Seriously, are these just average joes off the street or are they actually meaningful people? How do they become speculators? Can we vote them out?
Who are the oil speculators?
- Thread starter StarsFan4Life
- Start date
- Oct 30, 2000
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Businesses/Groups that hold a large chunk of money.
Some of yoiur 401K/retirement funds may be involved.
Some of yoiur 401K/retirement funds may be involved.
theeedude
Lifer
- Feb 5, 2006
- 35,787
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I remember in USSR, "speculation" was illegal, and looks like we are heading down that road.
Speculation is simply people making bets on future price of a product. Oil companies often speculate that prices will go down and want to lock in prices now, while consumers may speculate that prices will go up and also want to lock in prices now. Others speculate that prices will go up or down later and make directional bets, so they can make a profit by taking that risk. It is simple capitalism. Scapegoating it for the high oil prices is simply asinine. Oil prices are high because there is limited supply of it, and we are bringing huge demand online from emerging economies of China and India. On the other hand, we are printing more money, so there is more supply of it, and that money is devaluing, so that there is less demand for it. It is simple supply and demand. If supply demand equation is in favor of rising oil prices and falling dollar, oil will continue to rise relative to the dollar.
Speculation is simply people making bets on future price of a product. Oil companies often speculate that prices will go down and want to lock in prices now, while consumers may speculate that prices will go up and also want to lock in prices now. Others speculate that prices will go up or down later and make directional bets, so they can make a profit by taking that risk. It is simple capitalism. Scapegoating it for the high oil prices is simply asinine. Oil prices are high because there is limited supply of it, and we are bringing huge demand online from emerging economies of China and India. On the other hand, we are printing more money, so there is more supply of it, and that money is devaluing, so that there is less demand for it. It is simple supply and demand. If supply demand equation is in favor of rising oil prices and falling dollar, oil will continue to rise relative to the dollar.
IHateMyJob2004
Lifer
- Sep 29, 2004
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Didn't the Chinese government recently announce it would discontinue its oil subsidies? Shouldn't that limit China's demand for oil somewhat?
- Oct 30, 2000
- 42,589
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Much depends on who they invest in/through.
You would have to track this down in reverse.
Find out who the big speculators are and then check to see if they have anything to do with your own investments.
If you're looking for an individual (vs. a "fund", etc.), the lowest of them is a POS named T. Boone Pickens.
Lifelong G.O.P. (Gas and Oil Party) guy, and butt buddy to the likes of the Bushes, Cheney, etc. He's also the guy who bankrolled the character assassination program aka "Swiftboating".
To give you an indication of this guy's thinking (and perhaps power), approx. a month ago I saw him on one of those "talking head" programs where they were asking him about his plans/feelings on the energy markets in general. He noted that he was "quite happy" with his returns to date on oil, but that he was not going to increase his presence there. Instead, he was going to target natural gas, whereupon he went on a tirade about how underpriced it was, etc.
Since then, natural gas costs/futures are waaaaaay up, about 30-40%. Not that he has the sole power to do so, more like that old commercial ... "When ______ speaks, everybody listens."
And "T" is determined to not miss out on the next "big thing(s)" in energy either, so he's building massive wind farms, etc., so he can be in on the "control" of that too.
I'm not anti-capitalism, but these people/funds represent an aberration of the principle(s) and need to be stopped. Unless of course people don't mind $5/gal. gasoline and $400/mo. heating bills this winter.
Note: If you use natural gas to heat, check to see if you have an alternate supplier program available to your area. I got locked in for a 12 month contract at just over $1.24/cu. ft. a day or two after T's spew on natural gas prices being too low. It's at least $1.45 now ...
Lifelong G.O.P. (Gas and Oil Party) guy, and butt buddy to the likes of the Bushes, Cheney, etc. He's also the guy who bankrolled the character assassination program aka "Swiftboating".
To give you an indication of this guy's thinking (and perhaps power), approx. a month ago I saw him on one of those "talking head" programs where they were asking him about his plans/feelings on the energy markets in general. He noted that he was "quite happy" with his returns to date on oil, but that he was not going to increase his presence there. Instead, he was going to target natural gas, whereupon he went on a tirade about how underpriced it was, etc.
Since then, natural gas costs/futures are waaaaaay up, about 30-40%. Not that he has the sole power to do so, more like that old commercial ... "When ______ speaks, everybody listens."
And "T" is determined to not miss out on the next "big thing(s)" in energy either, so he's building massive wind farms, etc., so he can be in on the "control" of that too.
I'm not anti-capitalism, but these people/funds represent an aberration of the principle(s) and need to be stopped. Unless of course people don't mind $5/gal. gasoline and $400/mo. heating bills this winter.
Note: If you use natural gas to heat, check to see if you have an alternate supplier program available to your area. I got locked in for a 12 month contract at just over $1.24/cu. ft. a day or two after T's spew on natural gas prices being too low. It's at least $1.45 now ...
Boon pickens is also the biggest investor into wind power in the united states. Of course rich people speculate on stuff, it is how they make money. Why else would you be investing in wind energy when it isn't really profitable now?
I'm not an Ayn Rand worshipping capitalist or anything, but your comment made me think of what a shithole this country would be without investment banks and modern capital markets, and how most of their major detractors (and there are plenty lately) don't remotely understand the system.
Are you going to elaborate on how they don't understand the system? What should we/they know?
<serious question>
I tried to find a link that would explain it better than I could, because the importance of financial markets to the western economy (and, in turn, the importance of investment banks) is not a light subject that can be explained briefly. However, the best source I can recommend is this, especially the first third of the book.
To sum it up in a phrase, the financial markets are the backbone of capitalism, which is the reason the US is what it is. Not only is it the most important industry of our economy, but it's the reason we're not one of the many resource-rich yet third-world nations.
When it comes to oil, the financial corporations that are so vilified by the press are simply functioning as they should ... maximizing profits for their shareholders. Dips like the sub-prime "crisis" will happen, but it's important not to overreact and instead allow the market to correct itself, which it inevitably will.
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