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Three Cheers for Oil Speculators! (These folks are really the benefactors of humanity)
American Thinker ^ | 05/02/2012 | Howard Becker

Posted on 05/02/2012 6:57:42 AM PDT by SeekAndFind

Oil speculators are benefactors of humanity. We should be very grateful to all of them. Next time you see an oil speculator, thank him for what he is doing. Most Americans would strongly disagree with me. But they are wrong -- not morally wrong, but factually wrong.

One of the consequences of the recent increase in the price of gasoline has been the demonization of oil speculators. Politicians, journalists, talking heads, bloggers, and agitators have been denouncing speculators and proclaiming that the general public has been harmed by their speculating. Most of the anti-speculator rhetoric has been civil. But some of it can be described only as hate speech: Google "speculator, bloodsucker" and you will be directed to 295,000 websites. And this anti-speculator hysteria has not been confined to the usual suspects on the left. For example, the normally sensible Bill O'Reilly has been bloviating about the wicked oil speculators.

We now face an even more dangerous idea than the idea that speculation is harming the average American: the idea that the government should do something about it. Many people, including the president of the United States, have called for the government to stop -- or reduce the amount of -- speculation in oil. Vermont's socialist senator, Bernie Sanders, has announced that he plans to introduce a bill to do just that.

According to President Obama, "[w]e can't afford a situation where some speculators reap millions while millions of American families get the short end of the stick." The president's assertion that some speculators have reaped millions is almost certainly true. But his implication that the American people have been harmed by that is false. Those who believe that speculation makes non-speculators like us worse off are factually incorrect.

(Excerpt) Read more at americanthinker.com ...


TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: economy; energy; markets; oil; oilspeculatiors; petroleum; themarket

1 posted on 05/02/2012 6:57:47 AM PDT by SeekAndFind
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To: SeekAndFind

for later


2 posted on 05/02/2012 7:06:59 AM PDT by Doctor 2Brains (If the government were Paris Hilton, it could not score a free drink in a bar full of lonely sailors)
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To: SeekAndFind
There are people who take oil off the market now without putting it back on the market at a later time. That is, these people are responsible for decreasing the current supply and thereby increasing the current price, without increasing the future supply and thereby decreasing the future price. The behavior of these people has only one economic effect, which is a harmful effect. But these people are not the people we call speculators. They are the people we call environmentalists.

A long windy road to get to the punch line: Environmentalists (and the EPA) suck.

3 posted on 05/02/2012 7:09:55 AM PDT by grobdriver
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To: SeekAndFind
I didn't see this in the article - another impact of “evil oil speculators” is that their actions encourages the development of new technologies and exploration.

Since the 1970s it has been well documented that there were capped oil fields all over the US because it wasn't economically viable using existing technologies to extract the crude. Under Carter several capped fields were reopened because they had become money makers, again.

Without “evil oil speculators” the oil boom would have been confined to the original Pennsylvanian fields of the late 19th century! Anyone want to discuss the differences between the 1890s and today?

4 posted on 05/02/2012 7:12:52 AM PDT by Nip (TANSTAAFL and BOHICA)
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To: SeekAndFind

Futures trading tends to level out a fluctuating market. Its what the Board of Trade,and all the other futures exchanges, including the financial futures exchanges around the world and around the country do. The mush heads and socialists will not or cannot understand this.


5 posted on 05/02/2012 7:13:00 AM PDT by Don Corleone ("Oil the gun..eat the cannoli. Take it to the Mattress.")
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To: SeekAndFind

Oh please. Speculators are only interested in making money, which is fine. However, making them sound like some noble business person providing a valuable public service is extremely dishonest.


6 posted on 05/02/2012 7:19:17 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: SeekAndFind
"These folks are really the benefactors of humanity"

Certainly--as opposed to the "Occupiers" and the parasites in Congress and the Press and on the welfare rolls!

7 posted on 05/02/2012 7:20:01 AM PDT by Savage Beast (Nothing is more enlightening than truth. Nothing is darker than mendacity.)
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To: An.American.Expatriate

For each speculator who becomes rich, how many fail?


8 posted on 05/02/2012 7:20:36 AM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: SeekAndFind

The author is creating a ridiculously oversimplified strawman and holding that up as an ideal. The actual speculation market is far different and reality does not support his assertions.

This is not to say that speculation can or should be reined in by the government because speculation is now global and we do not have the ability to control it.


