[stupendousman]

The price of oil? Speculators and a lack of a coherent energy plan that accounts for the fact Americans don't want to spend and arm and a leg, and until new technologies are available we aren't ready to not be dependent on oil, are what has been causing the extremes. Now, oil is rising again and it's because of the reason I stated.

When Bush announced we were going to start looking at off-shore drilling again and pulled the executive order which made it impossible before, speculators who had been artificially propping up the price got scared and the price sank dramatically. You can look at any price chart and see that as the point the "bubble" burst.

We later found out that much of the problem was linked to a single firm:

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

Now we hear a single trader is possibly at fault for the current spike:

http://www.ft.com/cms/s/0/e0ae2b2a-6...44feabdc0.html

When is somebody going to do something rational to solve the problem, instead of just raising taxes to try and curb demand for energy?

We had this debate last year, starting when oil prices were at a record high. I explained why I thought that the oil prices where high, and what needed to be done to get the prices down at least short term. I even suggested that if done, prices might go down to as low as $2 for a gallon of gas. Of course, people scoffed, laughed and essentially told me I didn't know what I was talking about. Of course, just about everything I said happened and came true and as speculators AGAIN gear up and the US government sends signals to investors that they don't give a rats @ss about increasing production, the price will again rise without any real relationship to demand.

When will someone wake up and do something, or are sky-high oil prices (which many believe in tandem with dollar speculation and the screw-up of the housing industry by the Democrats killed the economy) something that is desired by certain groups or individuals? Me? I smell George "The King of Speculation" Soros. Has anyone checked to see if he has any involvement in any of the firms who have been engaged in the speculation voodoo in question?

[Eug]

Originally Posted by stupendousman 

We later found out that much of the problem was linked to a single firm:

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews

That article is almost a year old.

Now we hear a single trader is possibly at fault for the current spike:

http://www.ft.com/cms/s/0/e0ae2b2a-6...44feabdc0.html

Lost $10 million for his company, and moved oil prices about 2 bucks.

[OldManMac]

Originally Posted by stupendousman 

Me? I smell George "The King of Speculation" Soros. Has anyone checked to see if he has any involvement in any of the firms who have been engaged in the speculation voodoo in question?

Why don't you do so, and get back to us, instead of making wild generalizations.

[stupendousman]

Originally Posted by Eug 

That article is almost a year old.

Considering the fact that I referenced when the price of oil shot up last year, I'm not sure why that is relevant. The article came out after the record oil prices last year.

Lost $10 million for his company, and moved oil prices about 2 bucks.

So you are saying that Financial Times is wrong when they claim that "the startling spike in oil prices to their highest level this year on Tuesday was caused by a rogue broker who placed a massive bet in the Brent oil market, triggering almost $10m (€7m) of losses for his company?"

If a single speculator can raise the price in 2 bucks, what can several in tandem do? Maybe a guy with billions who'd love to see the price of oil go sky high for political reasons?

[hyteckit]

Again, thanks for Republicans for deregulation the financial market and screwing us over.

[kobi]

Originally Posted by hyteckit 

Again, thanks for Republicans for deregulation the financial market and screwing us over.

Phil Gramm at his finest.

[turtle777]

Originally Posted by hyteckit 

Again, thanks for Republicans for deregulation the financial market and screwing us over.

WTF ? You are like a retarded parrot, just blabbing the same old sh!t over and over again.

You DID get the memo that the suspected trading here took place in England.
I guess you're just not able to put 1 and 1 together.

-t

[ctt1wbw]

[hyteckit]

Originally Posted by turtle777 

WTF ? You are like a retarded parrot, just blabbing the same old sh!t over and over again.

You DID get the memo that the suspected trading here took place in England.
I guess you're just not able to put 1 and 1 together.

-t

You mean oil speculation has no effect on the US market? Have you been hiding in your turtle shell?

What do you think Democrats in congress are trying to do in the past year about oil speculation? Democrats are trying to passed an anti-speculation measure.

http://www.npr.org/templates/story/s...oryId=92809579

[ctt1wbw]

Don't give Democrats credit for much, seeing as how a Republican was in office as oil came down from $150 to just around $34 per barrel before he left office. Now that a Democrat is back in office, it's around 70 again, after just 6 months.

