13 Responses to “Speculation does affect oil prices”

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1. RLaitres
   Posted June 30th, 2008 at 7:35 pm  Login to Send PM  Report this comment  

   If Mr. Gerson expects to find anything but glib, trite, or shallow content emanating from the editorial columns in the Daily Sentinel, he is in for some disappointment in life. Shall we say, and here I am being kind, that many such pieces are written, not based upon much reasearch and real understanding of issues, but rather from a pure ideological perspective. How else to explain their double standards so often seen in the positions they take? If the offender calls him/herself a Democrat or “liberal”, hang ‘em high, and right now. If it is a Republican or “conservative”, let us be tolerant and wait for the facts, let us consider the “mitigating” factors and pressures in the “poor soul’s” occupation.

   This is nothing new, and has been quite obvious for years. Sometimes I have to seriously question if the publisher and editor even read their own newspaper. They might start by looking what has been published in the editorial columns, just over the last 8 or 9 years. For individuals making their living with the English language that should not take more than a few hours, at most.

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2. dherzog
   Posted July 1st, 2008 at 3:30 pm  Login to Send PM  Report this comment  

   http://www.realclearpolitics.com/articles/2008/07/lets_shoot_the_speculators.html

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3. bullishfrog
   Posted July 1st, 2008 at 4:09 pm  Login to Send PM  Report this comment  

   Dennis, the article to which you refer supports the Sentinel’s argument that futures markets speculation has not had a significant impact on oil prices. There are opinions on both sides of this issue with speculators being the first to tell you (and they may be a little biased) that they have no impact on prices. But logic would argue otherwise.

   If a large amount of money is being moved to the buy side of the crude contracts, the sellers will get a better price and the price will rise. Supply and demand works in the futues market as well as it does everywhere else. The demand for crude futures on the buy side has risen considerable as investment houses like Goldman Sachs took the position in 1999 that investors should make commodities a part of their investment portfolio. Ever since then hundreds of millions of dollars have been put to work in the futures markets by folks who are in there for the sole purpose of riding the trend higher. And the higher it goes, the more money is going in there by folks wanting to ride the trend.

   Clearly, the rise in oil prices is, first and foremost, a function of supply and demand in the real world. And as the supply cushion shrinks, it is reasonable for prices to rise. There is also the issue of a possible supply interruption due to the potential war with Iran.

   But the question is whether these real fundamental issues alone would cause oil prices to skyrocket the way they have given that there is no shortage of oil. The stock market and the futures market have the authority to increase margins and has done so in the past (sometimes temporarily) to curb speculation. I believe now is a good time to do so in the crude oil market.

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4. american_patriot
   Posted July 1st, 2008 at 4:11 pm  Login to Send PM  Report this comment  

   OOPS!! It would appear that Mr. Laitres stepped in it again. It makes one wonder why he avails himself of this site. It would appear that he is on a one man crusade to defame the Daily Sentinel, which begs the question; Why?

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5. dc
   Posted July 1st, 2008 at 4:39 pm  Login to Send PM  Report this comment  

   Thank you, Mr. Gerson, for a very thought provoking article.

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6. DaBookie
   Posted July 1st, 2008 at 7:17 pm  Login to Send PM  Report this comment  

   A_P - The daily Senile does a great job of defaming itself, usually on a daily basis. Your constant personal attacks on Laitres, Classof52, and others does not contribute anything to the collective discussions. Rather, it detracts and trivializes the various threads that you seem to have so much time to participate in. You are not just a thorn in the side, you are becoming a true cancer on the collective. The old adage applies - Lead, Follow, or just Get Out of the Way! Ron White said it best - YOU CANT’T FIX STUPID. You, at times, seem to have a good insight into things and, overall, you are a good writer. Please use those skills and abilities in a more positive manner and actually contribute to these discussions rather than pontificating and launching what can be best described as pointless diatribes. Remember A_P, and mind is a terrible thing to waste.

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7. RLaitres
   Posted July 1st, 2008 at 7:36 pm  Login to Send PM  Report this comment  

   Bullishfrog supports the Daily Sentinel position, I do not. What I believe is the problem is that, like the author of the editorial article, he is living in a “theoretical” world. That no “money” is lost may be true if one remains at the level, or at the level of funds management, i.e. one fund gains and the other loses. However, in reality, and the least that does do happen is that wealth does shift for stockholder in such funds.

