As Americans watch their wallets empty as quickly as gas prices climb, we all search for answers. Some experts say the seemingly endless rise in gas prices is being driven largely by oil speculation, the practice of buying and trading oil futures -- in an attempt to predict the cost of oil at a later date. Should you blame speculation for your pain at the pump?
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Speculation is at least responsible for 50% of the price of oil during the rise. You can tell by how quick the price has dropped and by how much when the speculators bailed at the peak.
I'd bet oil will hit $40bbl before it starts to recover.
What's needed is a 1/4% tax on each trade of all stocks, commodites, securities so it doesn't pay to speculate on the short term would go a long way to stabilize the oil, other markets against this kind of country destroying gambling by speculators.
jerryd
- jerryd
October 30, 2008 7:04AM
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Do you have any evidence for these numbers whatsoever, or are you just making up estimates?
You say "at least 50% of the price of oil during the rise" -- why did you pick that number? Why do you predict $40/barrel oil? Why is a 0.25% tax enough to counteract the effects you assume exist, and by what mechanism do you suppose it would have the effect you want?
- thoughtcounts Z October 30, 2008 9:14AM
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It's a SWAG but based in facts.
The main one is about$60/bbl all kinds of alt energy becomes viable.
For instance ethanol, gas/biomass/coal to liquids, oil shale, solar, wind, NG,ect and electric cars. Had the huge subsidies not been in oil we would have diversified from oil yrs ago when we hit peak US oil in 73. Shortly we'll have those costs in oil and oil will be more stable in price.
But it's the steep rate of rise, fall that pegs it to speculators. What happened was the housing bubble was ending and all that money had to find something else to invest in so turned to commodities like oil which were in tight supplies because of the other bubbles also growing.
And that went on until $4/gal gas, the credit bubble, others burst, sending the speculators for the exit on oil, other commodities, dropping it way down. It will hit $50/bbl and maybe down to $40bbl.
But we are at peak oil now so as the economy improves unless we really change our energy policy, use, the price of oil will get bid up by speculators again in about 18 months or so to probably a $200/bbl in 2-3 yrs.
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On the 1/4% on all securities trades will eliminate all those gamblers who bet on small changes instead of betting for the long haul which is much better for the country, making these corrections much lighter. It will also pay their social cost and the cost of regulating them. As you can see the costs can be quite high.
Luckily I don't have to worry because I use little oil as I drive an electric sportwagon that gets 250mpg fuel cost equivalent. I had to build my own because the 'free market' wouldn't. My total costs are about $.10/mile so actually make money on the mileage deduction ;^D. Many thousands of other EV's drive daily by others who converted cars, pickups, MC's, restored the few older EV's or built them from scratch. Google EV clubs, EV racing for details, links.
There are plenty of alt to oil if we just try. Our national, economic security demands it or we'll be broke slaves of OPEC, Russia and in constant wars over oil as we are now. It's basic econo 101.
jerryd
- jerryd October 31, 2008 5:11AM
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How is it possible for us to now only pay $1.70 for gas but we had to pay $4.40 a few months ago?
Same thing in grains. They paid farmers 3.50- then the board prices shot up to $7. The corn price is back to its former level.
The real unfortunate thing for farmers is that production input prices went up at even a higher speed and have remained stuck there making a profitable 2009 problematic.
All the goodies you bought for Christmas were delivered to their respective stores with the high priced diesel fuel- hard to reduce the selling price of merchandise.
Wheat also had its ups and downs in price. There are only a few cents worth of wheat in a loaf of bread. Price of "whole grain" breads remains close to $4.00 per loaf.
What happens next with a recession?
Hal 84
- Hal 84 December 25, 2008 10:58AM
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Limits are governed and imposed primarily by different investment groups and their governing forces and therefore are irrelevent. Incrimental increases still abide by these limits and if all the goups or a great portion of them who hold large shares manipulate the market together the inherent increase is inevitable wile diminishing risk. Truth be told! To put it in lay terms. If I have 90% of a resource/good(or the peopele that controll 90% of that resource all agrees to act the same way) and no one else has a means to get it, I can dictate how much I get for that good/resource. Yea, I will not have controll of that 10% but realistically that 10% will hold out to get as much as they can too! We had laws in place that were repealed under the Clinton administration that stopped large investment banks from market manipulation such as this, but now the game has changed.
- proposition1MD April 15, 2009 3:33PM
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It seems to me that reporters and commentators are just looking for someone to blame, no matter how unrealistic the story. A very small portion of the population would consider themselves "speculators," so they make easy scapegoats. Actual coverage of data analysis is too complicated or nuanced for a sound bite or for an incendiary talk show segment, which means that, unfortunately, no one gets the real picture. At the end of the day, though, I have to side with reality.
Are the data and analyses you mention publicly available, or are they currently only held by your research department? It would be easier to get these facts and figures to the public if you release and publicize a report.
- thoughtcounts Z September 4, 2008 1:54PM
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Is Oil Speculation Responsible for High Gas Prices?
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