9 posted on 05/02/2012 7:21:30 AM PDT by flintsilver7 (Honest reporting hasn't caught on in the United States.)
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To: Nip
I didn't see this in the article - another impact of “evil oil speculators” is that their actions encourages the development of new technologies and exploration.

Not sure I see the corelation here. Consumer demand / business demands (i.e. engine improvements) would seem to be the more logical "encouragers" of technical advancement & exploration. The speculator neither adds to, nor subtracts from either of those demands over the long term, and whether the speculator is betting on rising or falling prices would not seem, on the surface anyway, to encourage investment on the part of the producer.

Can you provide some reasoning?

10 posted on 05/02/2012 7:29:14 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: SeekAndFind

I have to wonder if BOR is going to revisit this issue. Or 60 Minutes, for that matter.

Show us some wealthy speculators, show us the broke ones. Show us how government rgulations play into pricing anomolies.

Just don’t wave your arms, and have no there there.


11 posted on 05/02/2012 7:32:06 AM PDT by cicero2k
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To: dfwgator
For each speculator who becomes rich, how many fail?

What does that have to do with what I posted?

For that matter, what do I care? It is thier decision to gamble thier money. If they win - nice job! If they loose, sorry - get a job with a more stable income. Just don't tell me I have to feel some debt of gratitude for thier nobel sacrifice ...

12 posted on 05/02/2012 7:33:13 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: An.American.Expatriate

Nobody is saying you have to......but if we did away with the function of speculating, it will have terrible ramifications for the economy.


13 posted on 05/02/2012 7:36:29 AM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: dfwgator
... but if we did away with the function of speculating, it will have terrible ramifications for the economy.

Right, and thats exactly what I called for when I said:

"Oh please. Speculators are only interested in making money, which is fine. However, making them sound like some noble business person providing a valuable public service is extremely dishonest."

Which is why you chose to call me out on my bashing of the evil oil speculators.

Oh, and if speculators were to stop speculating, the economy would not tank. Producers would still produce and consumers would still consume - there would be more seasonal fluctuation perhaps - but the world would still keep spinning.

14 posted on 05/02/2012 8:01:34 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: SeekAndFind

In a free market there is a tendency toward the equalization of the price of a good in the present with the expected price of that good in the future. The activity of the speculators serves to transfer supplies from a period on which they are less urgently needed, as indicated by their lower price to a period in which they are more urgently needed, as indicated by their higher price. In this way, it brings about the optimum rate of consumption of limited supplies.


15 posted on 05/02/2012 9:23:20 AM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: SeekAndFind
Oil speculators are benefactors of humanity. We should be very grateful to all of them. Next time you see an oil speculator, thank him for what he is doing.

You're welcome!

;>D

16 posted on 05/02/2012 9:47:36 AM PDT by Prov1322 (Enjoy my wife's incredible artwork at www.watercolorARTwork.com! (This space no longer for rent))
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To: Prov1322

I gather you’re making money hand over fist lately.... :)


17 posted on 05/02/2012 9:49:09 AM PDT by SeekAndFind
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To: An.American.Expatriate
Speculators add liquidity and depth to the market, and those are both very good things.

Greater liquidity and depth = smaller spreads.

Smaller spreads = lower prices.

18 posted on 05/02/2012 9:52:11 AM PDT by Mase (Save me from the people who would save me from myself!)
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To: Mase
Smaller spreads = lower prices.

That might be true in some cases, but that has nothing to do with the post you responded to where I asked for the the reasoning behind the assertion that Speculators / Speculation encourages technological advancement and exploration.

19 posted on 05/02/2012 9:56:35 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: SeekAndFind
Yes, but that has NOTHING to do with rising Futures prices.

I am a Daytrader/Scalper, strictly looking for price action. So, whether, up/down (even sideways) I have the same outlook every day. My profit potential is not dependent on the price being driven up (or down) but strictly on the price action.

20 posted on 05/02/2012 10:09:57 AM PDT by Prov1322 (Enjoy my wife's incredible artwork at www.watercolorARTwork.com! (This space no longer for rent))
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To: An.American.Expatriate
Speculators are only interested in making money

Of course they are!

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." -- Adam Smith

21 posted on 05/02/2012 10:09:59 AM PDT by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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To: BfloGuy
Of course they are!

Nice that you agree.

From my post: ... which is fine.

