Gas Prices and the Market

The government's war on speculators won't make gasoline any cheaper.

The speculators are ripping us off!

"The skyrocketing price of gas and oil has nothing to do with the fundamentals of supply and demand, and has everything to do with Wall Street firms that are artificially jacking up the price of oil in the energy futures markets. ... (T)he same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up."

Here we go again. That quote was Sen. Bernie Sanders doing what some always do when the price of oil spikes: complain about speculators. Now, President Obama says he'll investigate them: "We are going to make sure that no one is taking advantage of the American people for their own short-term gain." I assume that his new Financial Fraud Enforcement Working Group, like its predecessors, will uncover nothing untoward.

In America, we don't have a free market—we have a government-saturated economy in which oil companies and other corporations have a cozy relationship with politicians and bureaucrats. That's wrong, but even that can't explain the recent run-up in prices. Oil companies today are no more greedy or clever than they have been all along.

We have to look for a better explanation—and it isn't hard to find. Demand for oil rises with the growth of China, India, and other developing countries. When poor people get a little richer, they buy cars, computers, and refrigerators. They burn more fuel to make them and to run them. Rising demand, other things being equal, increases prices.

And other things have not been equal. Japan's nuclear plants are out of commission, and Libya, which accounts for about 2 percent of world oil production, is wracked by civil war. This is small compared to previous disruptions in the region, but it still affects the price.

The evil oil-speculator theory also runs up against the fact that the Federal Reserve's inflationary policies (QE2) and other factors have continued the dollar's slide against foreign currencies—to a three-year low. As the dollar loses value, oil sellers demand more for their product. "Commodities, along with most traded goods globally, are priced in dollars," former Federal Reserve official Gerald P. O'Driscoll of the Cato Institute writes. "It is the old story of too much money chasing too few goods."

If Sanders and other economic illiterates get their way, we'll have new laws banning "speculation." That will raise prices further. Don't believe me? Think back to a previous time when a Senate committee said that "speculative activity causes severe and unwarranted fluctuations in the price. ..." That was in 1958, when people got upset about the price of onions. Fools in Congress addressed that problem by banning speculation on onion prices.

The result? A Financial Times analysis found that the ban made prices less stable. This year, the retail price of onions rose more than the price of gasoline—36 versus 24 percent. Most years, the price of onions fluctuates more than other goods. No mystery there. Speculators help keep prices stable. When they foresee a future oil shortage—that is, when prices are lower than anticipated in the future—speculators buy lots of it, store it, and then sell it when the shortage hits. They know they can charge more when there's relatively little oil on the market. But their selling during the shortage brings prices down from what they would have been had speculators not acted.

Speculators are like the ants in Aesop's "Ants and the Grasshopper" fable: They save resources for lean times. Everyone benefits because everyone has a chance to buy from them in those lean times.

Speculators don't "artificially jack up the price of oil"—they take risks. Those who guess wrong lose a lot of money.

Historically, speculators have been convenient scapegoats, and they have suffered greatly for it. So have the rest of us.

While government should never create political opportunities for speculation, it should also stop interfering with its legitimate economic function.

We all are harmed when central planners take charge.

John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at johnstossel.com.

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  • Fist of Etiquette||

    It's not fair quoting Bernie Sanders.

  • ||

    I look forward to Sanders' investigation this winter when gas prices plummet.

  • BigT||

    Where was Bernie when the govt was giving out TARP funds? He should have been demanding investigations of the Congress, FED, Fannie/Freddie. How come only private industry needs investigating?

  • Mr Whipple©®™||

    Bernie "Backstabber" Sanders has no credibility after that "Audit the Fed" stunt. Fuck him. Socialists can't be trusted.

  • ||

    I find it highly unlikely that Zira drives a minivan.

  • ||

    You try wrangling 3-4 baby chimps with a sedan.

  • Ska||

    Did Caesar have siblings?

  • fish||

    Nahh....that's just Shrikes mom taking him to therapy.

  • ||

    Dr. Zaius has made it clear that minivans are the tool of the Beast Called Man. Ape shall not drive ape.

  • ||

    "Mama..."

  • ||

    Don't muddy the timestream.

  • ||

    Oh, pshaw. She had soccer chimp written all over her, the way she mothered Taylor and henmonkeypecked Cornelius.

  • ||

    You need to stop thinking about getting head from a chimpanzee.

  • ||

    Once you go chimp, you'll never be limp.

