Every single GD oil thread we have to go through this with you. Why don't you go learn what a speculative bubble is and stop asking stupid questions and making equally stupid assertions?
http://en.wikipedia.org/wiki/Economic_bubble
I understand what bubbles are and I understand there is often not one single cause for their creation or destruction. It was not just speculation that created it, but other factors as well.
You are truly clueless on this topic...aren't you?
The prices dropped so dramatically and so quickly because Congress was threatening to cut margins and force companies (read speculators) to have to put more of their money upfront for their futures instead of working on a margin system where they could buy $1B worth of oil for only $100M in real cash. Congress also threatened to force those that actually bought futures to take delivery before they could unload them. That might be kind of hard for GS, JPM or a host of the hedge funds that were dealing in paper oil instead of the real stuff.
More here
And guess what, at the end of the day someone who actually needed that oil was buying it and taking delivery of it. Well at least until there was more than enough oil to go around.
I will say this again, tight supply allowed the hedge funds to drive up the price of oil. Increased in supply and descrease in demand popped the bubble.
- Nov 29, 2006
- 17,458
- 83
- 86
Charrison, did you watch the video?
Supply and demands have always worked, until a fake demand was created to prop up the price. That price will eventually exceed the NEED for demand and the actual values of the commodity, because if continues it doesn't make any economic sense. Demands will drop, which it did by 5%; explain why prices of oil per barrel drop almost 200% from it's highest to current value? I'm just purely working from your supply and demands angle, and it doesn't make any sense just base on elementary deductions.
Bottom line is, the market was deregulated in 2000 (take a wild guess what happened in 2000) and the market is about to be regulated again by an administration with a conscience, that's why.
Supply and demands have always worked, until a fake demand was created to prop up the price. That price will eventually exceed the NEED for demand and the actual values of the commodity, because if continues it doesn't make any economic sense. Demands will drop, which it did by 5%; explain why prices of oil per barrel drop almost 200% from it's highest to current value? I'm just purely working from your supply and demands angle, and it doesn't make any sense just base on elementary deductions.
Bottom line is, the market was deregulated in 2000 (take a wild guess what happened in 2000) and the market is about to be regulated again by an administration with a conscience, that's why.
Hahahahaha you mean like the other 300 times congress has pretended to do something about this? Come on I cant believe you actually believe anything from congress would scare big oil.
My question is, how can our society regulate the market in such a way that the profiteering, the scheming against the public interest, is blocked while the industry can perform its legitimate functions of facilitating the flow of goods and capital efficiently, with reasonable profit?
And my question includes not only how the rules would look, but how we can get them passed over the objections of the very powerful financial industry.
StageLeft
No Lifer
- Sep 29, 2000
- 70,150
- 5
- 0
Who are these "supply and demand" people? I've not come upon anybody who says the increase/decrease in prices was all supply and demand; it's become a strawman argument, invariably. As with any market such as stocks, houses, or oil prices change based on speculators' interpretation of supply and demand.
Now, you of course have the conspiracy theorists who think it's all some awful game being perpetrated (don't ask them why oil was "allowed" to fall down to low 30's, they have no idea why), but the rest of us with brains knows it's speculation on top of underlying fundamentals. When the speculation gets excessive as it did with the tech bubble or houses or oil you see a big bubble and then a big bust.
Now, you of course have the conspiracy theorists who think it's all some awful game being perpetrated (don't ask them why oil was "allowed" to fall down to low 30's, they have no idea why), but the rest of us with brains knows it's speculation on top of underlying fundamentals. When the speculation gets excessive as it did with the tech bubble or houses or oil you see a big bubble and then a big bust.
I did not watch the video, but I have read much on the subject.
a 5% shift in available resources can be the difference between tight supply and more supply than you know what to do with. OIl is an inelastic resource as new production is not easily created and current consumption can be difficult to quickly modify. So people will be willing to pay whatever price it takes to get the resource. So when demand came back into balance, prices plummeted.
But as far as the speculators go, global commodities had a very big run due to global demand for resources. The world economy had been doing very well and everone demanding resources, so the prices were rising. Even commodities such as iron ore, which does not have futures trading, saw spike in prices similar to oil.
What was deregulated in 2000?
Ok it has been watched. There was not much new information presented in the video. Like I said, I have done a fair amount of reading on the subject, so it remains more than just speculators in my mind.
theeedude
Lifer
- Feb 5, 2006
- 35,787
- 6,197
- 126
Speculators may be to blame, but then you also have to give speculators credit for buying future production of these oil companies which financed projects to deliver more supplies and drive prices down in the future. You also have to give speculators credit for creating at least a short window of time when large investments in alternative energy and transportation systems were made. And for getting millions of people out of their huge SUVs and into fuel efficient vehicles. Speculation on the future, including foolish and misguided one, is what investments and capitalism is made of, which is why "speculation" was a crime in the USSR. We don't need this in USA.
- Nov 29, 2006
- 17,458
- 83
- 86
Speculation is fine, you reap what you sow, but add in collusion and manipulations and you have an entirely different ballgame mate.
It's not speculation when you and your buddies control the distribution and pricing of such commodities. If I make money by driving one commodity up and transfer it somewhere else, I haven't really lost my money when the bubble that I created pop.
One cannot help but wonder, behind all these atrocities are the usual suspects.
Edit: I'm sure some of you also said "supply and demands" before EnRon go bust too, right?
It's not speculation when you and your buddies control the distribution and pricing of such commodities. If I make money by driving one commodity up and transfer it somewhere else, I haven't really lost my money when the bubble that I created pop.
One cannot help but wonder, behind all these atrocities are the usual suspects.
Edit: I'm sure some of you also said "supply and demands" before EnRon go bust too, right?
I have to say, CH is a moron. Some people never learn to read I guess.
But the question does come up in my mind.... I do wonder if its the 'usual suspects' that are doing this.
Unfortunetly in the finance game its more about beating the system itself, than the fundementals. This is why there are teams going through the tax code etc. every year, trying to find loopholes to make money on, instead of doing traditional 'investing'.
But the question does come up in my mind.... I do wonder if its the 'usual suspects' that are doing this.
Unfortunetly in the finance game its more about beating the system itself, than the fundementals. This is why there are teams going through the tax code etc. every year, trying to find loopholes to make money on, instead of doing traditional 'investing'.
TRENDING THREADS
-
News NVIDIA and Intel to Develop AI Infrastructure and Personal Computing Products- Started by poke01
- Replies: 248
-
Discussion Zen 5 Speculation (EPYC Turin and Strix Point/Granite Ridge - Ryzen 9000)- Started by DisEnchantment
- Replies: 25K
-
Discussion Intel Meteor, Arrow, Lunar & Panther Lakes + WCL Discussion Threads
- Started by Tigerick
- Replies: 22K
-
Discussion Intel current and future Lakes & Rapids thread- Started by TheF34RChannel
- Replies: 23K
Facebook
Twitter