   Investement is one thing, but speculation is another. There is also the consideration of an “acceptable” degree of risk. If there is a reasonable expectation of return, whether short or long term, while there is risk, it is considered manageable. However, when the too much “risk” is created vs what is a possible ROI, that approaches the standard of gambling. But, even there, if one is capable of taking the loss, there is no problem. However, some funds and fund managers, are not really handling their own money, but that of others. That includes, retirement funds, pension funds, etc.

   Both bullishfrog and the Daily Sentinel editorial writer might care to research what has happened with the value of some such funds, if only over the last decade. Now, the serious decline of value may have been partially caused by the incompetence or greed of fund managers but, that is not by any means the only problem.

   Is a “bubble” being created in the oil market, most certainly it is. It is really the same as those in the technology and housing markets of recent years. And, like all others it will burst.

   As far as the article is concerned, I certainly hope the Daily Sentinel did not base its opinion upon that one article which provided by Mr. Herzog. It is really nothing new, and represents one perspective. If that is all we have, I will stand behind my criticism of the editorial article.

   As to AP’s comment beginning with “OOPS!!” Rest assured that Mr. Herzog is a big boy, and so am I. As such, he is quite capable of defending his position and that of his newspaper. Mr. Herzog and I have disagreed in the past, and am quite sure we will in the future, very much as I have disagreed with the Daily Sentinel’s publisher, Mr. Taylor.

   Perhaps AP is impressed with titles and positions but I am not. Titles and positions are merely that, titles and positions. While Mr. Herzog may have worked very hard to gain his position, it is no guarantee that he is infallible in any position he takes. And, as AP is probably not too well acquainted with newspapers and their operation, and probably never even having spoken to either a publisher or editor, permit me to enlighten him, if just a tad.

   Newspapers are “businesses”, and as such they are operated for profit. But, they are in a very unique industry, one charged with keeping the public informed. The question really then becomes, are they really doing so, or are they serving their own agenda or “pandering”, so as to “make a buck”?

   If the latter, then perhaps the management of such enterprises have to ask themselves how much of their country or community, and how many people, are they willing to sacrifice in order to keep a “healthy” bottom line? This is not a new question and not only applicable to the “information??” industry.

   Sorry, but AP is again (or should I say still) off the mark. Or perhaps he is attempting to curry favor with folks at the Daily Sentinel. Being the “good and faithful” little one that he is, they may give him some reward, but I doubt it. They are probably laughing harder than we are at the contents of his post.

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8. american_patriot
   Posted July 1st, 2008 at 8:03 pm  Login to Send PM  Report this comment  

   DaBookie,
   Thank you so much for your advice. Of course you may have overlooked the part that the dynamic trio has played, but that is understandable. Let me see if I have gotten this straight? What you are saying is, let me flatter you into laying off of one of the guys on my side. Just ignore the fact that they slam everyone on this site, that they are arrogant, and they do their best to run off all new posters, so they can continue to use this forum for their own personal propaganda instrument. Now, I know AP that you tried to ignore them, and they just kept on keeping on, and I know AP that you have written several posts on here exposing what they are doing, and how deceptive and deceitful it is, and I know AP that I wasn’t around when Proteus and the Dynamic trio were slamming the troops, and using proteus’s imaginary military career to do it, and I know I wasn’t around when class posted his quote “Sacred cows make the best hamburger” on the Memorial Day salute to our Troops and Veterans Forum, or when proteus changed his handle to sugarfoot in order to deceive the readers, or when sugarfoot changed his handle to GJBubba, and for all I know, I am taking to him right now. That is deceptive and deceitful. But that don’t mean a thing, no not a thing. AP you are such a smart guy, don’t use your many and illustrious talents to whack these human vermin. Well, I got the message alright, but if I were you I wouldn’t hold my breath. You see, a short time ago, I offered a truce to Class of 52 and he kicked it right back in my face, so you may be talking to the wrong guy. The next move belongs to the dynamic trio. The one thing you have overlooked is history, and history has a way of shaping the future. I started out trying to get along, and trying to discuss the issues in a fair and equitable way. Now I do the same thing they do, and if I didn’t, their side would be all that was being presented. Now, if you don’t like the Daily Sentinel, that is your prerogative, but it does seem a wee bit hypocritical for you to use their forum and then whack them at every opportunity. I am sure you are aware that the Free Press has a forum that is dominated and controlled by those of the radical liberal persuasion, so why don’t you heed your own advice (read; what does your post have to do with the subject on this forum). It would appear that you are doing exactly what you are asking me to stop doing, so make the move. You will be much happier over there.