  • Barely Suppressed Rage||

    Hey, just imagine the things she can do - she's got four hands...

  • ||

    "Oh, baby... you knucklewalk like such a dirty girl..."

  • Craig Shoemaker||

    Knucklewalk nasty for the Love Master.

  • botoxporcupine||

    HA! +1

  • Zira||

    "If you weren't so damned ugly..."

  • Barely Suppressed Rage||

    Get your stinkin' paws off me, you damn dirty gas pump attendant!

  • ||

    We should institute price controls. Gas should be available to Americans at $1.00 a gallon; therefore, gas is now $1.00/gallon. Please, please, your cheering is unseemly. Just kiss my unicorn ring.

  • rather||

    depends where you are wearing it

  • ||

    ...not if he makes gas $1.00 a gallon

  • rather||

    If it's this ring, swallow;-)

  • Fiscal Meth||

    Oh yeah? Well while my opponent Mr. Libertate would have one dollar for every single gallon of oil go to line the pockets of rich fat cats on wall street at the expense of the everyman on main street, I will set prices at $0/gallon so that nobody is making profits off the basic needs of my fellow Americans!

  • Fiscal Meth||

    Meth wins election.

  • ||

    Certainly, oil companies can present a small bill for such services. After all, we are not communists.

  • Fiscal Meth||

    My agreement with that statement depends on whether I can count on campaign donations from them.

  • Dick Fitzwell||

    Damn you, Barzini!!!

  • ||

    Tattaglia's a pimp.

  • Irresponsible Hater||

    Photo needs no alt-text or explanation. We all understand.

    Wink wink, nod nod.

  • WTF||

    Why, what do you mean? Oh, wait..RACIST!!

  • Barely Suppressed Rage||

    I put $100 of gas in my truck this morning, and that was using the low-grade, cheap stuff and using a frequent shopper card that got me a $0.20/gallon discount.

    I guess I need to get a Prius or a "Smart" car (which have to be one of the stupidest cars ever invented).

  • ||

    Ouch. I thought 60 bucks for my car was bad.

    Still, $4 for a gallon of fuel that will propel a 2-ton vehicle, with you and your squalling brats for 20-30 miles? Pretty damn nice in my book. I'd rather it cost half that, but who wouldn't?

    I guess I need to get a Prius or a "Smart" car

    My kids call them Stupid cars. God love 'em.

  • Barely Suppressed Rage||

    Still, $4 for a gallon of fuel that will propel a 2-ton vehicle

    My truck weighs about 5800 lbs., so make that a 3-ton vehicle...

  • Barely Suppressed Rage||

    Oh, and on a good day, on a long trip, with a tail wind, I'll get 18 mpg. More typical is about 15 mpg.

    Yeah, I like to call it a "fossil fuel disposal unit."

    And I call them Stupid cars too. Because they are.

  • An Engineer||

    Oil is a disgusting pollutant that is destroying the Earth's crustal layers. I advocate the cleaning of the Earth's subsurface by drilling out all that nasty oil and converting it back to its natural state (CO2). We need more fossil fuel disposal units to accelerate this process.

  • Montani Semper Liberi||

    The cost of gas definitely impacted my choice in a new car. 5 years ago, I wouldn't have given a shit about mpg ratings, but when I finally had to break down and get a new car, getting 30+ mpg was one of the major factors on my list.

  • nekoxgirl||

    A lot of non-hybrid/non-Smart cars get over 30 mpg. I currently have a Nissan Versa and before a Honda Civic. They both get about 35 mpg. I hate the Prius. It's ugly, expensive to fix, and with the $10,000 to 15,000 to pay for it just to get an extra 10 mpg, I don't think it's worth it.

  • SIV||

    Car@Driver's best observed fuel economy in a passenger car was a early 1980s Subaru Justy up until the third or 4th year production of the Prius.

  • Doktor Kapitalism||

    If you happen to car about the environment...

    The extra pollutants released into the atmosphere while producing a Prius battery means that you would have to drive it 100,000 miles to make a negative impact on pollution rating. Just stick with a non-hybrid small car.

  • nekoxgirl||

    A lot of non-hybrid/non-Smart cars get over 30 mpg. I currently have a Nissan Versa and before a Honda Civic. They both get about 35 mpg. I hate the Prius. It's ugly, expensive to fix, and with the $10,000 to 15,000 to pay for it just to get an extra 10 mpg, I don't think it's worth it.

