Gas Prices would be cut in half overnight if Speculators were banned in Oil market...

[masmdu]

Last edited Fri Mar 16, 2012, 01:28 PM - Edit history (2)

Only those parties who intend to take delivery should be allowed in the oil market.

Oil is such a vital commoditiy that it should be regulated in such a manner.

Hegde funds, commodity pool operators, commodity funds, etf funds, and the oil companies themselves should NOT be allowed in the oil market.

The liquidity arguement fails as there is constant demand for oil worldwide.

As it stands, those speculators are profiting at the expense of the health of the world economy and are able to do so with a collective bet on upward price movement to the tune of only about 50 billion.

That's right, the collective margined speculative power of a handful of players who have NO intention of using oil is being used to enrich a few at the expense of all others. We are paying for it every time we fill the tank, and the growth of economies around the world is hobbled because of it.

Oil is too critical to allow this to continue. If they wish to speculate they should be allowed to do so in commodities that are non-fundemental.

Speculators should be banned fromthe oil market!


Editied to include video of former oil speculator and current commodities trader with similar view.

http://vimeo.com/22768444

[WI_DEM]

1. cut in half?

[masmdu]

3. Easily, crude would be more properly priced at 20-40$ / brl

[dipsydoodle]

7. Dream on

at those prices OPEC would reduce production.

[Initech]

4. Gas prices right now have *NOTHING* to do with supply and demand.

It's all about speculation and control. We let these corrupt banks and stock market dictate prices and that's what we get.

[hifiguy]

2. Anyone who cannot take actual, physical delivery

of the oil they are buying should not be allowed to buy or trade in oil. Simple as that.

[dipsydoodle]

6. Thats a good way of expressing it.

.

[dipsydoodle]

5. Unlikely

In the complete absense of what you call specultors who buy oil forward it would be pot luck trying to buy oil as and when. You could just find that under those circumstances none was avaiable to buy when you needed it.

[Nye Bevan]

8. How about speculators with short positions,

who are betting that prices will fall? Should that be banned, too?

And the logical extension of this would be to ban people frim buying real estate for investment purposes. These property speculators, who have no intention of living in the properties they buy, only push up real estate prices for everyone else.

[masmdu]

10. RE is not fundemental (other options exist). The comparison fails. Think of it this way...

If all food was derived from a single souce, say soy beans, speculation on soy beans would drive prices on all other food. It wouldn't be tollerated with food and shouldn't be with oil as oil is that elemental.

[Nye Bevan]

15. Not really. Everyone needs to live somewhere. (nt)

[masmdu]

16. yes but other options exist...just as with food...but oil not so much

[Zalatix]

9. THIS again? No intent to offend the OP but

isn't it time we started moving AWAY from fossil fuels?

What you pay at the pump is an absolute pittance compared to what it really costs to produce it... the damage done to the environment, and the wars we get into over it, and the weather disasters caused by global warming, to say the least.

Ever wonder why food prices are going up? It's because harvests have been hit hard, globally, by bad weather... which is caused by "cheap" gasoline.

We'll never see electric cars that get better than 100 miles per charge if we're devoting this much time, effort, money, resources, and technology, to keep America addicted to a drug that's going to drive us even further down the road toward a global ecological catastrophe that will hit your kids' pocket books very, very hard.

[masmdu]

11. Not at all mutually exclusive...I agree 100% we should be getting away from oil but as that happens

speculating should be banned.

[Better Believe It]

12. Which can we accomplish first? Stop oil speculators or end the use of oil?

[Zalatix]

13. When oil prices skyrocketed during the Carter Administration, we made cars more gas-efficient.

High gasoline prices will force America to innovate.

"Cheap" gasoline prices will keep us addicted to oil until we literally run out.

We don't need cheap gasoline. It's killing us.

[Ron Green]

19. +1, but the big picture doesn't get much traction around here.

People are too busy whining about how they have to commute 50 miles, or they need their big truck to haul stuff, or how poor people will be hurt. All of this is true. But Jesus, why does the more important issue of our absolute dependence on oil get pushed out by all the immediate concerns?

