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Thread: Gas prices are highest ever for this time of year

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by 1Perry View Post
    I've seen nobody argue that they can corner the market.
    Then speculation cannot drive prices higher.

    Why? Easy. Because the positives (increased income for investment banks) are far outweighted by the negatives (higher everything for consumers). All speculation is as used here is those making money doing nothing off the backs of those actually working.

    Oil is a commodity, not an investment vehicle and should be treated as such.
    You miss my point. Speculation driven price spikes are realized on discrete time intervals, and are not.... i repeat.... are not a driver of long term price trends. Because of this fact, short term price volatility does not create real inflation. As stated, price trends are entirely driven by supply and demand determinants on an infinite continuum.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by Kushinator View Post
    Then speculation cannot drive prices higher.
    Despite the fact that it is. It's the herd mentality. We have done this. I've provided the links that showed that a percentage of the costs connected with $145 a barrel was do to nothing but speculation. Despite this, you still claim it doesn't happen.

    You miss my point. Speculation driven price spikes are realized on discrete time intervals, and are not.... i repeat.... are not a driver of long term price trends. Because of this fact, short term price volatility does not create real inflation. As stated, price trends are entirely driven by supply and demand determinants on an infinite continuum.
    I do not miss your point. Your point is wrong. Will supply and demand continue on a certain trend for awhile? Yes, most likely but those fundementals do not take oil from $45 to $120.

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by 1Perry View Post
    Despite the fact that it is. It's the herd mentality. We have done this. I've provided the links that showed that a percentage of the costs connected with $145 a barrel was do to nothing but speculation. Despite this, you still claim it doesn't happen.
    You have yet to provide me with anything.





    I do not miss your point. Your point is wrong. Will supply and demand continue on a certain trend for awhile? Yes, most likely but those fundementals do not take oil from $45 to $120.
    As usual, you simply got involved in a topic in which you know little if anything about.

    Here is an example of a valid source:

    Activity in the crude oil futures market increased appreciably in the past decade, as did the number of noncommercial traders, the so-called speculators. This coincided with rising oil prices but didnít necessarily cause them. No transmission mechanism linking futures prices to spot prices appears until transactions occur in the spot market. Looking at the 2007Ė09 period, the data are consistent with how a well-functioning futures market would behave, initially when there is tightness in the market, and later when there is considerable slack due to the global recession. Futures market traders, therefore, seem to have been routine market participants.
    I'm not even confident you understand what the bold is stating.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by Kushinator View Post
    Investment banks and hedge funds are incapable of cornering commodity markets; there is nothing to build a case for cornering futures markets, because for every long or short order contract, there is a counter-party required to take the other position. And if and when delivery is met, this opens up a plethora risk scenarios for entities holding vast tanks of petro, e.g. natural disaster, leaks, insurance costs, etc.... If a speculator is willing to assume such risk, why would they not be able to profit from it? Speculation can only drive up (or down) prices on very discrete intervals. In the long run, its all based on supply and demand and speculation simply adds liquidity to the respective market.

    P.S. Bernie Sanders is an idiot.
    Here's one reason why it might not be such a great idea: CFTC charges traders over oil price - FT.com
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by AdamT View Post
    Here's one reason why it might not be such a great idea: CFTC charges traders over oil price - FT.com
    Sometimes people do bad things. But such occurrences are generally outliers, as opposed to the market norm.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by Kushinator View Post
    Sometimes people do bad things. But such occurrences are generally outliers, as opposed to the market norm.
    What IS the norm is speculators -- who have absolutely no intention of ever taking delivery -- pushing up oil prices. Why do they do it, do you think? It's not because they want the oil. 70% of the oil futures traders will never take delivery of so much as a quart. It used to be the case that only 30% of speculators were financial traders. Now it's 70%. And of course they often make a lot of money on their bets. And who pays for those profits, do you think?
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by AdamT View Post
    What IS the norm is speculators -- who have absolutely no intention of ever taking delivery -- pushing up oil prices. Why do they do it, do you think? It's not because they want the oil. 70% of the oil futures traders will never take delivery of so much as a quart. It used to be the case that only 30% of speculators were financial traders. Now it's 70%. And of course they often make a lot of money on their bets. And who pays for those profits, do you think?
    Nobody has yet to show that speculation has driven prices up in 2008, or now. There is credible evidence that leads us to believe that emerging market demand is the key determinant in oil price movements.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by Kushinator View Post
    Nobody has yet to show that speculation has driven prices up in 2008, or now. There is credible evidence that leads us to believe that emerging market demand is the key determinant in oil price movements.
    You think that emerging market demand has increased 32% in the last four months? Because that's the price change over that time period.