  • Doc S||

    Smart cars are only smart in countries that aren't the US. Our open roads and high speeds and HUGE TRUCKS make smart cars a really dumb death trap of an investment.

    Plus their fuel efficiency is dominated by so many other cars that are larger and better designed. so no, dont get one of those.

  • ||

    Kinda rains on "no blood for oil."

  • ||

    Hit submit too soon...You have to wonder about people who value their own lives so little.

    Either they never did the math, or their life really is worth only a couple hundred bucks a year, considering the massively increased risk of death from a collision in a Stupid Car.

  • Not an Economist||

    Stupid cars are actually pretty safe. It is basically just a roll cage on wheels.

    However, if you damage the frame, the car is pretty much toast.

  • ||

    Safe is relative.

    By themselves into a stationary barrier, they do OK for their size class. Against a mid-sized car, a much more realistic situation, not so much.

    http://www.youtube.com/watch?v=L4k0FWvGoSM

  • Anomalous||

    If you're going to risk death on the highway, you might as well get a motorcycle and at least have fun and look cool.

  • ||

    Crude oil down $7 today - and the Fed conspiracy theorists are much quieter.

  • TDL||

    What Fed conspiracy are you referring to?

  • Restoras||

    He's talking about himself.

  • ||

    There is a Glenn Beck CT that oil prices are inversely related to money supply instead of driven by supply/demand.

    Its crackpot garbage.

  • TDL||

    I'm looking @ the CL front month contract down ~$6.80 & the DX front month up ~$.952. That seems as though it reinforces the theory that there is an inverse relationship b/n the $ & Oil. I don't know what Beck says, but I'm sure that he has no clue what he is talking about.

    For the non-traders:
    CL = West Texas Intermediate crude
    DX = The U.S. dollar

  • ||

    Dollar strength is different than money supply. The Fed just didn't pull 7% of M1 out of circulation today.

    So I agree with you.

  • TDL||

    Now I got what you are talking about. I'm not surprised that Beck would believe that there are guys at the Fed expanding & contracting the money supply just to manipulate a commodity. Crackpot garbage indeed.

  • Fatty Bolger||

    I don't know about you, but I always trade money for gas.

    Are you saying supply and demand applies only to the gas side of the equation?

  • ||

    Are you really making an argument based on day to day price fluctuations?

  • ||

    Weather isn't climate!

  • Fed Conspiracy Theorists||

    No we're not!

    Dick!

  • Dave S.||

    So speculators can't drive the price of a commodity up or down. And the long only oil ETFs, nothing to see there either. Hmm.

  • TDL||

    What are you talking about?

  • ||

    I think he's having a stroke. Oil companies heavy burtation diristan TDJ's!

  • ||

    He is implying that easy to buy oil futures ETF's are pushing the price up.

    But the ETF's must sell and roll every month - so I don't buy it. A large one could move the price intra-month but that is also doubtful.

  • TDL||

    Also, for every buyer there must be a seller. As far as the long only ETFs, there are also short only ETFs.

  • ||

    The next time I see somebody at the grocery store buying two loaves of bread at the same time, I'll report them to the Ministry of Plenty for speculating. Or hoarding.

    Whatever.

  • Paul Krugman||

    OMG DON'T YOU PEOPLE GET IT? DEFLATION IS BAD!

  • Mango Punch||

    no amount of central planning will make gasoline any cheaper.

    Rationing? Price cielings?

  • TDL||

    With rationing & price ceilings we will end up paying more by wasting time in lines or by using slower means of transportation.

  • Doktor Kapitalism||

    Rationing = lower price, but less consumption possible.

    Price Cielings = lower or no profits for oil producers. Eventually they go into other fields = no oil.

    Subsidized gasoline prices = we pay it via taxes (and probably loose some to the bureaucracy) rather than at the pump.

  • John||

    It may not be speculators, but it is plain to see that it is because of gouging. I think that needs to be investigated. There is an unlimited supply of oil, so it should be cheap. The one thing that has not yet been tried would be to put a windfall tax on the oil companies to keep the price down. I suspect it would not work, but it may be worth it.

  • TDL||

    No it is not worth a try to put on a "windfall tax". Even if there is an unlimited supply of oil, there is a cost of pulling that oil out of the ground. Higher prices leads to more supply (& innovation), lower prices do not.

  • ||

    BTW... ^This "John" is not the regular who comments under the handle John. This one is over on the Drug War thread spouting drivel as well.

    (Not pointed at TDL, just wanted to get it high on the sub-thread.)

