Gas Fantasy land

Races for the Senate, U.S. House, etc. and other issues of national importance.
ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 1:07 pm

pjbogart wrote:I think we need to apply anti-trust laws to speculators who use vast financial resources for coercive purposes. Essentially, commodity speculators hold our economy hostage when they restrict supply for personal gain. Furthermore, allowing such behavior simply puts them in better position to be even more coercive as their financial resources grow, eventually grinding our entire economy to a halt as they find the cornering of markets easier to achieve.
This is an interesting post. How are oil traders able to hold our economy hostage? Can they make oil stop flowing somehow? Are they keeping it in a big tank somewhere? The U.S. consume 18+ million barrels a day, which is much more than could be stored or hoarded for any appreciable amount of time, unless it is "stored" in the oil wells for future use (e.g. conservation).

It's clear that we need to get our economy unhooked from oil. I don't see how outlawing or controlling speculators is going to move us in that direction, absent other changes. More in line with your post, I'm not sure how speculators have cornered, or might be able to corner the oil markets. Please go into more detail about exactly what you think is happening, because I don't understand how this works.

ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 1:10 pm

Henry Vilas wrote:There was no other crashes on that scale. And there were many periodic depressions prior to the Big One. They were called panics, since that is what they brought on.
No argument.

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Re: Gas Fantasy land

Postby O.J. » Tue Feb 21, 2012 1:15 pm

ArturoBandini wrote:
pjbogart wrote:I think we need to apply anti-trust laws to speculators who use vast financial resources for coercive purposes. Essentially, commodity speculators hold our economy hostage when they restrict supply for personal gain. Furthermore, allowing such behavior simply puts them in better position to be even more coercive as their financial resources grow, eventually grinding our entire economy to a halt as they find the cornering of markets easier to achieve.
This is an interesting post. How are oil traders able to hold our economy hostage? Can they make oil stop flowing somehow? Are they keeping it in a big tank somewhere? The U.S. consume 18+ million barrels a day, which is much more than could be stored or hoarded for any appreciable amount of time, unless it is "stored" in the oil wells for future use (e.g. conservation).

It's clear that we need to get our economy unhooked from oil. I don't see how outlawing or controlling speculators is going to move us in that direction, absent other changes. More in line with your post, I'm not sure how speculators have cornered, or might be able to corner the oil markets. Please go into more detail about exactly what you think is happening, because I don't understand how this works.


In general, if deep pocketed investors speculate on oil prices going up in the future, oil producers are more likely to restrain output until that later date.

ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 1:33 pm

O.J. wrote:In general, if deep pocketed investors speculate on oil prices going up in the future, oil producers are more likely to restrain output until that later date.
I agree. What I don't see is why that is a problem, especially for people who think that burning oil as fast as we can is a bad idea (e.g. environmentalists, conservationists). The futures contracts are just a prediction that oil will be more valued in the future than it is today, and they will have the effect of making more oil available in the future, either through deferred consumption today or increased exploration/drilling/investment in the interim. Described in these terms, I see futures speculation as a socially-beneficial activity.

A person could claim that the economy is hurting today, and that a dose of cheap gas would really get things going again. That's a fair argument, but then they lose credibility on environmental/conservation/long-term economic sustainability because they have only delayed the inevitable transition away from finite fossil fuels.

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Re: Gas Fantasy land

Postby Stebben84 » Tue Feb 21, 2012 1:40 pm

ArturoBandini wrote:The futures contracts are just a prediction that oil will be more valued in the future than it is today, and they will have the effect of making more oil available in the future, either through deferred consumption today or increased exploration/drilling/investment in the interim.


Manufacturers know when these future speculations come out. If they know there is deferred availability, aren't they more likely to hold off making more fuel efficient or non-oil reliant vehicles?

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Re: Gas Fantasy land

Postby DCB » Tue Feb 21, 2012 1:43 pm

ArturoBandini wrote:
It's clear that we need to get our economy unhooked from oil.

Are you saying that you support Obama's radical Islamo-environmentalist agenda?

ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 1:46 pm

In reply to Stebben: No, because that future oil is going to cost more than oil does today, as indicated by the high futures prices. A signal of high-cost oil in the future would be an incentive for an auto manufacturer to start making plans to build more fuel-efficient vehicles in the interim, or perhaps get serious about non-oil alternatives.
Last edited by ArturoBandini on Tue Feb 21, 2012 1:47 pm, edited 1 time in total.

ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 1:47 pm

DCB wrote:Are you saying that you support Obama's radical Islamo-environmentalist agenda?
Stupid question. Next.

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Re: Gas Fantasy land

Postby DCB » Tue Feb 21, 2012 2:02 pm

ArturoBandini wrote:
DCB wrote:Are you saying that you support Obama's radical Islamo-environmentalist agenda?
Stupid question. Next.

Obviously I was just being silly.

My serious point is that Gingrich is full of shit.

ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 2:05 pm

DCB wrote:My serious point is that Gingrich is full of shit.
We can agree on that.

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Re: Gas Fantasy land

Postby Crockett » Tue Feb 21, 2012 2:30 pm

Inflation

Devaluation, inflation = bye bye debt on the backs of the citizens whom can afford it the least. Why pay down the debt through taxes or decreased spending when you can have the populace pay for it?

Thank you sir may I have another?

Image
Last edited by Crockett on Tue Feb 21, 2012 2:52 pm, edited 3 times in total.

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Re: Gas Fantasy land

Postby pjbogart » Tue Feb 21, 2012 2:35 pm

ArturoBandini wrote: How are oil traders able to hold our economy hostage? Can they make oil stop flowing somehow? Are they keeping it in a big tank somewhere? The U.S. consume 18+ million barrels a day, which is much more than could be stored or hoarded for any appreciable amount of time, unless it is "stored" in the oil wells for future use (e.g. conservation).


Speculators aren't restricted to long and short positions. They can make actual purchases and hold them to artificially bottleneck supply. The largest super tankers hold 3 million barrels of oil but they're typically closer to 2 million barrels. Oil can be held in depots or parked offshore in tankers. And it doesn't need to be held for very long. Relatively small variations in the price of crude can lead to large profits for the speculators. This practice isn't without significant risk, however, as last Spring we saw the President threaten to open the nation's petroleum reserves, resulting in an immediate decline in oil prices and probably more than a few speculators losing significant money either in long positions or lost value on the oil they possessed.

We also saw several speculators charged by the FTC for manipulation of oil prices just last year, though their crime wasn't the restriction of supply (which they did) but rather that they took short positions on oil before unloading their stock (insider trading).

I guess the real point is that the speculators are not adding anything of value to the economy so we shouldn't feel guilty about placing restrictions on their tactics. Every time you shop for groceries, fill up your gas tank or pay your utility bill, speculators are skimming a bit of money out of your wallet. You aren't receiving anything of value in exchange for their "services." They simply use the money that they have to coerce you into giving them some more.

ArturoBandini
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Re: Gas Fantasy land

Postby ArturoBandini » Tue Feb 21, 2012 2:56 pm

pjbogart wrote:Speculators aren't restricted to long and short positions. They can make actual purchases and hold them to artificially bottleneck supply.
How would that be different from a long position? They make a bet that oil will be more valuable in the future, and sit on it. I don't see how it matters whether they physically possess the oil or not.
pjbogart wrote:I guess the real point is that the speculators are not adding anything of value to the economy so we shouldn't feel guilty about placing restrictions on their tactics.
I disagree, the speculators are doing the tricky work of price discovery, and they are doing it with their own necks on the line. They only make money when their bets (which amount to predictions) are accurate. With enough traders playing the game, society gets an accurate picture of the status of oil supply and production. They incorporate myriad forms of dispersed knowledge (that no one person could know) into a single predictive price signal for all to see.

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Re: Gas Fantasy land

Postby pjbogart » Tue Feb 21, 2012 3:06 pm

ArturoBandini wrote:
pjbogart wrote:I guess the real point is that the speculators are not adding anything of value to the economy so we shouldn't feel guilty about placing restrictions on their tactics.


I disagree, the speculators are doing the tricky work of price discovery, and they are doing it with their own necks on the line.


Ok, now say that again, this time without laughing hysterically.

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Re: Gas Fantasy land

Postby fisticuffs » Tue Feb 21, 2012 3:08 pm

I disagree, the speculators are doing the tricky work of price discovery, and they are doing it with their own necks on the line.


At what price? 40% of what I pay at the pump? Find a new system.


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