Idea for stabilizing gas/oil prices...

[LegendKiller]

Not nearly as much as the USD though. All commodities have been on a tear upward, gas prices are simply more in our face and we import most of it.

Why are commodities on a tear upward, the market on a tear upward, and bonds at historical lows (people piratically losing money in them) all at the same time? Is this normal?

Tons of commodities are coming down, quickly. Some have lost ~20% in the last month. There's a flashcrash going on in Silver and some in gold, likely caused by some hedge fund unloading some futures. That happened 2 months ago, a $10mm hedge fund had $850mm of gold futures, they laid off the entire position and caused gold to go down 4% since they were somewhere around 70% of the daily liquidity in that market.

The paper ETFs that thrive on derivatives are causing a huge amount of massively levered investments.

 

[Zebo]

Why bitch? I told you guys to buy option @ 80 none listened. Or alternative you could buy working interests in producing wells @ auctions in houston... Bottom line is some people benefit like anything else and this just happens to be a good time for producers.

 

[Budmantom]

It would be interesting to hear everyone's thoughts on why gas is at $4+...sadly I don't think many would understand.

It's simply really.... I shall form a committee and get back with you in a couple of months.

 

[Capt Caveman]

Kill Osama Bin Laden?

 

[Darwin333]

Tons of commodities are coming down, quickly.

I wonder if anything significant is about to happen that is related to my argument...

Some have lost ~20% in the last month. There's a flashcrash going on in Silver and some in gold, likely caused by some hedge fund unloading some futures. That happened 2 months ago, a $10mm hedge fund had $850mm of gold futures, they laid off the entire position and caused gold to go down 4% since they were somewhere around 70% of the daily liquidity in that market.

Silver is still up roughly 200% from before QE was started. It really got going halfway through QE1 and took a serious rocket shot after QE2 started. Has it gone up too much? It probably has but I wonder why it would start correcting now? Would the fact that QE2 is ending in June have any significance whatsoever?

The paper ETFs that thrive on derivatives are causing a huge amount of massively levered investments.

I agree that leverage and speculation has caused some of the rise but only some. That is probably why the hedge fund you mentioned is getting out while the getting is good, right in front of the end of QE2. My argument was that QE has caused a large portion of the rocket shot we have seen in commodities and your counter argument is that the prices are coming down, but still up huge, right before the end of QE? Are you really expecting silver to hit sub $15/ounce (price before QE) in the near future? Are you also expecting the market to erase all of its recent gains as well or is that due to market fundamentals and not speculation or QE?

Furthermore, you have often argued that QE is a good thing due to China's peg. Can you really have it both ways? We are exporting inflation to China but at the same time our dollar, which is necessarily worth less or it wouldn't be working as you argue it is, should be buying the same amount of "stuff" produced outside of our borders as it did before we started? Please elaborate on how that is possible.

I don't believe you answered my previous question either, is it normal for the stock market to be on a tear upwards, commodities to be on a tear upwards, and people buying bonds at effectively zero or negative gain all at the same time?

 

[Darwin333]

Why bitch? I told you guys to buy option @ 80 none listened. Or alternative you could buy working interests in producing wells @ auctions in houston... Bottom line is some people benefit like anything else and this just happens to be a good time for producers.

I have made a nice chunk of change in physical copper simply because my father owns a company that uses the hell out of it so I have a buyer as well as free storage, in return I have been selling it to him at spot which is significantly lower than he (or I) can actually purchase coils for. I could have sold it for more to someone else or even back to the mill but it was really just a safe bet to help fund/pay off debt for my business. I still have a few 5,000LB coils that I purchased in early 09 for under $2/lb and a few more I bought shortly after in the $2.25-$2.75 range. I sure wish I had the balls to go "all in" when it was under $2, shrug, hindsight and all that jazz. He has a big job coming up that will take up most of it so he will probably take the last of it in the next week or two which is just fine with me.

You plan on going to the auctions anytime soon? I wouldn't mind sitting in and observing something like that and Houston isn't much of a drive for me. I'll even buy the beer.

 

[soccerballtux]

The recent price hikes in gas and oil have been mainly due to Wall Street speculators. There has not been a decrease in supply or increase in worldwide demand to justify the recent price spikes. This has been a big problem especially in the last 10 years.