[The2ndWheel]

23. Because of our dependence on oil?

You can't be dependent on something and not focus in on what you're dependent on when it gets taken away.

Up to this point, we've been transitioning from one source of energy to another basically through dumb luck. Find this, use that, find something else, use that, do one thing here, do something else there, whatever. This is really the first time we're trying to consciously change everything everywhere at the same time. Transition to something that is unproven at a scale we've become...dependent on.

[Zalatix]

24. Goodness gracious, I do not know. What I do know is

if gasoline prices go back down,

gasoline usage will go up. Fossil fuel reserves inside the Earth will go down.

Global warming will accelerate.

Crop yields will be susceptible to wilder and crazier weather. Food prices will go up.

Cheap gasoline pump prices today mean a harder life for us all tomorrow.

We're putting a giant subprime mortgage on our children's future and quite LITERALLY much of the world will be underwater on that mortgage when the big rate reset comes - namely, that fateful summer or winter season when some major city in the world gets flooded and the waters don't recede.

[Fawke Em]

27. America HAS innovated.

Unfortunately, most Americans can't afford to run out and buy new cars right now. Our economy is slowly showing a slight sputter of re-ignition, but high gasoline prices keep that from completely engaging.

The best plan is to force the news media to be honest and report on Peak Oil so that the word gets out to even the lowest information voter in hopes we continue this innovation whilst we move toward breaking our dependance upon fossil fuels in a manner that won't break the Middle Class's wallets.

For example, I drive a car that is "OK" in its fuel efficiency - it's American made and it's a straight shift (straight shifts get better gas mileage than their automatic non-hybrid brethren). I'm about to pay it off. Once it's paid off, it will free me a few hundred to pay down credit cards I want to get out from under, so it will be another three to four years before I even CONSIDER purchasing a new car. At that time, I'll look at the hybrids and hope they finally build one that doesn't look like a bubble. I'm lucky, though, I have a job and a plan. Others do not.

[masmdu]

14. This former Oil speculator and current commodites trader agrees...And on FOX Business News no less

http://vimeo.com/22768444

[hughee99]

17. Perhaps the US government should start speculating on oil.

I know there's at least 1 person in this administration that made 100 times on their initial investment in less than a year in one of the other commodities.

[masmdu]

18. Yes, and more power to her but it wasn't Oil

[hughee99]

28. Surely if she can get up to speed

in such a short time with a commodity she had virtually no experience with, given her experience in global affairs, it will take even less time to corner the oil market.

[mathematic]

20. There are three types of players in the oil market

1. Oil producers
2. Oil refiners
3. Middle men (eg speculators)

If you are not trading a for-delivery oil contract you are not in the oil market, you are in the oil price risk market. Not like that's even relevant. Energy contracts are physically settled. Every long that doesn't intend to take delivery is offset by a short.

Besides you can't just "declare" that speculators are doubling prices. I'm curious to hear your explanation of the effects of the speculators in the CME weather futures on the weather. Wouldn't it be a trip if anthropogenic global warming was caused by speculators and not oil consumers!

Also since oil producers and oil refiners are oil companies I'm trying to figure out what an oil market would look like without them.

[Ron Green]

21. One minor point: There are no oil "producers," rather oil "extractors."

The producers died millions of years ago.

[mathematic]

22. heh

Noted!

[Zalatix]

25. DING!!! Knockout point.

[cthulu2016]

26. not a useful hypothetical

There is no way to ban speculation in oil. None.

There is no entity with the meaningful authority to do what you propose. The second any given trading market became for-delivery-only then oil action would shift to a different market.

[Snake Alchemist]

29. And if stock speculation was banned, the price of products would drop similarly. nt

[saras]

30. The system worked better with less speculation, as did many of our markets

India was right when they simply refused to ALLOW complex derivatives training, BECAUSE you couldn't track what was going on with them - that was SUFFICIENT reason to ban them. Financial transactions aren't automatically constitutionally protected, they are legal inventions.