[hyteckit]

Originally Posted by ctt1wbw 

Don't give Democrats credit for much, seeing as how a Republican was in office as oil came down from $150 to just around $34 per barrel before he left office. Now that a Democrat is back in office, it's around 70 again, after just 6 months.

WTH are you talking about? You make it sound like Pres. Bush took office when oil was $150/barrel.

When Pres. Bush took office, price of a barrel of oil is $24. It shot up to $150/barrel.

[hyteckit]

Originally Posted by kobi 

Phil Gramm at his finest.

Exactly.

When Gov. Pete Wison of California deregulated the energy market, Enron took advantage.

It cost California billions of dollars as a result and multiple blackouts.

Thanks to stupid Phil Gramm and Enron deregulating the commodity and futures market.

http://en.wikipedia.org/wiki/Commodi...on_Act_of_2000

[turtle777]

Originally Posted by hyteckit 

You mean oil speculation has no effect on the US market? Have you been hiding in your turtle shell?

And how exactly did Bush deregulation enable speculators overseas ?

-t

[ctt1wbw]

Originally Posted by hyteckit 

WTH are you talking about? You make it sound like Pres. Bush took office when oil was $150/barrel.

When Pres. Bush took office, price of a barrel of oil is $24. It shot up to $150/barrel.

My point is that no President controls the price of oil. The US President is not in charge of OPEC. So why do you keep blaming Republicans and crap for the price of oil? President Bush didn't make it go up to 150 and he didn't make it come down to 34 or so.

[ctt1wbw]

I bet Republicans caused global warming too?

[OreoCookie]

You're contradicting yourself.

Originally Posted by ctt1wbw 

Don't give Democrats credit for much, seeing as how a Republican was in office as oil came down from $150 to just around $34 per barrel before he left office. Now that a Democrat is back in office, it's around 70 again, after just 6 months.

Originally Posted by ctt1wbw 

My point is that no President controls the price of oil. The US President is not in charge of OPEC. So why do you keep blaming Republicans and crap for the price of oil? President Bush didn't make it go up to 150 and he didn't make it come down to 34 or so.

[mattyb]

I thought that comedy was usually in the Lounge. You guys are funny, keep going.

[ctt1wbw]

Originally Posted by OreoCookie 

You're contradicting yourself.

No, I was intentionally trying to point out that he blames Republicans but it's neither one that is responsible. He blames Republicans, but didn't give a Republican credit for bringing oil down. Just another typical liberal, blaming Republicans and trying to give Democrats credit for everything.

[kylef]

It's concerningly impressive that a single trader can spike oil prices by $2 a barrel.

Originally Posted by ctt1wbw 

I bet Republicans caused global warming too?

Naturally.

[ctt1wbw]

I thought it was from all the hot air coming from the Obama campaign.

[Wiskedjak]

The price of oil has been rising ever since the US invaded Iraq. There was a brief drop at the beginning of the financial crash, but it doesn't take any great speculative powers to deduce that the price will continue to rise. Even *I* knew at the beginning of the financial crash that the price of oil would quickly work it's way back up to the highs it enjoyed during Bush's Presidency.

[Wiskedjak]

Originally Posted by ctt1wbw 

Don't give Democrats credit for much, seeing as how a Republican was in office as oil came down from $150 to just around $34 per barrel before he left office. Now that a Democrat is back in office, it's around 70 again, after just 6 months.

So, all a President has to do to lower the price of oil is to tank the global economy?

[King Bob On The Cob]

Originally Posted by Wiskedjak 

So, all a President has to do to lower the price of oil is to tank the global economy?

Obama's trying his best darnit! He just needs more time!

[ctt1wbw]

Originally Posted by Wiskedjak 

So, all a President has to do to lower the price of oil is to tank the global economy?

See above statement.

[turtle777]

Originally Posted by King Bob On The Cob 

Obama's trying his best darnit! He just needs more time!

He spent / committed trillions of $ in just 6 months. I can't wait what this will amount to in 4 years. The US is going to be so broke, living on welfare today will feel like being rich then.