    Listen, I'm not disagreeing with you to the extent that supply and demand are still, by far, the main factors in the price of oil, but I think speculation does drive up costs, and it can do so quite sharply in the short and mid term. And I don't see a good reason why it should be allowed, other than for end users.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Gas prices are highest ever for this time of year

    How Koch Became An Oil Speculation Powerhouse

    "In April, ThinkProgress caused a stir when we uncovered a series of Koch Industries corporate documents revealing the company’s role as an oil speculator. Like many oil companies, Koch uses legitimate hedging products to create price stability. However, the documents reveal that Koch is also participating in the unregulated derivatives markets as a financial player, buying and selling speculative products that are increasingly contributing to the skyrocketing price of oil. Excessive energy speculation today is at its highest levels ever, and even Goldman Sachs now admits that at least $27 of the price of crude oil is a result from reckless speculation rather than market fundamentals of supply and demand. Many experts interviewed by ThinkProgress argue that the figure is far higher, and out of control speculation has doubled the current price of crude oil."

    "– October 6, 1986: First oil derivative is introduced to Wall Street by traders at Koch."

    – 1990-1992: Koch, along with several oil companies and Wall Street speculators, form a coalition lobbying group to deregulate oil speculation. A coalition called “The Energy Group” is organized to press the Commodity Futures Trading Commission (CFTC) to allow oil derivatives to be traded off the NYMEX or any other regulated exchange. Participants in the coalition include Koch, Enron, Phibro (a powerful commodity speculator firm recently sold from Citigroup to Occidental Petroleum), J. Aron & Co (a commodity trading division of Goldman Sachs), BP, and other companies.

    – January 21, 1993. Wendy Gramm makes first major move to deregulate oil speculation. “On the final day of the [George H.W.] Bush administration, January 21, 1993, [CFTC chairwoman] Wendy Gramm … approved the rule exempting key energy futures contracts from government regulation and returned a great chunk of the energy market to the grand old days of unregulated futures trading,” writes author Antonia Juhasz in the book Tyranny of Oil.

    – 1997: Koch continues to shift from oil refining and pipelines to financial products. As Koch continues its embrace of selling exotic financial products, the company pioneers the first “weather derivatives,” essentially insurance policies sold to utility companies that bet on future temperature and weather patterns.

    – December 12, 2000: Sen. Phil Gramm (R-TX), after being lobbied by Koch and Enron, creates the infamous “Enron Loophole” vastly deregulating the oil speculation market. On the night of December 12, 2000, Gramm attaches a 262-page amendment to the Commodities Futures Modernization Act, which is then attached to an omnibus spending bill that is signed into law by President Clinton before leaving office. The Gramm amendment, which received absolutely no public scrutiny or committee hearings, radically expands and codifies the energy deregulation agenda began by Gramm’s wife during the first Bush administration.

    – 2008: Rampant oil speculation spikes prices to unprecedented levels. As academics from the Peterson Institute, the James Baker Institute at Rice University, and others conclude, non-commercial speculators begin to dominate the market, forcing up prices.

    – 2009: Koch presentation to ICE boasts that Koch is on the level of transnational big banks and can now be considered one of the world’s top five oil speculators.

    – 2010: Koch’s Tea Party front groups and lobbyists fight financial reforms designed to reign in the unregulated energy market.

    – 2011: As oil speculation again hits record highs, leading to record high oil prices, Koch’s allies in Congress fight to undermine new reforms and allow unchecked speculation to spiral out of control."


    How Koch Became An Oil Speculation Powerhouse | ThinkProgress
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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by AdamT View Post
    You think that emerging market demand has increased 32% in the last four months? Because that's the price change over that time period.

    Listen, I'm not disagreeing with you to the extent that supply and demand are still, by far, the main factors in the price of oil, but I think speculation does drive up costs, and it can do so quite sharply in the short and mid term. And I don't see a good reason why it should be allowed, other than for end users.
    Why would demand have to increase by 32% for oil to increase by that same amount given your specified time interval? Furthermore, what leads you to believe that the oil market expresses a linear relationship between demand and price? Consider price elasticity of demand, and rethink your response
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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