren't even making an attempt to understand what we're saying, but whatever, I have another half-hour at work, I can for a bit. I shall correct your analogy. You are person A, wanting to buy a widget. Person B is making widgets. Person C is the eeeeeeeevil speculator. You go to Person B and ask to buy widgets. He says they aren't done yet, but he can give you a contract for delivery of widgets at $87 per. You are very at that price and believe it'll go down if you wait. A week later, you return, $87 in hand, because now you need a widget and can't wait any longer. Person B says, sorry, Person C arrived just after you did last week, bought the contract on all my widgets and paid my asking price of $87 per - now you'll have to deal with him. You go to Person C, who is now charging $100 for the widgets, because people are paying it.  You scream and wail and eventually hand over the $100, because you gotta have your widget. Person C smirks and uses your $100 bill to light his giant evil capitalist cigar. Alternatively: Person C guessed wrongly, and finds that the widgets he purchased a contract on at $87 per can only command a selling price of $66 per, because no-one is willing to pay more, or perhaps because a competitor has undercut him. His flood of tears puts out his cigar and you take your extra $21 and spend it on ammo.   Well done.

that is a great analogy, unfortunately, nobody if forced to buy widgets just to live.

Without GASOLINE we DIE

Quoted: Investing in an oil company is capitalism , owning an oil company is capitalism , selling oil you don't even have in your possession ( and never intend to have ) is thievery. Or at least legally santioned fraud of the worst kind.

You don't have the vaguest idea of what you're talking about.

European economy is about 8 months behind the US

End of the year the Euro will fall significantly against the dollar.

$150 dollar a bl oil will cause the Indians and Chicoms to raise prices
and cosumption in those countries will drop so will world demand.

Hopefully we can ride it out til then

Quoted: Quoted: I thought demand increased supply ? Another one we hear all the time. For supply and demand to work it needs to not be tampered with. People don't want government tampering , why should others be allowed to ? Demand increases prices. Maybe you really shouldn't advocate economic policy when you clearly don't understand basic economics.

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

-- Murray Rothbard

Quoted: Soros for all his faults has called the current oil boom a bubble. He isn't a billionaire because he is stupid with money. His politics is another story. Oil traders have some to do with this run but at the end of the day you have two nations coming online(India and China), who need oil to fuel their economies. Meanwhile in the good old US of A we won’t drill in Alaska, off Florida and California and haven't built a new refinery since I was two years old. You reap what you sow. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnsoros126.xml

Damn, just damn, that is so very well spot on and well said.

Good job!

These high energy prices are a gift from god.  Why do I say that?  Because going into an election, Republicans can point out the following:

ANWR Exploration House Republicans: 91% Supported House Democrats: 86% Opposed

Coal-to-Liquid
House Republicans: 97% Supported
House Democrats: 78% Opposed

Oil Shale Exploration
House Republicans: 90% Supported
House Democrats: 86% Opposed

Outer Continental Shelf (OCS) Exploration
House Republicans: 81% Supported
House Democrats: 83% Opposed

Refinery Increased Capacity
House Republicans: 97% Supported
House Democrats: 96% Opposed

SUMMARY

91% of House Republicans have historically voted to increase the production of American-made oil and gas.

86% of House Democrats have historically voted against increasing the production of American-made oil and gas.

Hopefully, these prices will cause Americans to rise up and demand the development of our domestic energy resources.

Quoted: Deregulation - get used to how your government works when it's limited in areas that affect you.

There is no deregulation in the futures market.  But there should be some deregulation on where we can drill...say Florida?

Quoted: Quoted: I can't wait till the oil bubble bursts. No doubt that prices are not in line with supply and demand. These oil speculators deserve to lose everything. Sooner or later there will be a correction and these people will be sorry when they finances take a dive off a cliff. there are buyers AND sellers of these futures contracts. (ie people speculate on the upside and downside) some will win, some will lose, but the smart ones have covered positions and will make good money either way

I can guarantee you in this market that buyers heavily outnumber sellers.

Quoted: These high energy prices are a gift from god.  Why do I say that?  Because going into an election, Republicans can point out the following: ANWR Exploration House Republicans: 91% Supported House Democrats: 86% Opposed Coal-to-Liquid House Republicans: 97% Supported House Democrats: 78% Opposed Oil Shale Exploration House Republicans: 90% Supported House Democrats: 86% Opposed Outer Continental Shelf (OCS) Exploration House Republicans: 81% Supported House Democrats: 83% Opposed Refinery Increased Capacity House Republicans: 97% Supported House Democrats: 96% Opposed SUMMARY 91% of House Republicans have historically voted to increase the production of American-made oil and gas. 86% of House Democrats have historically voted against increasing the production of American-made oil and gas. Hopefully, these prices will cause Americans to rise up and demand the development of our domestic energy resources.

