I came accross this site. It sounds interesting. What are your thoughts?


http://www.stopoilspeculationnow.com/

Patrick

 

"Speculation" is a misunderstood concept. Speculators not only make money when prices rise but when they fall too. Speculators are really nothing more than gamblers - betting that the price either goes up or down over time.

As I see it, the speculators were in the high tech market until that bubble burst, they then moved to the mortgage market and that burst too. They then moved to the oil market and became one of the targeted Congressional scapegoats.

Two problems with "Congress regulating speculators" - 1) Congress has no authority over international markets and b) it would be a band aid at best while not addressing the fundamental underlying problem, which is supply. And quite honestly - Congress has been looking for a scapegoat over high fuel prices when, in fact, the problem was created by them in the first place. That alone gives me pause to agree with anything they want. I had to laugh when Congress announced it was going to sue OPEC. WTF?

The oil price problem is the result of not only supply but also the weak dollar and the perception the market won't improve (again, this part is supply).

The lie that "we can't drill our way out of this problem" is utter bullsh!t. So is the notion that it would "take 10 years" to do. All the experts I've looked into talk in terms of months, not years. And letting the market know we WERE going after our HUGE reserves would send a shudder through the market and prices would start to seriously drop rather quickly. As for the speculators, increased supply would effectively make them a non-issue as well.

My $ .02

 

As is typical, most people have no clue how commodity speculation works (arguably, I probably don't either since I lost alot of money in a BIG hurry doing some a few years ago... )

However, if you look at futures markets as you would a business banker it might help to realize the important function that commodities brokers ("speculators") provide to the market. Certainly, brokers "speculate" as to what the price for a "X" may be at some time in the future, but this speculation is based on significant amounts of research as to what the future "supply and demand" will be, coupled with "crystal ball gazing" as to how other variables (weather, breakdowns, civil unrest etc.) will affect that supply.


The people that produce the commodity sell the future production of that commodity on the COMEX (commodities exchange) to brokers who purchase it and then re-sell to final users. This provides the producers capital to then grow, manufacture, or provide the product at a later date.

Commodity brokers are a valuable and important piece in the capitalist system.

 

Just a question since I know next to nothing when it comes to speculation...but from the sounds of it prices for oil are being determined and traded based on futures. By that I mean based on speculator research etc...the expected price for a barrel of oil will be X+ what it was yesterday come next month or next year but it seems that this future speculation is driving that future price today. Not when they speculate/ predict the price to be. Am I making sense?

Iran says they tested missiles in preparation for an Israeli or US strike that may or may not ever happen. Based on the speculation that the price of oil would rise if supplies were affected by a war between Iran and Israel/ US in the future maybe next week or next year the price still goes up today. Supply is unchanged today and tomorrow and next week.

Are you saying if the supply if oil is not interrupted as the speculators speculate that they will get burned down the road by the price being paid now?

Either we have been living with artificially low oil prices for the past decade+ and the cost is finally starting to equate to reality or the price of oil is being driven artificially high by those looking to push the market in a direction that will make them money. Also....part of the problem is the bottleneck in the system are the refineries that can't meet the supply of gasoline required versus the oil at their disposal to refine.

Set my random thoughts straight.

 

Well stated and correct on all points. Drill here, drill now and pay less.

 

Your on the right track.

Commodities traders "win" and "lose" all the time. For every contract that is purchased, a contract has to be sold. Sometimes the buyers win, sometimes the sellers win. The long term impact is that the trading actually "smooths out" much of the volativity to the consumer.

Either we have been living with artificially low oil prices for the past decade+ and the cost is finally starting to equate to reality or the price of oil is being driven artificially high by those looking to push the market in a direction that will make them money. Also....part of the problem is the bottleneck in the system are the refineries that can't meet the supply of gasoline required versus the oil at their disposal to refine.

Neither of these assumptions are correct. Compared to most of the rest of the world, we have cheap gasoline at the pump. However, with the exception of those countries that subsidize gasoline prices to their own citizens (Mexico, Saudi Arabia, Kuwait, China, India etc.) the major price difference country to country is the amount of taxes that governments decide to load onto the base cost of the produced gallon of gas.

As far as refineries are concerned, there is definately a capacity problem since we haven't built a new refinery in more than 30 years. We currently import more than 30% of our refined gasoline.

FYI, Amy and I vacationed on St. Croix last March. The largest oil refinery in the western hemisphere is located on the island (Hovensca). Gasoline was about $2.50 per gallon. At $100 / bbl, the raw crude costs $2.38 per gallon. (A bbl is 42 gallons) Not much of a mark-up...

The biggest issue to impact oil prices is the continued economic growth of India and China. This growth has had a tremendous impact on ALL world commodities, not just oil. Steel prices have more than doubled in the last 5 years.