Oil and gas contracts can only be purchased by the consumers of these commodities. If you purchase a contract you must take delivery of the product. All gas/oil contract purchasers will be registered as a legal consumer.

Example: an airline purchases a fuel contract for 1,000,000 gal of fuel, they must take delivery of the product. Delivery can be in stages but they must accept. If an airline wants to take a gamble on purchasing fuel for the next 5 years they can. But they must take delivery.

If an airline has a reason they need to sell off part of their contract they can only sell to other registered consumers. Also portions of contracts can only be resold once.

Traders will no longer drive up the price of oil/gas by speculating. The commodities market can start gearing themselves to servicing the consumers of commodities not paper pushers.

Heard this a few days ago. Like the idea. What do you think? Good idea, bad idea, flaws, improvments?

the oil market is global,
the increasing cost is due to a weaker dollar. Why would the seller sell to us for 80 euros what they can sell to the europeans for 100 euros? $1 buys less than it used to.

That said, I would not be opposed to your idea.

Blame the Fed's monetary policy. Too much quantitative easing. Lots of extra $$$s in circulation.

 

[piasabird]

Just quit taxing Gas and the prices will drop. The price of Oil is one of the best indicators of the health of our economy. If it goes up too high, then that means our economy is bad, and the value of our money is decreasing. The problem is we are often doing things that are bad to our economy like having out of control government regulation and spending. We know what we need to do to fix it yet the people in office keep spending more and more and keep enlarging the size of the government.

 

[LegendKiller]

Hmm....

 

[mrkun]

Hmm....

Hmm?

 

[sandorski]

Global Demand for Oil keeps Increasing. Cheap Oil Reserves keep Decreasing.

Do the Math.

 

[Zebo]

Speculators have nothing to do with it. Dollar is barley worth paper it's printed on does. Notice copper, cotton or anything else people produce is way up too?

Seems they don't like when you dilute their market position and price begins to reflect that. Another way to think about is money follows supply and demand curves like anything else. All money is, is a representation of value. When you dilute that value without matching production the market will correct.

Mathematically speaking when changing a denominator of a fraction what each unit of the numerator is worth changes in lockstep.

 

[LegendKiller]

Global Demand for Oil keeps Increasing. Cheap Oil Reserves keep Decreasing.

Do the Math.

There's not a single additional reserve being brought online to meet the decrease in supply that has a marginal cost of $100bbl. Even oil sands are profitable somewhere ~80.

 

[LegendKiller]

Speculators have nothing to do with it. Dollar is barley worth paper it's printed on does. Notice copper, cotton or anything else people produce is way up too?

Seems they don't like when you dilute their market position and price begins to reflect that. Another way to think about is money follows supply and demand curves like anything else. All money is, is a representation of value. When you dilute that value without matching production the market will correct.

Mathematically speaking when changing a denominator of a fraction what each unit of the numerator is worth changes in lockstep.

There was a 10% movement in the USD yesterday? Ohh wait, there wasn't. In fact, there was only a large movement against the Euro.

You know what did happen yesterday? They increased the margin requirements for oil. That means that speculators couldn't hold as many oil contracts since they had to service the ones they had. Paper oil = unlimited supply = unlimited supply of no-doc/option-ARM NINJA mortgages = price feedback into physical oil (since you never know if some take delivery) = huge runup in prices.

You're a fucking inflationist tool that really has no solid grasp of what's going on around him. Sadly you represent a huge portion of America.

You take your talking points from T. Boone Pickens and some shithead analyst. I take mine from actually working in finance.

 

[LegendKiller]

http://globaleconomicanalysis.blogspot.com/2011/05/oil-consumption-demand-destruction-vs.html

This shows the COT charts which clearly shows that speculators are taking massive bets on the upside, far exceeding recent bets.

 

[desy]

So as gone over speculation is one of MANY reasons for oil volatility
why so fixated on that one it in the market? If you don't want to be hosatage to it, figure out how to become energy independant and quite exporting over a billion $ everyday
http://rwer.wordpress.com/2010/04/02/doe-sidles-up-to-peak-oil/