-t

[Big Mac]

stu, we often agree, and I thank you for pointing to that first article from August 2008. The issue I have with your line of thought is, if the oil market is that easily gamed, why did prices go from $147 last summer to a low that was briefly under $50 this year? Those who had their funds tied up in $147 oil contracts got burned big time by that swing, and I bet many firms went out of business as a result. If the market had been controlled by the speculators like you and so many others are inclined to believe, the price should have continued going up or should have stayed at that high level.

Commodities periodically experience speculative peaks, but they quickly enough return to levels reflecting their fundamentals. If the world thinks commodity speculation is too big of a problem there will be an international agreement over acceptable margin levels. Right now the world powers are much more interested in controlling intellectual property - hence ACTA.

[stupendousman]

Originally Posted by Big Mac 

stu, we often agree, and I thank you for pointing to that first article from August 2008. The issue I have with your line of thought is, if the oil market is that easily gamed, why did prices go from $147 last summer to a low that was briefly under $50 this year?

A couple of possible reasons, and I don't think it's based entirely on speculators wanting big profits:

1. The people doing the "gaming" don't want anything done to increase production. If you notice, the drop in oil started when everyone in Washington was talking about increasing production. It's rising again now that it's clear that there probably will be no increases in production.

2. The people doing the "gaming" saw the oil issue was hurting Democrats, especially Obama. They weren't the ones who the "gamers" wanted to hurt.

3. Those doing the "gaming" know that high gas prices hurts the U.S. economy. A weakened U.S. economy creates dependance on Government. I believe those doing the "gaming" possibly want this.

None of this works though if supply isn't artificially controlled and even if there is no wild conspiracy as I suspect, this can all be controlled by ensuring increased U.S. production. As soon as there is serious talk about about increasing domestic production, you'll see the prices go back down. Until then, I don't think so. I predicted what would happen last last. I'm predicting this now:

If the price of gas or oil becomes an issue that is hurting Democrats - the price will go down. If there is any real debate on increasing production - the price of oil will go down. Otherwise, I think the prices will stay the same or rise.

[Big Mac]

It makes for a good conspiracy theory against the Left, so I like your ideas and would like to subscribe to your newsletter. But if speculators had that much control over prices, they wouldn't care one bit about Obama's presidency. They'd take oil from $50 a barrel in the winter to $150 in the summer and back again, over and over again. The thing is, that's not how trading works. No one participant has enough power over the market to rig a world market it to that extent. Not even OPEC has the power to really move the price of its own commodity anymore.

Besides all of that, political gestures toward increasing American oil production are nice for the American psyche when prices are high, but the effect on the price of crude would be small because our contribution to the world's supply is small.

There's one point on which most everyone agrees, though: Raise the margin requirement and enforce it. If that's done on an international basis you'll reduce the amount of speculation and see fewer bubbles as a result. But I guarantee to you that in last summer's bubble, those speculators who were highly leveraged and shooting for north of $150 oil got burned big time when the bubble burst.

[Chongo]

The Illuminati/Bilderburg group is behind it.

[stupendousman]

Originally Posted by Big Mac 

It makes for a good conspiracy theory against the Left, so I like your ideas and would like to subscribe to your newsletter. But if speculators had that much control over prices, they wouldn't care one bit about Obama's presidency. They'd take oil from $50 a barrel in the winter to $150 in the summer and back again, over and over again.

I think that depends on the

a. Motive for driving prices up.
b. Effect perceived supply has on speculators whose only motive is profit.

If you've got a handfull of billionaires (say, someone like George Soros) who do not mind blowing millions in order to effect political change, who are backing upward prices in regards to speculation, then a money making cycle is irrelevant.

Say that these people were acting politically. A guy like George Soros has made it known that he at times wishes to use his billions to pressure governments into doing things his way. He's the man "who broke the Bank of England" for heavens sakes. Say that other speculators see how these other speculators are betting for high prices. They will do the same. Now, if something happens to make them think that supply will increase (like it happened last June) then they'll hop off the boat and that will cause the billionaires to do the same probably so that they can minimize their losses. People who are looking to manipulate the markets can't stop someone like George Bush from stepping in and ruining the party by announcing that there would likely be increased production, thus greater supply - spooking people who were helping drive up the market.

