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In recent years, oil speculators who have no intent of taking delivery of oil now make up 70 percent or more of trading activity.
Quote:
McClatchy documented in a series of reports last year how the futures markets _ where contracts for future delivery of commodities ranging from oil to coffee to cotton are traded _ have been overrun by financial speculators. Historically, end users of these products, who are hedging against price shifts, made up 70 percent of trading activity in these commodities. Speculators traditionally played an important but secondary role in what economists call “price discovery,” the market finding the rational price for a product based on supply-and-demand fundamentals.
Critics such as Michael Greenberger, the former head of the trading division of the Commodity Futures Trading Commission _ which regulates the futures markets_ contend that this flood of financial-sector speculation has pushed up the price of oil and is divorced from underlying market fundamentals of supply and demand.
“People, including the administration and others, are coming to realize that money moves these markets, and money sloshing around in the crude oil market, or any other market, is going to move the price,” said Michael Masters, a hedge fund manager whose repeated testimony before Congress highlighted the “financialization” of oil markets.
So what do they expect to happen when this speculative bubble collapses? What would be the effect of oil future prices dropping below the long term average price trend? How would this effect the oil business and the various economies around the world? This bubble will burst when the speculators find another commodity to play with.
Let me guess...this is driving oil prices through the roof.
The subsequent and inevitable failure of these boondoggle corporate fascism inspired solar/wind entities certainly make oil and natural gas more appealing for the short term.
The subsequent and inevitable failure of these boondoggle corporate fascism inspired solar/wind entities certainly make oil and natural gas more appealing for the short term.
Nice try. The money spent is a drop in the bucket. A very, very large bucket. Stay focused.
Compared with the petroleum companies investment in exploration and development or our military research all the alternative research is trivial. That is why we have a petroleum monopoly for the forseeable future.
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