China's communist centrally controlled economy has to generate more than 25,000,000 NEW jobs every year, AWAY from metropolitan areas in order to keep their citizens employed and prevent a massive economic downturn. This has caused the Chinese government to keep the yaun artificially cheap compared to the dollar, thereby making Chinese products affordable for the worlds largest consumer, the United States. They have also been subsidizing gasoline prices. (the last I read, gasoline was about $1.00 / gallon in China)

However, just last week I read that both China and India are going to gradually stop subsidizing gasoline prices. This will eventually reduce consumption of gasoline in both those countries and create a downward pressure on global oil prices.

However, keep in mind that the world market for oil is not really a "free market" because 95% of all oil being produced is by countries that have nationalized their oil business. Only 5% is produced by independent companies including Shell, Texaco, Exxon, etc. Keep that in mind the next time you hear someone vilifying the evil oil companies.

PEMEX, ARAMCO, CITGO are some examples or who REALLY is controlling production of oil in the world. They have a definate motive to keep a close rein on production as it funds their countries and keeps the government ruling class fat.

 

Lets all hope that cooler heads well prevail in the middle east, or we'll be looking at $10.00 a gallon real quick. JOE

 

That potential certainly exists. However, the middle eastern countries have a vested interest in keeping oil flowing to the west and east. Without oil revenue, the ruling classes might find themselves facing overthrow. Consequently, I believe any significant unrest would be short-lived.

The reality is that oil is fuel that allows every economy to function. Without the free flow of oil at market prices, every major economy in the world would come to a screeching halt. Because of that fact, no "sane" country wants a disruption of oil. So the few rational countries with the ability to prevent or moderate actions that would impact that flow will certainly step in to minimize a world-wide economic calamity.

If those facts don't get our "so-called" leaders to get off their collective *** and improve the energy independence of this country t's time to throw them out.

I'll support the first candidate with the "huevos" to start his push by proposing the construction of 30 to 50 new nuclear generating facilities and 10 more regionally located refineries in the next 10 years.

Build now, build here, be independent!

 

I think you are right. Here is what I got from my representative after I sent his a note about what I think congress isn't doing. At the end, he invited me to contact him again and I did. He stresses conservation. We conserve, then the oil companies shut down the flow and the price stays high.

From congressman...

Thank you for contacting me with your concerns about the rising price of gas and America's energy policy. I appreciate hearing from you and would like to take a moment to respond.

Every American family that owns an automobile knows that gas prices continue to rise and squeeze our pocketbooks. As oil continues to hit record prices per barrel, Congress is working to create a sustainable energy policy that supports our economy, our national security, and our environment. We must do all we can to start moving towards energy independence through aggressive efforts at conservation, efficiency, and the development of alternative fuels.

Congress has been debating a range of short-term proposals attempting to address the impact of high gas prices. Unfortunately, most experts agree that the actual impact on gas prices of measures such as a gas tax holiday, increasing offshore drilling, or more tightly regulating the oil futures market, would be minimal at best. Opening up new public lands to drilling, for example, aren't expected to affect gas prices for at least 10 years. One immediate step Congress has taken is to pass into law new legislation that would temporarily suspend deliveries of oil to the U.S. Strategic Petroleum Reserve thus slightly increasing supply and alleviating at least some of the pressure from sky rocketing gas prices in the near term.

Beyond short term fixes, we need to focus on long term solutions to our energy crisis. That means a policy that reduces our dependence on oil and moves us in a sustainable, energy-efficient direction. The U.S. consumes 25 percent of the world's oil even though we only have 3 percent of the world's oil reserves. It is clear we will never become independent of foreign oil sources, and the only way we can lessen the effect the international price of oil has on our country is to reduce our consumption. We have the technology and innovation to develop a sustainable domestic energy program with the potential to lead the global market; however, this can only succeed through improved energy efficiency and the development of alternative energy sources. The domestic production of renewable resources will strengthen our economy and loosen our dependence on foreign oil, its dangerous and unstable prices, and its environmental costs.

As a major step toward those goals I was pleased to work with my colleagues in passing H.R. 6, the Energy Independence and Security Act of 2007, into law. This legislation made a number of changes to our energy policy and created a Strategic Renewable Energy Reserve to invest in clean renewable energy resources and alternative fuels, promote new energy technologies, develop greater efficiency and improve energy conservation. This bill passed both the House and Senate, and was signed into law on December 19, 2007.

Specifically, H.R. 6 improves three key standards in our nation's energy efficiency and conservation efforts: the Corporate Average Fuel Economy (CAFE) standards, the Renewable Fuel Standard (RFS), and appliance and lighting efficiency standards. The legislation increases CAFE standards to 35 miles per gallon for cars and light trucks by model year 2020. This is a common sense step I have long advocated for and is the first congressionally mandated increase in CAFE standards in 32 years. The RFS standard requires that 9 billion gallons of renewable fuel be produced by 2008 and increases to 36 billion gallons by 2022. Finally, the bill sets new energy-efficiency standards for appliances and buildings.