The thing is, that's not how trading works. No one participant has enough power over the market to rig a world market it to that extent. Not even OPEC has the power to really move the price of its own commodity anymore.

Did you not see the citation that claims that the initial spike in oil prices last year likely came from one firm? One guy raised the price 2 dollars a barrel in the second story cited. George Soros drove the value of the pound down to nothing. I think you underestimate what one, or a few people can do if they are smart and have LOTS of money.

[hyteckit]

Originally Posted by ctt1wbw 

My point is that no President controls the price of oil. The US President is not in charge of OPEC. So why do you keep blaming Republicans and crap for the price of oil? President Bush didn't make it go up to 150 and he didn't make it come down to 34 or so.

I'm blaming the Republicans for deregulating the energy market and commodities market, giving speculators and OPEC too much influence over the price of oil.

Guess what happened in California when California deregulated the energy market?

Enron took advantage of it and manipulated the energy market causing prices for electricity to sky rocket.

Do I blame Republican Gov. Pete Wilson for deregulating the energy market in California for it? Yes
Do I blame Enron and Phil Gramm for the Commodity Futures Modernization Act of 2000? Yes

http://en.wikipedia.org/wiki/Commodi...on_Act_of_2000

[CreepDogg]

Originally Posted by Big Mac 

It makes for a good conspiracy theory against the Left...

Besides all of that, political gestures toward increasing American oil production are nice for the American psyche when prices are high, but the effect on the price of crude would be small because our contribution to the world's supply is small.

<Sigh> Sounds like someone (else - not this poster) still hasn't gotten Econ 101 onto their course itinerary...

[stupendousman]

Originally Posted by CreepDogg 

<Sigh> Sounds like someone (else - not this poster) still hasn't gotten Econ 101 onto their course itinerary...

Sigh, indeed. If you are limited to Econ 101 in your understanding of how markets really work then yes, this all can be pretty frustrating for you to understand.

It's tough to swallow that psychological factors and politics can play just an important role in shaping markets when they never go over that sort of thing in basic economics courses. They don't go over Jim Cramer moving markets when he says stupid things on TV. They don't explain how a single analyst giving misinformation on a company to a few select people can drive the prices up or down dramatically by "fomenting the market". They don't explain how when Warren Buffet (one man) puts his money somewhere, that can dramatically shift perception and cause huge market changes. They don't explain that if you tell people you are planning on producing more oil, the market will respond because of the perceived effect it might have on supply.

Don't take my word for it. Google some of the terms and people I just mentioned. Don't look at your Econ 101 textbook though, because you won't find any of that in there.

Let's not forget CreepDogg, that we already had this debate a year ago. That was when I predicted exactly what would happen and why. When I stated that If we'd make a strong stand that we were going to be a player in increased production, prices would go down, and they did. I said that prices would stay down as long as we kept up that stand and/or it was no longer politically expedient to keep them artificially high. What happened? Exactly what I've claimed.

Again..you keep your Econ 101. The people running the world markets likely never cracked the textbook open once they got real-world experience and realized that those where basic concepts where there were many exceptions to the "rules". In this thread alone there are several examples.

[Big Mac]

We'll have to agree to disagree on this subject, stupendousman. Speculation does happen in the markets. Those who have the means can take advantage of market conditions to an extent. But to attribute last year's oil run-up to just a few very powerful conspiratorial interests is naive. The world market is far too large for that. I'm a trader, I follow the markets closely, and I'm pretty well informed on the topics involved.

Oil's down again today, by more than $2, btw.

[stupendousman]

Originally Posted by Big Mac 

We'll have to agree to disagree on this subject, stupendousman. Speculation does happen in the markets. Those who have the means can take advantage of market conditions to an extent.

I posted two examples at the top where single traders influenced the price of oil more than "to an extent", IMO

But to attribute last year's oil run-up to just a few very powerful conspiratorial interests is naive. The world market is far too large for that. I'm a trader, I follow the markets closely, and I'm pretty well informed on the topics involved..