That's what I'm say'in!!!!

www.ar15.com/forums/topic.html?b=1&f=5&t=717934

For Gods sake people it's a commodities bull market, it isn't just oil it's everything tangible and it's been going on for years now, rather than complain about it you should be climbing on and trying to ride it to the buzzer.

The only real problem in the futures market is when people sell commodities they don't actually have and can't actually deliver short, which DEPRESSES prices. Longs are never a problem. If the futures market disappeared tomorrow spot oil would go through the roof.

Grow the fuck up and deal with the fact you were wrong and didn't invest wisely and that energy is going to be more expensive, as will all commodities, from here on out.

Resource scarcity, plain and simple.

Quoted: For Gods sake people it's a commodities bull market, it isn't just oil it's everything tangible and it's been going on for years now, rather than complain about it you should be climbing on and trying to ride it to the buzzer. The only real problem in the futures market is when people sell commodities they don't actually have and can't actually deliver short, which DEPRESSES prices. Longs are never a problem. If the futures market disappeared tomorrow spot oil would go through the roof. Grow the fuck up and deal with the fact you were wrong and didn't invest wisely and that energy is going to be more expensive, as will all commodities, from here on out. Resource scarcity, plain and simple.

hey jeanius, genus, geinius very smart person

not everybody has tens of thousands of dollars laying around to invest in the stock market. Oil isn't even traded onthe open market, you have to be part of a big conglomerate, or filthy rich.

Besides which... the only thing I have invested in were AK parts kits, and I more doubled my money...


I was wrong to not buy MORE of them...

Quoted: Quoted: These high energy prices are a gift from god.  Why do I say that?  Because going into an election, Republicans can point out the following: ANWR Exploration House Republicans: 91% Supported House Democrats: 86% Opposed Coal-to-Liquid House Republicans: 97% Supported House Democrats: 78% Opposed Oil Shale Exploration House Republicans: 90% Supported House Democrats: 86% Opposed Outer Continental Shelf (OCS) Exploration House Republicans: 81% Supported House Democrats: 83% Opposed Refinery Increased Capacity House Republicans: 97% Supported House Democrats: 96% Opposed SUMMARY 91% of House Republicans have historically voted to increase the production of American-made oil and gas. 86% of House Democrats have historically voted against increasing the production of American-made oil and gas. Hopefully, these prices will cause Americans to rise up and demand the development of our domestic energy resources. That's what I'm say'in!!!! www.ar15.com/forums/topic.html?b=1&f=5&t=717934

you are right, hopefully this will wake some people up and demand that congress kick those libtards in the ass.

Quoted: Quoted: For Gods sake people it's a commodities bull market, it isn't just oil it's everything tangible and it's been going on for years now, rather than complain about it you should be climbing on and trying to ride it to the buzzer. The only real problem in the futures market is when people sell commodities they don't actually have and can't actually deliver short, which DEPRESSES prices. Longs are never a problem. If the futures market disappeared tomorrow spot oil would go through the roof. Grow the fuck up and deal with the fact you were wrong and didn't invest wisely and that energy is going to be more expensive, as will all commodities, from here on out. Resource scarcity, plain and simple. hey jeanius, genus, geinius very smart person not everybody has tens of thousands of dollars laying around to invest in the stock market. Oil isn't even traded onthe open market, you have to be part of a big conglomerate, or filthy rich. Besides which... the only thing I have invested in were AK parts kits, and I more doubled my money... I was wrong to not buy MORE of them...

Hey genius, the futures market is open.  Anyone (with the cash and the bravery) can participate.  I've traded crude futures (granted, mini contracts, which are 100bbl each), and I'm still in college.  It's not some mystical hard-to-enter, old-boys-club market.  

If you don't want to buy futures, USO and OIL are both crude-tracking mutual funds.  They move roughly the same (percentage) as the NYMEX crude futures.  Futures are more popular due to the set dates you can buy for and the greater access to margin.  

Oddly enough, buying AK kits years ago was like buying futures, just taking physical delivery of them.  You wagered that the price would rise, and bought your kits then, as either an investment (you would sell them later) or as a hedge (if you built them).  The futures market just allows you to not bother with storing them in the intervening period.