awww poor cows. We're already forcing them to eat something they aren't evolved to eat (government subsidized corn) and injecting them with growth hormones and antibiotics to keep them barely alive until they are slaughtered. Maybe we should leave those cows alone for now.
I think you can get money from the government if you fart to propel yourself as you ride your bike to work.
I thout T Boone was crazy when he was talking about natural gas cars, but now I think it might be possible. People don't take transmission cost into account when talking about wind. That's the same problem in Texas. Lots of wind farms are being built, but there isn't enough transmission to bring it to the high load areas. The transmission is getting built, but it's going to cost money.
Good move. I see natural gas continue to go cheaper, while oil I'm guessing will kind of stay the same. By the way, speculators are heavily involved in trading natural gas. Where are all the ignorant D&D threads saying the market is getting manipulated downward? Where are all the government inquiries pandering to the public by threatening to regulate natural gas trading?
this is something I don't understand. How could those involved (Especially someone like Pickens) NOT consider the task of getting the power from the turbines to the grid? There must be something more to the story, because I know it wasn't just an oversight.
T Boone wouldn't have to personally pay to build the transmission. It's up to the states and utlities to build the transmission, and these costs are usually spread over a lot of people- consumers and generators. In Texas (where the electricity market is known as ERCOT) here is how it works: In ERCOT’s deregulated market, transmission and distribution providers are still regulated by the Public Utility Commission. The cost of transmission is “uplifted to load;” it is rolled into costs that all ratepayers pay
No one cares about speculation that pushes prices downward because it doesn't have any cost to the public taxpayer. The people that get hurt there are the producer companies - the gov't isn't going to do inquiries for that. I still fail to see how those threads are "ignorant". Ultimately, there are three players in a closed market: Producers: Provide supply, extract money Consumers: Extract supply, provide money Speculators: Provide money, extract money If the speculators are making a net profit, then they are extracting money from the system. By definition then, consumers are either paying more or producers are getting paid less. If prices are going up due to speculators, then consumers are paying more than they would otherwise. If prices are going down due to speculators, producers are getting paid less. On the flipside, if the speculators are making a net loss, then they are providing money into the system. By definition then, consumers are either paying less or producers are getting paid more. If prices are going up due to speculators, then producers are getting paid more. If prices are going down due to speculators, consumers are paying less. Of the four scenarios, only one is really a concern for gov't: speculators making money on upward prices. The other three possibilities are not net-negatives for the general public.
That much I know. What I'm saying is, how did he not see this being a hurdle before he invested so much into it?
That was my main fear, but our carrier lets us sign contracts that lock in prices over time. It's not going to be cheap though; the changover is going to be around 10 grand when it's all said and done.
The cost. There is very minimal loss. You can move power from the northeast to Texas with minimal loss of electricity.
Well it won't be much of a hurdle for long. Most electricity markets are committing to building transimssion to support wind. Texas is very commmitted to it.
In your theory, if producers make less money, they will still pass on higher costs to consumers. That should be investigated. And again, I know you don't believe this, but prices do not go up or down due to speculators. It ultimately depends on the fundamentals of the market. That's why gas is down so much, because of supply. Even if speculators wanted to push natural gas prices up, they couldn't. They would lose money and get fired- speculators go bust all the time. You're also not considering the fact that speculators take on risk that hedgers and consumers don't wish to take. If a consumer locks in a long term contract, the price may ultimately go down and he has "lost" money, but the speculator took the risk. One final point- both producers and consumers speculate in the market to some extent. They aren't always completely hedged.
No - in the commodities market, that doesn't really hold. If oil goes from $60 to $50, the producers don't pass additional costs to the consumer. They just make less profits. Similarly, if prices go up, their profits simply go up. If the speculators are breaking even as a whole, that's the case. But if they making or losing money, then prices *have to* go up or down due to them. If the speculators as a group make $1B, where does that money come from? It either has to come from the producers or the consumers - there's no other source. If the speculators lose $1B, that's money that either goes to the producers or doesn't have to be paid by the consumers. But regardless, they are affecting the price one way or another. Take for example, a simple barrel of oil (I know this is oversimplication, but the concept applies for the whole market). Lets say without financial speculators - on a pure true supply and demand basis - the price was $65. The producer was paid $65, the consumer paid $65. Now, lets say a speculator made $10 on that barrel. That $10 has to come from somewhere. The price could go to $75, with the producer still getting his $65 and the middle-man financial speculator getting $10. Or the price could go to $70, with the producer getting only $60. Or whatever the split may be. But regardless, that speculator's profits comes from the price of the oil. Agreed - but speculators do lose money, and when they do (as a group), it will push the price of natgas even lower than a non-speculator market. And when they make money, it would push prices higher than otherwise. I'm not saying they can permanently move prices, but they certainly can drive prices up for extended periods as long as they keep making money, which has to be paid by the producers or consumers. We may be using a bit different terminology here, adding to the confusion. To clarify - by speculator, I'm referring only to financial speculators who have no interest in the commodity itself. By consumer, I'm referring to the players in the market that actually take possession of the products, not necessarily the end consumer like you or I.
I still take issue with your phrase that they "affect" the price of oil. They make bets on where the price is going, they don't control where it goes. Now let's ask- how does a speculator really make a profit? It's only by taking on risk that a hedger did not want to take. There are three types of trades: Speculator trades with Speculator- you don't care about this, because one speculator's loss is another's gain. Hedger trades with Hedger- I assume you don't care about this either, the consumer and producer are just making a contract for future delivery. Speculator trades with Hedger- Here the speculator might "extract," as you say, profits. If the producer locks in a $60 oil price by selling a futures contract to a speculator, and the price then goes up, you allege the speculator has harmed consumers. But that doesn't make any sense. How does this harm consumers? The consumer isn't even involved. The producer has made less profit, but it made a profit anyways, otherwise it wouldn't have hedged. The other scenario is if a consumer hedges by buying a futures contract from a speculator. If the price goes up, the speculator gets burned, but if the price goes down, the speculator makes money. Now here, the consumer COULD have made more money if he didn't hedge. But you said you don't care if the price goes down. The problem is that even consumers and producers speculate to a certain extent. There is a gray area. It would be very easy to stop speculators from "extracting" profits. Consumers and hedgers could decide to only do futures contracts with each other. They could cut off all speculators and put them on their NO TRADE list. Of course they wouldn't do this, because liquidity would dry up and they would then be exposed even more to the volatility of the market.