  • Mr Whipple©®™||

    I thought it was sarcasm.

  • ||

    1. Please define "Windfall Tax". We already tax profits, sales, and capital gains.

    2. Visit the annual report for any American Oil Company and tell me which should pay more taxes.

  • ||

    Pretty sure this is sarcasm, guys.

  • ||

    There is an unlimited supply of oil, so it should be cheap.

    *Sarcasmometer Explodes*

  • John||

    1. Please define "Windfall Tax". We already tax profits, sales, and capital gains.

    Excessive profits.

  • Restoras||

    Excessive profits? Are you kidding? Define it as a percent of sales. 10%? 15%? 20%? Are you only going to do this with eeeviiiil oil companies or across the board?

  • Brett L||

    Didn't we settle this the other night? 13% profit, 35% effective taxation rate -- both in relation to gross receipts. The government makes 3x as much off oil as the evul oil companies.

  • John||

    Perhaps 90% tax on any profit over a 10% profit margin.

  • Restoras||

    And you will apply that to all companies?

  • Barely Suppressed Rage||

    So John - what company have you ever started or operated?

  • Restoras||

    Define 'windfall profit'.

  • ||

    A falling tree makes a windmill spin faster?

  • Restoras||

    This I agree with

  • ||

    Define "gouging."

  • waffles, side of bloodlust, ||

    Come here an I'll show you.

  • John||

    Charging too much.

  • ||

    Define "too much."

  • nekoxgirl||

    Aren't taxes usually passed on to the consumer?

  • Highway||

    Only as much as possible... including raising the price more than the tax and using it for an excuse.

  • Jersey Patriot||

    There is an unlimited supply of oil, so it should be cheap.

    At $1000 a barrel, yes. At $35 a barrel, no.

  • prolefeed||

    It may not be speculators, but it is plain to see that it is because of gouging. I think that needs to be investigated. There is an unlimited supply of oil, so it should be cheap.

    The stupid is strong with this one.

    It's hard to gouge when you have a lot of competitors trying to take away your business. Last I checked, there were quite a few companies selling gas.

    There is a virtually unlimited supply of gold, too -- scattered thinly throughout the universe -- so by this logic, gold should be cheap, too, even though it is prohibitively expensive to get to those other planets and asteroids and extract the gold there.

    I suspect it would not work, but it may be worth it.

    Why would something that fails -- and has always failed every time it's ever been tried -- be "worth it"?

  • Restoras||

    "Why would something that fails -- and has always failed every time it's ever been tried -- be "worth it"?"

    Two Words: Social Justice. Two words that strike fear into the hearts of all liberty-loving people.

  • Mango Punch||

    Stossel completely misses the impact of the weak dollar.

  • A Serious Man||

    The evil oil-speculator theory also runs up against the fact that the Federal Reserve's inflationary policies (QE2) and other factors have continued the dollar's slide against foreign currencies—to a three-year low. As the dollar loses value, oil sellers demand more for their product. "Commodities, along with most traded goods globally, are priced in dollars," former Federal Reserve official Gerald P. O'Driscoll of the Cato Institute writes. "It is the old story of too much money chasing too few goods."

    Yeah, but who knows what Stossel means by that?

  • Jersey Patriot||

    Oil has been rising faster than headline inflation since it hit its lows in 2002 or so. Smoothing out the 2008 spike and trough, oil's rise from $20ish in 2002 to $90ish in December has been very steady. QE, which didn't even begin until late 2008, can't be the cause of oil rises in 2005.

  • A Serious Man||

    Yes, I agree that correlation does not equal causation, but clearly inflation, which drives prices UP, cannot be said to be helping consumers.

  • TANSTAAFL||

    Food for thought:

    The loss of Libyan crude — about 2% of global supply — has reduced the amount of oil available in the market and gasoline prices track global crude oil prices.

    Prices must necessarily rise to reduce global oil consumption because we can't consume what isn't there. How much do prices need to rise to reduce oil consumption by 2%? It takes a big increase in gasoline prices to get us to drive even a little less. Economists estimate that prices must rise anywhere from 10 to 20 times the percentage reduction in quantity to reduce demand enough to equal the lower supply. Thus for a 2% supply reduction, prices must rise between 20% and 40%. Average gasoline prices have risen 20% since early February, on the low end of what economists predict.

    http://www.cato.org/pub_display.php?pub_id=13039

  • ||

    "Those who guess wrong lose a lot of money..."
    ...but those who manipulate the market make a lot of it.

