It’s a pity, it was an effective video I would have sent to everyone I know, but for that.

On July 10th, 2008 at 11:10 pm, starlightwoman said:

ROFLMAO! this is so true! I love the part about which terrorist group do you want to support? The should add one “democrats”

Checking “democrats” is like saying “all of the above”.

The speculators are shorting the market. They are both long and short, at varying levels and they are doing this with various strategie like Straddles and Spreads.

You are correct that the devaluing of the dollar is a cause of higher prices. We do need more refineries and we do need more supply but the speculators are playing a major part in this and they are playing both sides of the market. When the trend turns opposite, and it will, they will make oodles (is that a word?) on the short side.

Although this is a short term thing it leads to distress, fear and idiotic actions by the politicians.

And, as far as currency goes, if oil were trading in Euros, prices would not appear to be rising quite so high. But, Americans would still be paying $4 a gallon because the dollar is weak relative to the Euro.

A dollar buys less of a commodity than it did ten years ago. It just happens that the dollar we use to buy gasoline and the dollar used to announce the spot price of oil are the same dollar. So it’s easy to say

It takes more dollars to buy them because commodity prices are rising!

because dollars and commodity prices are the same thing. So, you’re statement has to be true. Not very explanatory though.

The world needs to extract more oil. We need more refining capacity. We need to be able to refine something other than light sweet crude for US gasoline. We need to empty out the SPR. And we’ve got to do something to strengthen the dollar.

Prices aren’t too high yet.

….. interesting.

The CEOs banded together to send a poor poor pitiful me message to us,

Whatever. You know better than these people. Apparently. In your mind.

I trust these people more than I trust you.

And no one says that speculators have to bet that the price of a commodity rises. Many speculators bet that prices will fall and they short the commodity. I’m sure the WSJ has numbers on this.

By this logic then, it is speculators that drive up the prices of wheat, corn, pork bellies, sugar, silver, etc. Commodity prices are rising across the board. Is it all because of paper speculators?

The CEOs banded together to send a poor poor pitiful me message to us, the airline travelers. I received this email, also. I would expect that this is a pre-move before some hellacious fare increases or new fees.

Prices aren’t too high yet. If they were, then demand would plummet. Speculators who can’t sell their futures contracts on oil would have to lower their prices or take delivery (or pay to have the oil sit somewhere.)

Having more regulation on the commodities market is not the answer. We need speculators to distribute price risk for commodities. The airlines CEOs should know that. What these folks should be asking is: Why aren’t we tapping our own oil reserves? If things are so bad, then why aren’t we releasing oil from the SPR? Why can’t we start using heavy sour crude to make gasoline? (That last one would bring ou the environmentalists in full force.)

Here’s a counter to the airline CEO letter from three economists at the Fed Reserve Bank in Dallas. Notice how they treat speculators as an indicator of market forces, rather than a driver.

Notice also their explanation of backwardation and how it is refiners who are driving up spot prices because of future uncertainty. Regulation will correct this about as well as rent control helps keep apartment prices down in NYC.

I trust the economists’ views more than those from a dozen desparate CEOs.

Confusing isn’t it?

When you only have to put up a teeny tiny fraction of the contract price, a hedge fund can buy a lot of oil futures which really drives the price. The problem with regulation is that it only drives the funds offshore. Where do you think Soros is trading?

I used to be a commodities broker and there is a lot that goes into this but take my word for it, speculators are a big part of this.

What’s even more worrisome is that Arabs are buying their way into our banks, investment companies, and properties like the Chrysler Building. Clinton Library.

In addition to the airlines, they include Agricultural Retailers Association, Federal Express Corporation, American Bus Association, American Trucking Associations …

So it should be obvious that they want the price of oil to go down, because their business and livelihoods, employees are all threatened by high oil prices. So, it’s not just greedy airline CEOs here.