Whether or not it's a "conspiracy" is a separate matter. What is happening is that a few traders have influenced the price artificially to make them high, as evidenced by the threads I posted. I offered my own theory on why they might be doing it, based on observation of trends.

[Big Mac]

Regarding the first article, you know that you're relying on the Washington Post's claims. The same newspaper that wanted to throw that Obama-newspaper-lobbyist three-way shindig. They also rely on the claims of Dingell, who I imagine if he had the chance would end all capital markets Socialize the economy completely. I'm not saying I absolutely reject the article, but based on my knowledge of how trading and markets work, I'm skeptical of those assertions. The claims about the company in question are pretty vague if you read the article, so it sounds more like someone found a convenient scapegoat during a time when people were irate over clearly unjustifiably high oil prices. If Dingell had truly been troubled by what he saw, he would have introduced legislation to reduce futures margin requirements.

Regarding the second article, that was an unusual, easily spotted rogue trade from a trader who most likely got fired for losing millions in one shot. It appears to be an isolated incident. I don't mean to be quarrelsome, but I think if you had a deeper understanding of how the markets work you would reach a different conclusion.

[CreepDogg]

Originally Posted by stupendousman 

Sigh, indeed. If you are limited to Econ 101 in your understanding of how markets really work then yes, this all can be pretty frustrating for you to understand.

It sure is a good place to start. It demonstrates a desire for understanding beyond political leanings and conspiracy theories. But hey, if you want to depict the oil markets as a right-wing version of an Oliver Stone movie, be my guest.

Let's not forget CreepDogg, that we already had this debate a year ago. That was when I predicted exactly what would happen and why. When I stated that If we'd make a strong stand that we were going to be a player in increased production, prices would go down, and they did. I said that prices would stay down as long as we kept up that stand and/or it was no longer politically expedient to keep them artificially high. What happened? Exactly what I've claimed.

...and as I demonstrated a year ago, all the same behavior can be explained by the laws of supply and demand. The market found the point where there's elasticity in oil demand. I've said my piece on this, and the facts haven't changed. I'll let others decide for themselves which is more credible...facts and results, or conspiracy theories.

Not to mention, you're twisting the facts to suit your story. Since then, oil has fluctuated betwen what, about $30 to $70. Hardly 'staying down' as it's still gotten to historically pretty high point.

Again..you keep your Econ 101.

I will. Gladly.

[Big Mac]

Originally Posted by CreepDogg 

...and as I demonstrated a year ago, all the same behavior can be explained by the laws of supply and demand.

I don't think one can explain last year's oil prices just on the basis of supply and demand. It had a huge run-up that attracted considerable speculative buying that was far in excess of the actual demand for crude. Investment managers were using oil as an investment vehicle, which was never traditionally done. Then the bubble burst. It wasn't just supply and demand, at least not of the underlying commodity, but it wasn't the work of a few very powerful players, either.

[CreepDogg]

Originally Posted by Big Mac 

I don't think one can explain last year's oil prices just on the basis of supply and demand. It had a huge run-up that attracted considerable speculative buying that was far in excess of the actual demand for crude. Investment managers were using oil as an investment vehicle, which was never traditionally done. Then the bubble burst. It wasn't just supply and demand, at least not of the underlying commodity, but it wasn't the work of a few very powerful players, either.

Yes, I don't think there was any question there was a speculative bubble. Speculation tends to exaggerate supply and demand, not work against it (people are speculating based on where they think the price will go!) The facts were showing that there was rapidly growing global demand, and many got in a tizzy about how high prices would go. When they shot up quickly, consumption dropped a bit, all the excitement about growing demand subsided, and the bubble burst.

It was still supply and demand - that of the underlying commodity - exaggerated by the supply and demand for the investment vehicle. Investors seem to be more cautious now as we're back to 'normal' fluctuations in price (at least, 'normal' in the sense that we've seen fluctuations of this magnitude before).

And yeah, if anything, the goal of the speculators in this whole thing was personal gain, not some political conspiracy.

[Big Mac]

Well said.