  • Restoras||

    Nassssty trickseeee ssssspeculatorsssss...we hatesss them!

  • Paul||

    "Those who guess wrong lose a lot of money..."
    ...but those who manipulate the market make a lot of it.

    Except when they don't.

  • OO||

    traders should be forced to take physical possession of the commodities

  • TDL||

    Why? What would this accomplish? How would this affect hedgers?

  • Restoras||

    There isn't room for speculation in OO's Five-Year Plan. Literally. Shortage of paper driven by regulation, price controls, environmental 'protection', rationing, etc. that his economic dystopia excells at.

  • Fiscal Meth||

    This idea comes directly from Marx.

  • WTF||

    OO should be forced to take physical possession of a brain.

  • OO||

    kinda funny but weak

  • u r||

    so stOOpid

  • Brett L||

    Isn't that part of every futures contract? I seem to recall a guy getting a bargeful of coal.

  • Restoras||

    It is - unless you liquidate/roll forward. If you 'forget' to do this - then yes you do take delivery.

  • OO||

    and that churning for quick profit is part of the pricing problem

  • Restoras||

    No, it isn't.

  • TDL||

    How is the "churning for quick profit" a problem when it comes to pricing?

  • Restoras||

    He must be an eBay-hater

  • Paul||

    I believe if certain procedures aren't followed, you will take possession of the commodity.

  • Soapy Johnson||

    The "Jed Clampett Time Travel Theory" will tell you all you need to know ... http://placeitonluckydan.com/2.....everybody/

  • OO||

    the saudi oil minister & OPEC both say the supply hasnt decreased. fear n greed is driving the price

  • ||

    Demand has increased, though. China and India's economies aren't being powered on wishful thinking, after all.

  • Jersey Patriot||

    Even if the US went balls out, it couldn't even replace lost exports since 2005, let alone the increase in Chinese and Indian imports.

  • ponchy||

    No, but oil has a steep S/D curve. Small changes in supply lead to proportionally larger changes in price. Works in both directions. If the US found ways to up production it might not send prices down to 1990's levels, but it would impact rising prices much more than a series of fake investigations will.

  • ||

    True but what the anti-oil factions don't acknowledge is that the US could provide a STABLE supply. This would act to calm global markets and reduce the fear and confusion (and associated price spikes) caused by uncertainty in the supply from the more chaotic areas of the world. This would be a big positive for the world economy and not a big negative for the environment.

  • Jersey Patriot||

    A stable supply to whom? If we went nuts, we could possibly pump P-` of our own domestic consumption. And even then, probably not for long. The US currently imports 8 million barrels of oil per day. We probably have another 3 mbpd of oil, maybe 4. And that rate wouldn't last long anyway.

  • TANTSAAFL||

    "We probably have another 3 mbpd of oil, maybe 4. And that rate wouldn't last long anyway."

    JP's Estimate = FAIL

    Try estimated oil reserves at 90 - 130 billion (not including shale, which could become accessible as R/D is conducted)

    That puts us up in Saudi Arabia levels. The problem isn't a lack of oil, but a lack of will to exploit and explore our own resources...

    http://en.wikipedia.org/wiki/O.....ted_States

    http://www.boemre.gov/revaldiv.....ochure.pdf

  • Becky Chandler||

    Stossel, who usually writes so well, always sounds like an Exxon Press Release when he gets going on this topic.

    Overall he is right. In addition oil, like all commodities, is up due to the debasement of the dollar. However there is a bubble on top of it. That started with the Libyan Civil War. It is a very small physical disruption, and has not effected supplies or demand. However, investors are "fearful" of future increased hostilities and decreased supplies. It is a legitimate fear and market changer--but, inventors are aware that an actual physical disruption in oil supplies in the near future is not likely. At some point, since it is an unsustainable paper barrel bubble, it will collapse as they run to recover profits (and minimize losses). It is not going to go down to $2.50 (more for the underlying reason I mentioned than Stossel's lesson on free market economics)--but it will go down suddenly, unexpectedly and steeply--in the very near future.

  • Paul||

    None of this answers the simple question: Who do we investigate when prices take a sudden, dramatic drop?

  • Doktor Kapitalism||

    The Saudi treasury?