And your quote confirms what I wrote immediately after that too!

22 posted on 05/02/2012 10:15:12 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: An.American.Expatriate
Um, ok. What I meant to point out is that you were wrong when you said that claiming speculators are "providing a valuable public service is extremely dishonest."

It's not a "dishonest" thing to say at all. So it can hardly be claimed to be "extremely dishonest." Speculators absolutely provide a valuable public service.....that is, unless you think higher prices are better than lower prices.

23 posted on 05/02/2012 10:23:51 AM PDT by Mase (Save me from the people who would save me from myself!)
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To: Mase
I originally posted:

Oh please. Speculators are only interested in making money, which is fine. However, making them sound like some noble business person providing a valuable public service is extremely dishonest.

Removing context is also extremely dishonest. And I stand by my statement.

It's not a "dishonest" thing to say at all. So it can hardly be claimed to be "extremely dishonest." Speculators absolutely provide a valuable public service....that is, unless you think higher prices are better than lower prices.

Speculation does not equate to ONLY lower prices and speculators DO NOT CARE which way prices change, as long as the price changes favourably in respect to thier bets! Therefore thier motives are not noble and not in the public interest (and do not need to be!).

24 posted on 05/02/2012 10:45:15 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: An.American.Expatriate
Um, ok. Speculators may not be noble business persons - I really don't know all of them, but they absolutely provide a valuable service. It is extremely dishonest to say otherwise. Maybe you just aren't aware of how speculation works.

I didn't take your comments out of context. That's absurd and you are free to stand by your absurdity. You said what you said and your meaning is crystal clear. You are wrong. Deal with it.

Speculators make money if the price goes up or down, that is true. However, regardless of which way the market moves, higher spreads will lead to higher prices for consumers and lower spreads will lead to lower prices. Speculators are good for the market and for consumers because they lower the spreads, and that is contrary to your earlier statement that claimed that it is dishonest to say so.

Speculators absolutely act in the public interest even if that is not their goal. Anyone who understands how markets function, or how they are supposed to function, wouldn't have made the statement you did.

25 posted on 05/02/2012 10:59:37 AM PDT by Mase (Save me from the people who would save me from myself!)
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To: Mase

The market would function without speculators and the price the consumer paid would be the price the producer charged, plus any costs involved in the actual movement and storage of the goods between the point of production and the point of sale (and a margin of course).

Speculators add a level of abstraction that only hurts the consumer as they too want a profit. IOW, prices would ALWAYS be lower without the speculator involved.

Of course, speculators take some risk from the producer which tends level out major swings in prices - IOW the speculator earns his money.

Without the speculator, prices for most commodities would vary greatly due to seasonal demands - but the consumer would pay less, and the producer would earn more, “in the end”. There would also be no “spread” since that only exists in the speculative market.

Finally, in todays market - with HFT and all the rest of the dishonest practices which serve ONLY to drive the price - liquidity is an illusion and your “spreads” are meaningless. Trades are introduced with NO intent of having them actually acted upon - simply to drive a price - and the only beneficiary is the speculator.

The only absurdity here, is attesting noble traits to the speculator - as if we should celebrate his accomplishments and goodness. That is normally reserved for persons that act in the public interest first, and then for themselves; not for those whose only value to society is a by-product of thier own self interest.


26 posted on 05/02/2012 11:46:08 AM PDT by An.American.Expatriate (Here's my strategy on the War against Terrorism: We win, they lose. - with apologies to R.R.)
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To: An.American.Expatriate
Speculators add a level of abstraction that only hurts the consumer as they too want a profit. IOW, prices would ALWAYS be lower without the speculator involved.

Speculators want a profit. They also want a foot rub. They aren't guaranteed either.

Without the speculator, prices for most commodities would vary greatly due to seasonal demands - but the consumer would pay less, and the producer would earn more, “in the end”.

Without a way to lock in future prices, commodity consumers would pay more.

27 posted on 05/02/2012 3:05:18 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: An.American.Expatriate
Nice that you agree.

Yes, isn't it.

I was merely reinforcing your point. Don't take offense so easily.

On the other hand, I think the author was sticking his tongue in his cheek by implying that speculators are heroes. They're not, of course, but they are a valuable yet oft-disparaged part of a well-developed capitalist economy.

28 posted on 05/02/2012 3:28:46 PM PDT by BfloGuy (The final outcome of the credit expansion is general impoverishment.)
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