[OreoCookie]

Originally Posted by CreepDogg 

Yes, I don't think there was any question there was a speculative bubble. Speculation tends to exaggerate supply and demand, not work against it (people are speculating based on where they think the price will go!) The facts were showing that there was rapidly growing global demand, and many got in a tizzy about how high prices would go. When they shot up quickly, consumption dropped a bit, all the excitement about growing demand subsided, and the bubble burst.

It was still supply and demand - that of the underlying commodity - exaggerated by the supply and demand for the investment vehicle. Investors seem to be more cautious now as we're back to 'normal' fluctuations in price (at least, 'normal' in the sense that we've seen fluctuations of this magnitude before).

And yeah, if anything, the goal of the speculators in this whole thing was personal gain, not some political conspiracy.

Well-said.
Edit: I normally don't do +1 posts, especially since Big Mac has posted the same response earlier.

[Eug]

Originally Posted by stupendousman 

Maybe a guy with billions who'd love to see the price of oil go sky high for political reasons?

Nope. The motive is profit, amongst the market in general, as others have said.

CreepDogg had a good post on it. ie. +1

[stupendousman]

Originally Posted by Big Mac 

Regarding the first article, you know that you're relying on the Washington Post's claims. The same newspaper that wanted to throw that Obama-newspaper-lobbyist three-way shindig. They also rely on the claims of Dingell, who I imagine if he had the chance would end all capital markets Socialize the economy completely. I'm not saying I absolutely reject the article, but based on my knowledge of how trading and markets work, I'm skeptical of those assertions.

I'm not saying any trader on the street can go in and move a market in the manner that has been suggested.

Originally Posted by CreepDogg 

...and as I demonstrated a year ago, all the same behavior can be explained by the laws of supply and demand.

Originally Posted by CreepDogg 

Yes, I don't think there was any question there was a speculative bubble. Speculation tends to exaggerate supply and demand, not work against it (people are speculating based on where they think the price will go!) The facts were showing that there was rapidly growing global demand, and many got in a tizzy about how high prices would go. When they shot up quickly, consumption dropped a bit, all the excitement about growing demand subsided, and the bubble burst.

The price was skyrocketing as supply grew and demand was falling. Even as supply was growing and demand was decreasing, all the experts predicted even higher oil prices, If price increases as supply increases and demand decreases, then you have something that does not fall within the laws of supply and demand. There is obviously other market forces at work - one's that you can't figure out with formulas or textbooks.

Not to mention, you're twisting the facts to suit your story. Since then, oil has fluctuated betwen what, about $30 to $70. Hardly 'staying down' as it's still gotten to historically pretty high point.

I didn't say it would stay low. I predict the price will likely rise even more soon. I predicted what would cause the price to drop, and it wasn't any real drop in supply or demand. It was something that was necessary in order to effect the "psychology of the market". Do they teach about the "psychology of the market" in Econ 101 these days? It's been probably 20 years since I aced my Econ courses in college.

[CreepDogg]

Originally Posted by stupendousman 

The price was skyrocketing as supply grew and demand was falling. Even as supply was growing and demand was decreasing, all the experts predicted even higher oil prices, If price increases as supply increases and demand decreases, then you have something that does not fall within the laws of supply and demand. There is obviously other market forces at work - one's that you can't figure out with formulas or textbooks.

Data to support this claim? I seem to recall a lot of screaming for more production, with little tangible result (which would mean there was little increase in supply), and the market reacting soon after consumption dropped (as one would expect).

Do they teach about the "psychology of the market" in Econ 101 these days?

Yes. It can cause shifts in the supply/demand curves and is always worthy of rational consideration.

It's been probably 20 years since I aced my Econ courses in college.

Refresher, perhaps?

[finboy]

Originally Posted by stupendousman 

When is somebody going to do something rational to solve the problem, instead of just raising taxes to try and curb demand for energy?

What, you mean like nuke Beijing? Or assassinate George Soros? So many choices, so little time.

Sure markets can be manipulated. It's up to those in the markets to understand that and pull things back to reason over time. Last summer's price doctoring was pretty obvious to the folks to play in those markets, and that's why you haven't seen more of a runup in recent months. "Fool me twice..."