  • OO||

    "The euro dropped the most against the dollar in two weeks, making commodities that are traded in the U.S. currency more expensive in other monies. “The common denominator for all the commodities selling today is the strength of the dollar,” said Bayram Dincer, an analyst at LGT Capital Management Ltd. in Pfaeffikon, Switzerland."
    http://www.businessweek.com/ne.....wdown.html

  • TDL||

    Do you have a point to make?

  • OO||

    upthread the argument was speculation vs the dollar. try to keep up

  • TDL||

    Why don't you look at who was commenting up-thread on the $/CL speculation.

  • ||

    No, it doesn't. Run before you get any on you.

  • OO||

    stop folloing me a round stocker shoodnt u b puting book away

  • the real oo||

    go bang mrs old mex

  • the real real OO||

    fuck of suger stop spoffing me

  • NotSure||

    Speculators are like the money lenders in the middle ages. Most people people hate them and are a useful scapegoat when things do not go as planned, the speculators perform a function that the economy needs, with out risk in economy there can be no gain, its that simple

  • Jesus||

    money changers are the scum i bull-whipped outta the temple

  • ||

    "Speculators" (whoever they are) add depth and liquidity to the market. Markets with depth and liquidity work better.

    Ergo, driving out speculators will damage the functioning of the markets. I simply can't believe that our President would do such a thing.

  • oo||

    really? since oil supply n demand remain balanced, explain the speculators comtribution to the market now

  • Restoras||

    They take on price risk the hedgers seek to avoid.

  • Dave S.||

    Looks like the speculators are getting out today.

  • BigT||

    It never ceases to amaze me that people blame speculators for making easy money, and yet do not go out and become speculators (or at least emulate speculators) to rake in all that 'easy' money.

    How high do you think oil would go if Suadi Arabia were attacked by Iran? Wouldn't you want to have some contracts in place to buy oil at $100/bbl to guarantee your supply if you needed oil for your business? Maybe we should initiate long term gasoline contracts for the average consumer so they can learn how difficult the game can be, and how they can hedge their bets. The nat gas utilities do this with their consumers.

  • Brett L||

    You rarely hear when speculators lose their ass.

  • ||

    As of today, it seems that the government's war on the economy is leaving the oil speculators standing there looking broke with their dicks in their hands.

    The idea that speculating is a one-way deal is pretty stupid. Ask someone who has lost his ass. Speculation only leads to profits when the speculator guesses right -- meaning that other factors have led to a rise in the price of the commodity.

  • 4chan||

    If you want to curb speculation, make it more expensive to speculate. Increase the margins needed to buy more oil, or whatever commodity. Its what the CME did with Silver, and it just took a nose dive.

  • 4chan||

    And oil prices dropped under a $100 at the moment. Take that market speculators.

  • Fist of Etiquette||

    Repeat episode!

  • Jim||

    Whew, because I was going to keep watching the "debate" anyway.

  • Fist of Etiquette||

    It's being liveblogged. Two places.

  • Fist of Etiquette||

    Oh, wait. This isn't a repeat, it's a mishmash of his Freeloaders show.

    Meh, either way, after the debate, I'm liveblogged out. Next week.

  • jandy25||

    Learn much from this article hogan catalogo ufficiale.
    hogan catalogo ufficiale

  • will||

    I can't help but feel that the author is conflating speculators who actually purchase and store product with those who simply buy and sell futures non-stop. there's a distinct difference between the two, particularly in regards to their effects on the prices of commodities.

    I've read far too many substantive, well-written articles by individuals with economic backgrounds to so readily dismiss the (purported) "illusion" of speculation.

  • TANSTAAFL||

    "A federal interagency task force undertook one such econometric analysis in 2008 and found that futures price changes from January 2000 to June 2008 preceded net position changes by any group of traders. An updated and more rigorous econometric study by economists Bahattin Buyuksahin and Jeffrey Harris found the same thing for July 2000-March 2009."

    "These findings undermine the claim that speculators' behavior increases gasoline prices. "The lack of even Granger-causality (let alone true causality) between positions and prices undermines the prospect that speculative trading has driven recent dramatic price swings in the crude oil futures market," concludes Buyuksahin and Harris. "Rather, we believe it more likely that both prices and positions react to the same factors, such as global demand and supply."

    SUCK IT!

    http://www.cato.org/pub_display.php?pub_id=13039

  • darnit||

    I love this line of argumentation - "I've read tons of articles by actual EXPERTS that show your argument is wrong. I'm not going to name the article, or the expert, but trust me - I'm right and you're wrong".

  • spacciohogan||

  • sologn||

    is good

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  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

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