And of course, you would never abuse your apparent authority on the issue to present a slanted and adulterated case that just happens to coincide with your politics and bank account.
I can't believe it, but I'm going to have to hold my nose and more or less agree with T_J. Trading volume is traditionally seen as a result of price volatility. People don't buy and sell if they don't believe there is any reason for the price to change. And often when prices change, limit orders will kick in and automatically sell or buy, acting as positive feedback, not to mention all the computer trading programs, etc. If a price changes, necessarily volume increases will follow and increase many times over. If the volume doesn't increase, then the price change is usually viewed as an artifact or anomaly.
Damn hedge funds bidding up the price of oil! *shakes fist When the oil sell off happened at the end of last year, no one seemed to be cheering the traders for knocking oil down lower than it probably should have gone. The reason I like importing ethanol from Brazil is because its so cheap to produce there. According to wikipedia... they pay their workers only $3-5 dollars a day. That def. helps reduce the cost. Also, Brazil isn't trying to nuke us every 5 minutes, so its a "safer" buy, and the price is more stable. I don't think US ethanol subsidies is a real solution, but it is a great way to politically bribe farmers and the American people for votes. The government seems to be doing something, when they really aren't. The US needs to drill more oil domestically to have a stronger hold on the price of oil in the markets. So much is riding on what happens in the Middle East, we need to lessen their impact. Of course, killing them, raping their women, and taking their oil could be beneficial as well, but that seems like a less popular action. My prediction is that oil drops to around $58, and rebuilds strength and goes higher once the summer driving season starts. But in the long run, oil is going much higher. It's linear regression over the last howmany years has been trending upward, and its illogical to think it will go lower because of that. Oil is a limited commodity, with an increasing demand and a growing population. I don't know what the answer to cheaper gasoline prices is. Why don't we cut the gasoline tax? In times of rising oil prices, everyone complains about the evil oil corporations. Instead of complaining about them, why don't you buy the Hal's and Xom's that people so hate. Profit from higher oil and hedge against rising gas prices. http://en.wikipedia.org/wiki/Ethanol_fuel_in_Brazil
Random observation: I love how the people in finance try to defend the price of oil, call it legitimate, to the people in production and refining. Would this happen in any other industry?
Theoretically you could could cut the long term price of gasoline by raising gasoline taxes. Of course it would be political suicide...ask Ross Perot. But, if you raised the tax on gasoline (pay down the deficit, pay for the war, lower income taxes...whatever) you would incentivize reduced consumption and innovation. Nobody is going to give up the easy living till they can't afford it. Why in the world are we still building a new Hummer dealerships in every quadrant of every city? TJ's favorite president told us in 1980 that energy conservation was the moral equivelant of war. He was a farsighted man. We have funded our enemies efforts to oppose us. But as long as it's cheap to drive around that's cool right?
Because they inflated the street price of gas months in advance and the sell off was the result of the market correcting its bubble. Speculators magnify volatility to a commodity where people have called desperate means to improve supply and lower price. One such measure is our foreign policy. The other is relaxing environmental regulation which has proven over the past decades to benefit the general welfare.
No one is stripping out the profit motive. The oil and gas industry can still sell their product for a profit. It was the out of control and unregulated traders that fueled Enron. As far as the refineries go, the oil industry has had obscene profits in the past. They could build refineries if they want to. Instead they prefer to manipulate the market just like Enron.
Ok, you're done, goodbye. Very superficial understanding of the market, the industry, economics, the whole shabang. Read a few books, the WSJ, visit a few refineries, talk to people in the industry, and in a few years you should be able to participate in this discussion. Thanks.
The problem with Enron was that they reported and fabricated false and criminally misleading financial information. It had nothing to do with out of control speculation or anything of the sort. Enron was specifically the result of a pattern of criminal activity by a limited number of executives within the company.
I think the price of corn has gone up because of ethanol, but I'm not sure if that is what he is referring to. in other words, it is demand driving up the price, not speculation.
What I don't understand is did demand really grow that much in such a short span of time? As early as late 2004 oil was trading for around $25-30 a barrel. Now it is trading for almost triple that amount in a span of less than 3 years. Did demand really grow that much in such a short span of time?
of course not. and it hasn't grown nearly as to what it was projected to grow, even. every year they come out with some bold projection about growth in demand worldwide...and every year it falls short of those projections, it seems.
The economy will affect volatility this year more than it did last. Much harder to tolerate high gas prices when we're hovering around a recession and an interest rate drop.
