Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The first deepwater drilling permit in the Gulf of Mexico since the BP well disaster was just issued. A coincidence that it arrived on the tails of crude oil price spike? Too little, too late.
No one is applying for permits,the rig owners have moved due to Obama's ban and they most likely won't come back soon,so thanks to a on the job training POS in the white house.
Most of you need to read Matt Taibbi's book Griftopia. Every election cycle it seems we fight over why gas prices are high; the right blames the need for more drilling, the left blames oil companies and SUVs. Truth is, oil prices are out of control due to speculation on the commodities exchanges, a relatively recent phenomon. In fact, during the last price boom in 2008, we had record high supply and relatively stable demand during that whole period of time gas was out of control expensive. A similar situation happened with food a few years ago. Remember the runs on rice?
It's basically the same right now. Supply is fine, demand hasn't gone up, but financial speculators are making a ton of money claiming the sky is falling while the general public pays $4 a gallon.
Truth is, oil prices are out of control due to speculation on the commodities exchanges ...
No matter how often a lie is repeated (" ...oil prices are out of control due to speculation on the commodities exchanges ... "), it remains a lie.
With the exception of some buy-only commodity hedge funds, speculators are as likely to sell short as they are to buy long, interested only in making a profit by attempting to correctly anticipate the nearby to intermediate price trend.
Should prices become too dear or too cheap relative to their economic value, the market will quickly teach those holding long or those holding short positions, as the case may be, a painful financial lesson.
No matter how often a lie is repeated (" ...oil prices are out of control due to speculation on the commodities exchanges ... "), it remains a lie.
With the exception of some buy-only commodity hedge funds, speculators are as likely to sell short as they are to buy long, interested only in making a profit by attempting to correctly anticipate the nearby to intermediate price trend.
Should prices become too dear or too cheap relative to their economic value, the market will quickly teach those holding long or those holding short positions, as the case may be, a painful financial lesson.
Tell ya what Walter, let's run a little experiment - let's raise margin requirements to 80% just to make sure the playas in the market have some skin in the game - now, let's see how fast the run-ups occur when we have some political event or rumor hit the marketplace. What we need is a CFTC commissioner with a pair of cajones.
You'll find the "demand" evaporate overnight, oh and Cushing will still be chock full of oil. There is no supply problem in crude or refined products.
Peak Oil folks would disagree wholeheartedly with the "supply is fine" argument... Thanks to wikileaks we know our government doesn't believe OPEC countries can provide the estimates they say they can and it's hard to argue with the availability of new finds of oil deposits. Not trying to turn this into a peak oil debate, just pointing out there's another side to the argument. Even the peak oil folks will say that there will be a "glut" short term, but that's not looking very far down the road.
Matt Taibbi is awesome on many levels and I agree such a huge issue is that we've gone away from producing / manufacturing things as wealth generation to financial instruments producing fake money. It's so out of whack.
Peak Oil folks would disagree wholeheartedly with the "supply is fine" argument... Thanks to wikileaks we know our government doesn't believe OPEC countries can provide the estimates they say they can and it's hard to argue with the availability of new finds of oil deposits. Not trying to turn this into a peak oil debate, just pointing out there's another side to the argument. Even the peak oil folks will say that there will be a "glut" short term, but that's not looking very far down the road.
Matt Taibbi is awesome on many levels and I agree such a huge issue is that we've gone away from producing / manufacturing things as wealth generation to financial instruments producing fake money. It's so out of whack.
Obviously the "peak oil" fans haven't been to the Athbasca Oil Sands or the ANWR refuge or offshore California or in the Bakkens, or at the Eagle Ford area, or in the Gulf of Mexico between Florida and Cuba....and the hits just keep on coming........
Short Term = at least another 300 years, but go ahead keep calling Peak Oil. Meanwhile lets run that experiment and jack up margin requirements - you'll see how fast artificial demand evaporates, then the rest of society can join the party that commodity speculators have been enjoying these last 3 years.
Tell ya what Walter, let's run a little experiment - let's raise margin requirements to 80% ...
Margins in the futures markets are different from margins in the equity markets, and generally are set at 3 times the recent daily average price range, and can be anywheres from 3% to 5%, or so; and, to raise them to 80% would destroy liquidity, leading to a much more volatile price situation.
Obviously the "peak oil" fans haven't been to the Athbasca Oil Sands or the ANWR refuge or offshore California or in the Bakkens, or at the Eagle Ford area, or in the Gulf of Mexico between Florida and Cuba....and the hits just keep on coming........
Short Term = at least another 300 years, but go ahead keep calling Peak Oil. Meanwhile lets run that experiment and jack up margin requirements - you'll see how fast artificial demand evaporates, then the rest of society can join the party that commodity speculators have been enjoying these last 3 years.
I don't even know what those places are lol (will google when I get some time)... I'm not a peak oil person, just pointing out that it's a pretty broad movement.
For the record I'm well documented as being anti-wallst/bankers/etc. Reigning in the "liquidity providers" would be a huge help to the middle class in the long run.
Margins in the futures markets are different from margins in the equity markets, and generally are set at 3 times the recent daily average price range, and can be anywheres from 3% to 5%, or so; and, to raise them to 80% would destroy liquidity, leading to a much more volatile price situation.
haha we crossed posts... the "liquidity" argument kills me!
haha we crossed posts... the "liquidity" argument kills me!
I agree that "it would destroy liquidity" and oil would plummet short term. But with that also comes long-term consequences: a lot of oil-dependent industries, like airlines and even heating oil companies, use these markets to deliver stable prices to passengers, customers etc... Even projects like the oil sands, could use futures contracts to base the viability of their operations existing in the first place, off a set-price in the future using leverage that exists today.
I agree mostly with Walt, that demand is the ultimate driver of the price of oil (via the by-products). Speculators do drive the price higher, but it can work both ways. The shady stuff that I'm concerned about is possible collusion, price gouging, keeping production lower than normal, etc.. going on by big oil and the refiners right now.
The record high crack spread we are seeing right now is really driving the price of a barrel higher , which is logical --(eg- if the price of french fries skyrocketed to $6 a pound, naturally potatoes would follow). BUT, what is causing this ultra-high crack spread to exist in the first place? A lot of palm-greasing and 'winks & nods' going on here I believe.
Last edited by Pequaman; 03-03-2011 at 12:56 PM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.