While the Energy Independence and Security Act of 2007 was a strong start, I believe we must move even more aggressively to change the direction of our nation's energy policy. That is why I also supported the Renewable Energy and Energy Conservation Tax Act, H.R. 5351, when it passed the House on February 27, 2008. H.R. 5351 contains approximately $18 billion in energy tax incentives aimed at encouraging the production and use of alternative fuels and energy conservation. These tax incentives would be offset by revenue created from repealing tax deductions and foreign tax credits for oil and gas producers. We need to change the incentives behind our energy production and consumption if we want to have more stable energy and lower gas prices in the future. Currently, this bill is awaiting consideration in the Senate Committee on Finance.

Again, thank you for contacting me on this critical issue. Please be assured that I will continue to work with my colleagues to bring about the changes needed to address our pressing energy needs and move the United States towards energy independence. Should you have any additional questions or concerns, please do not hesitate to contact me.

 

There is so much political nonsense in this letter I don't know even where to start...

I'm sorry but any MORON that thinks that we can solve this self-made "crisis" through conservation deserves a frontal lobotomy with a high speed projectile.

We have a growing population and a growing economy, unless this dumbass would like the US to de-evolve into a 3rd world country (which may fine with him) all this means we need more energy of ALL types.

If you take every "alternative" energy source currently in use today, it provides less than 5% of our total energy consumption needs. Maybe in 20 years that number might be 20%, but our economy runs on fossil fuels and it will continue to run on them for probably the next 50 years.

Yes, the US consumes 25% of the current production of oil, but we are also 25% of the worlds economy. Oil just isn't used in vehicles, it is a foundational material for the development of all large scale polymers.(plastics, nylon, rayon, kevlar, etc)

The good news is that we currently know of more than 220 billion bbls of oil and about 19 trillion cubic feet of natural gas within our national boundaries. That oil and gas alone could run 60 million cars and heat 160 million homes for the next 60 years. That does not take into consideration the massive energy reserves that we have in coal.

The bad news is no one apparently has the ***** to stand up to the environmental wackos and start producing this massive energy reserve.

This problem was a long time coming and will take a while to fix, but just saying that drilling and producing our own oil isn't viable because it won't be available for a few years just shows what an idiot this guy is. That's what they said about ANWAR 10 years ago!! We could have that source producing crude today if it wasn't for these short-sighted, politically motivated, power hungry jackasses we so happily elect.

 

What he said!

 

From the text of the letter, it is obvious to me which side of the aisle this particular politician is. According to this high-feather-to-brain ratio individual, we shouldn't have ever started working on AIDS treatments because it would take so long to come up with something feasible.

And as I said earlier, the claim that it would take 10 years is a lie.

And without getting too terribly political here, I really think someone needs to ask the Democrats exactly WHY they are so insistent on refusing to do a single G-ddamned thing to help those people they are always paying lip service too - the American People.

(why the public keeps voting these treasonous, contemptuous, seditious pieces of **** back into office year after year after year just dumbfounds me)

 

I couldn't agree more, 8 yrs. pizzed away, we should of at least been doing more with alternate energy sources (not food for fuel). If there heads WERE removed from their colons, they would realize this is a huge opportunity for jobs, that is basically untapped. Remember, "GEE-DUB" has an IQ of 91. Another one of my favorite quotes by him is "This war is not about the oil, I'm just trying to get us more energy" I guess he meant solar, maybe we should invest in an extension cord company. JOE

 

This piece of work came from Adam Smith - 9th District, Washington. The two Washington Senators (Cantwell and Murray) didn't respond to my note to them.

 

The only thing that is of value in the middle east is OIL. It is within our national interests to protect the free flow of that oil to us and the rest of the world so I don't have a problem shoving an aircraft carrier or two up the *** of these nickel-dime megamaniacal dictatorships that aren't sufficiently happy collecting oil revenue and buggering young boys.

Moreover, this is not an R or D problem. Clinton vetoed the first bill that would have allowed drilling in ANWAR 12 years ago. The politicos have their collective snouts so far up the *** of the environmental movement and the money dispensed by those groups that they have allowed the energy policy of this country be dictated by them, at the cost of our own national economic security.

If we started a national push to produce more energy of all types (except maybe corn based ethanol) the economic and technological growth that would occur in this country would be staggering. It would provide longterm solutions that our great-grandchildren would benefit from.

Wouldn't it be great to hear a proposal and challenge to the American people oriented to developing all types of energy in this country similar to the challange that JFK made to put a man on the moon?

The job growth from a national push to build new nuclear power generation facilities, oil refineries, coal gasification plants, hydropower plants, windmills, and solar panels would grow the economy for the next two decades.

So who will have the guts to propose it and the principles to make it happen?

 

I heard something about if you remove the oil revenue from all Middle Eastern countries, the remaining combined GDP is about equal to that of the Nokia company.