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

  1. #491
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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by rocket88 View Post
    Right, but as high as our gas prices are it's not from a shortage of anything. The oil companies ship gasoline elsewhere that they make here because they make a bigger profit in doing so. That's just business.

    So gas wouldn't necessarily be cheaper just from drilling anywhere and everywhere. Because if the increased crude production just turns into gasoline that they ship to China because they make more money, it doesn't lower the price we pay much at all.
    Do you believe prices will go lower if our economy improves? We are exporting more gasoline because there is less demand for it here. What will happen when a Republican President is voted into office in November and the economy begins to improve?

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

    Quote Originally Posted by Lord Tammerlain, replying to Karl View Post
    [...] The oil industry is too large to corner the market, it has new supplies being produced every day, and the long term price is set by supply v demand (other then currency changes). Every speculator either has to sell their rights to the oil they contracted for or to take del of the oil. All the oil they bid on, and buy, they have to sell as well
    You are neglecting option contracts, correct?

    Therefore the question would be,
    what is to total dollar value of all the open options contracts on oil futures
    versus
    the total dollar value of all the oil deliverable over the total time frame of all the existing open option contracts (roughly 3 or 4 years worth, I suppose... been quite a few years since I played the options market).

    Given that there is some $70 trillion worth of derivatives floating around the world at the moment, I'm far from convinced that the price of oil could not be severely manipulated by options (derivatives) on futures contracts.

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

    Quote Originally Posted by 1Perry View Post
    You post news articles that lack valid methods of critique, and expect to be taken seriously?

    Maybe you would like a second opportunity to internalize a something of substance?

    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.

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

    Quote Originally Posted by Karl View Post
    You are neglecting option contracts, correct?

    Therefore the question would be,
    what is to total dollar value of all the open options contracts on oil futures
    versus
    the total dollar value of all the oil deliverable over the total time frame of all the existing open option contracts (roughly 3 or 4 years worth, I suppose... been quite a few years since I played the options market).

    Given that there is some $70 trillion worth of derivatives floating around the world at the moment, I'm far from convinced that the price of oil could not be severely manipulated by options (derivatives) on futures contracts.
    Derivatives are zero-sum positions, meaning they require a counter-party to even exist.
    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
    Derivatives are zero-sum positions, meaning they require a counter-party to even exist.
    This is true, but you did not address the question: to wit, the sum total of outstanding derivatives can exceed, by a wide margin, the availability of the commodity that they are speculating upon... leading to a bubble, followed by a collapse (I give you the 2008 mortgage-backed-securities market).

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

    Quote Originally Posted by Karl View Post
    You are neglecting option contracts, correct?

    Therefore the question would be,
    what is to total dollar value of all the open options contracts on oil futures
    versus
    the total dollar value of all the oil deliverable over the total time frame of all the existing open option contracts (roughly 3 or 4 years worth, I suppose... been quite a few years since I played the options market).

    Given that there is some $70 trillion worth of derivatives floating around the world at the moment, I'm far from convinced that the price of oil could not be severely manipulated by options (derivatives) on futures contracts.

    If the price of oil is too high, then it will not be used. Excess supplies will build up in storage tanks, super tankers and the like. The excess supply will be seen by the market and result in a lowering of the price. Speculator can drive the futures price up, because the futures contract does not mean it will be delieverd, and most likely will not. It is what the actual user of the oil will pay, which will determine the price of oil. Not somebody with a contract that allows him/her to buy oil at a certain price at a certain date, or not to do anything. If the actual user is not willing to pay $120 per barrel, the price will not be $120 per barrel

    Unlike gold, silver, Oil is not generally put into long term storage as an investment, and it is constantly being produced in significant quantities. Meaning cornering the market is difficult unless the actuall supply can be reduced
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    Re: Gas prices are highest ever for this time of year

    Quote Originally Posted by Karl View Post
    This is true, but you did not address the question: to wit, the sum total of outstanding derivatives can exceed, by a wide margin, the availability of the commodity that they are speculating upon... leading to a bubble, followed by a collapse (I give you the 2008 mortgage-backed-securities market).
    Again, you are comparing apples to chicken legs. What is the relationship between futures and spot price?
    Last edited by Kushinator; 03-07-12 at 02:05 AM.
    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 Lord Tammerlain View Post
    Unlike gold, silver, Oil is not generally put into long term storage as an investment, and it is constantly being produced in significant quantities. Meaning cornering the market is difficult unless the actuall supply can be reduced
    This is a key point; the only entities capable of cornering this market are the suppliers themselves.
    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 Erod View Post
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    I just don't get it.

    You build a a new refinery or two, which will directly and indirectly create hundreds of thousands of jobs, and you drive the price down on gasoline, groceries, travel, and everything else. You run that pipleline and you pick up our on- and off-shore drilling production, too

    Basically, Obama has extended the social security tax cut so people get to keep another $40 per month, then gas prices spiral upward so all that and more goes back into the gas tank. What is the point?

    Why we let this go on, while other countries simply pick up the slack and gouge us on the back end, is completely beyond me.

    But I guess the Jedi global-warming mind tricks always work on the weak minded, eh Obi Wan?
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    Re: Gas prices are highest ever for this time of year

    Hi Gas price is increased very high and i consider you are opinion

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