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9. bullishfrog
   Posted July 1st, 2008 at 8:16 pm  Login to Send PM  Report this comment  

   RL “Bullishfrog supports the Daily Sentinel position”

   Man oh man. What gave you the impression that I agree with the Sentinel?

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10. RLaitres
    Posted July 1st, 2008 at 10:22 pm  Login to Send PM  Report this comment  

    bullishfrog states: “Man oh man. What gave you the impression that I agree with the Sentinel?”

    Sorry, got distracted here. Believe your post raises some valid questions, as did the original letter writer. Their is no doubt that “speculation” does raise price, it is a matter of degree.

    The estimates vary widely as to how much, from 0 to over 30%. Don’t you believe it is about time we find out the truth? While that may not be a very severe hardship for some, it is for many (even some that I know who are on fixed income).
    While some people look only on the financial markets to determine how well the “economy” is doing, where I look is at the grocery store, and the cost of heating, cooling, and the cost to truckers who have to go out of business because they can’t pass on the addutional cost.

    What I look at is how the individual person is doing, not at corporate profits or their bottom lines. All that tells me is how “business” is doing.

    I also look at cost to government entities who, because of the rise in petroleum product prices cannot remain within budget.

    I know that because I go in to the county courthouse and examine the general ledger and look at how county government is doing with its budget. If I see a significant over-budget, or unexplained expense, I find out why. (I am probably the only one in the entire county of Delta, except for county employees, who keeps watch) Not even those running for county office bother to look that closely at county expenditures. Do you have anyone in Mesa County or even withing the the city that does the same or, as I find in Delta, they whine and moan about “taxes” but don’t pay any attention at all as to where and why the money goes?

    The same applies to cities, states, etc. And, if they can’t remain withing budget that means a raise in taxes, something that many complain about, without ever looking at the details of “why”, always my most important question in my vocabulary.

    When I look at the economy then, I am not so concerned with how Wall Street is doing, but what condition Main Street is in. It is “not good”, and getting worse.

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11. bullishfrog
    Posted July 2nd, 2008 at 9:01 am  Login to Send PM  Report this comment  

    I would like to offer one piece of anecdotal evidence that helps to support the case that speculation in the crude oil futures markets is responsible for a significant part of the price increase in crude. Over the last 12 months the price of crude oil has almost doubled. The international oil companies are major beneficiaries of this increase. So, one would expect that the price of these companies’ stocks to have kept pace with the increase in crude prices. But that has not been the case. Stocks like Exxon, Chevron, BP, Conoco, and Shell have barey budged in the last 12 months.

    How can one explain the divergence between the price of crude and the price of oil company stocks? One explanation is that investors in stocks do not believe the price of crude is sustainable. In other words, that there is a lot of froth in that price and that froth comes from speculators in the futures market.

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12. dherzog
    Posted July 2nd, 2008 at 9:11 am  Login to Send PM  Report this comment  

    I fear Mr. Laitres, who I consider a member of the loyal opposition, is confusing equities markets and commodities markets.

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13. Willis_Leon_Johnson
    Posted July 2nd, 2008 at 10:02 am  Login to Send PM  Report this comment  

    Mr Herzog,

    In reference to Mr Laitres (from Delta), perhaps the quote posted by gfbyers in a phorum thread this AM..

    ” “He can compress the most words into the smallest idea of any man I know.” - Abraham Lincoln ”

    Usually we are required to read through many very long paragraphs only to discover the fact that there was no idea, just his practicing on making sentences.

    Quite often he reminds me of the theory of putting a group of monkeys in a room full of typewriters and eventually discovering the entire works of Shakespeare being reproduced.

    Maybe his doctor suggested this as an exercise to fight off the effects of some debilitating brain disease?

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