Combine a few billions with a bunch of sheep in the press and populace, and market manipulation is easy. All part of the grand plan.

[Wiskedjak]

Originally Posted by stupendousman 

When is somebody going to do something rational to solve the problem, instead of just raising taxes to try and curb demand for energy?

What do you suggest be done, and who do you suggest do it?

[hyteckit]

It goes beyond simple supply & demand and Econ 101.

We are talking about futures and commodities trading where the short-term demand for oil is very inelastic and where supply of oil is control by a very small number of key players.

It's like Enron shutting down power to California to drive up energy prices and then selling back to California at astronomical prices.


Here's today article on curbing speculation and market manipulation.

CFTC Floats Rules Aimed at Speculation - washingtonpost.com

The Commodity Futures Trading Commission will consider new measures to curb speculation in the markets for energy and other commodities, the agency is set to announce today.

The move aims to reduce the volatility of prices but faces resistance from top Wall Street firms, which fear the efforts could cut into profits. Regulators and lawmakers increasingly worry that these firms have used their size and power to inflate the prices of commodities, booking profits in the process.

[Chongo]

Originally Posted by hyteckit 

It goes beyond simple supply & demand and Econ 101.

We are talking about futures and commodities trading where the short-term demand for oil is very inelastic and where supply of oil is control by a very small number of key players.

It's like Enron shutting down power to California to drive up energy prices and then selling back to California at astronomical prices.


Here's today article on curbing speculation and market manipulation.

CFTC Floats Rules Aimed at Speculation - washingtonpost.com

The Commodity Futures Trading Commission will consider new measures to curb speculation in the markets for energy and other commodities, the agency is set to announce today.

The move aims to reduce the volatility of prices but faces resistance from top Wall Street firms, which fear the efforts could cut into profits. Regulators and lawmakers increasingly worry that these firms have used their size and power to inflate the prices of commodities, booking profits in the process.

This applies to US trading only and will have no control over international traders.

[stupendousman]

Originally Posted by CreepDogg 

Data to support this claim? I seem to recall a lot of screaming for more production, with little tangible result (which would mean there was little increase in supply), and the market reacting soon after consumption dropped (as one would expect).

Consumption had been dropping for some time while price increased. OPEC increased production twice months before the sky-high peak in oil prices.

http://ftalphaville.ft.com/blog/2008...s-green-shock/

Refresher, perhaps?

I'm beyond 101. You seem glad to be stuck there.

Originally Posted by Wiskedjak 

What do you suggest be done, and who do you suggest do it?

I think we need to increase production. It provides the psychological market force that keeps fear of OPEC down. Prices were rising while supply increased and demand decreased. It wasn't until there was something that caused a shift in the psychology of the market that oil prices started to sink from their artificial highs. That happened in June of last year, just when Bush and Congress decided to look into renewed off-shore drilling for the first time in years.

But I think it would be a mistake to rely on increased production alone. At the same time, we've got to invest in alternatives.

Originally Posted by finboy 

Sure markets can be manipulated. It's up to those in the markets to understand that and pull things back to reason over time. Last summer's price doctoring was pretty obvious to the folks to play in those markets, and that's why you haven't seen more of a runup in recent months. "Fool me twice..."

Combine a few billions with a bunch of sheep in the press and populace, and market manipulation is easy. All part of the grand plan.

They don't teach you that in Econ 101, so surely it can't be true!!11!!??

:lol

[CreepDogg]

Originally Posted by stupendousman 

Consumption had been dropping for some time while price increased. OPEC increased production twice months before the sky-high peak in oil prices.

http://ftalphaville.ft.com/blog/2008...s-green-shock/

That shows January and February 2008 as compared to 2007. For the US only. It doesn't show a steady drop in demand, or the expected increase leading up to summer. In previous years, that time period showed similar fluctuations, up and down, probably in part due to the length and severity of the heating season primarily in the northeast. And, it's only one very short-term snapshot. Try again.

I'm beyond 101. You seem glad to be stuck there.

In order to be successful in studies more advanced than 101, you have to be able to apply its principles. Try starting there, and maybe you'll get beyond it, instead of it being beyond you.