Posted on 06/01/2007 8:05:41 AM PDT by george76
Few politicians can resist the urge to exploit consumer angst over gasoline prices, and thereby deflect where the blame certainly lies — with them.
Here are 10 things the politicians won’t tell you:
1. At over $3.00 a gallon, the U.S. inflation-adjusted price for gasoline in May 2007 is now less than it was in 1981, a remarkable decrease in price over a 25 year period during which real prices in other sectors, such as health and education have tripled and quadrupled.
2. This decline in the price of gasoline since 1981 is enjoyed almost exclusively in the U.S. In most other developed counties in the world, the price of gas is at least double what Americans pay. Consumers in the Netherlands now pay an average of $7.77 gallon, while those in Great Britain pay over $7 and consider it a bargain.
3. The gross profit margins of the major oil companies is far less than that for many other sectors, such as beverages, electrical equipment, chemicals, and computers.
4. At present gas prices, the major oil companies make a profit of between 10 cents and 12 cents a gallon...
5. At present prices, combined federal and state government profit (i.e. taxes) on each gallon of gas is 28-68 cents a gallon, depending on which state you live in. Pelosi’s San Francisco enjoys tacking on an extra 26 cents bite.
9. Crude oil prices, which make up 90% of the total cost of running gas refineries, are set by the international market of supply and demand, which fluctuates hourly, and not by private companies; while the major oil producing countries can form cartels (such as OPEC) which can set prices at higher than a free market, these countries are not subject to U.S. antitrust laws.
(Excerpt) Read more at blogs.rockymountainnews.com ...
Essentially for everyone buying thinking the price is going up, there is someone selling thinking the price is going down.
I’ve been to many auctions. Often there are bidders who have no intention of taking home an item they are bidding on. They are merely bidding to increase the price to those who actually want the item. Such a phony bidder is called a “shill”, and their activity benefits the seller of the goods, as well as the auctioneer who makes a percentage of the selling price.
I don’t see any appreciable difference between the activities of futures traders, and shills. Am I wrong?
Yes.
Such a phony bidder is called a “shill”, and their activity benefits the seller of the goods, as well as the auctioneer who makes a percentage of the selling price.
The difference is, the person at the auction doesn't buy anything. A futures speculator buys, or he sells.
“Go right ahead. If you want to make the market less efficient.”
How? Use the Amaranth fund involvement in NG futures as an example of non-delivery speculation increasing market efficiency. Good luck, cause logic won’t help you with that.
“You mean the speculator who lost $6 billion? Don’t tell gas0linealley, he thinks all speculators make money.”
Who’s money was non-delivery speculator Brian Hunter playing with - his own?
You really dont’ know who lost the money Brian Hunter’s non-delivery speculation pi$$ed away? Come on! It was people well outside the group of non-delivery speculators playing in the NG futures markets and you know it. Don’t play dumb about it. It was anybody who had money in that hedge fund not just within the tidy group of speculators and brokerage houses you talked about. So you are wrong about that aren’t you?
“Stop it, you’re confusing him with your logic.”
Logic, ha ha yeah right.
Now consider this;
Shell CEO;
“There’s no point in predicting the oil prices, because it tends to be a pretty bad prediction. Why is that? Because there are so many factors at play. What I will say is that as recently as this weekend, I looked at data showing that crude-oil stocks in factories around the world are very normal or even better than normal. It’s a bit of a mixed picture, but by and large, there is no physical shortage in the world. So there must be two reasons [for the current prices]—geopolitical tensions in the world, and the amount of nontraditional money like hedge funds moving into the oil market.”
“Are traders distorting the prices?
Nobody knows the correlations there; it’s new territory. But some people estimate there is north of $100 billion in hedge-fund money in oil markets right now, which is of course significant. But that said, I’ve grown up in a physical world, and what I see from the physical world is that the lines of ships at refineries, and things like that, are OK.”
How about that - 100 billion in new, nontraditional, hedge fund money in oil futures last July.
Less liquidity.
Good luck, cause logic won’t help you with that.
You obviously don't understand markets.
Who’s money was non-delivery speculator Brian Hunter playing with - his own?
Investors in the fund.
You really dont’ know who lost the money Brian Hunter’s non-delivery speculation pi$$ed away?
Who made the money he lost?
So you are wrong about that aren’t you?
No.
How about that - 100 billion in new, nontraditional, hedge fund money in oil futures last July.
And what does that do to prices?
Non-delivery churn and burn speculators are worse than shills.
Someone asked a famous bank robber why he robbed banks, he said “because that is where the money is”.
So it is with economic systems, there hasn’t been a system like capitalism for generating new capital and naturally this will attract all kinds of thieves. There is plenty of “surplus” for the unethical to leech out of the system. I’m not talking about legitimate futures traders like a farmer buying futures contracts with intent to deliver. I’m talking about a speculative “purchase agent” that is driven by only by market swings, his only goal being to suck money out of the swing. They might even deliberately manipulate the market to cause an artificial swing. Will any of you say it doesn’t happen? And when it does will any of you call it capitalism? These guys are not capitalists. I knew someone 15 yrs ago who was set up with a satellite link in his home for speculating in the commodities futures market. His only purpose was to suck money out of a market swing. It doesn’t even matter what way the market swings for these leeches to suck money out. How would I explain declining gas prices? Well you can bet someone is sucking money out of the down swing. The feel good term these leeches use for that is “shorting the market”. Think about that for a second what kind of ethics does it take to bet on the market declining? Someone who shorts the market wants it to go down. That is capitalism?? It is legal, people do it, but it is not capitalism IMO.
Capitalism is not the guy who buys a token at a casino, who buys a futures contract, with the very specific greedy hope of the machine paying out. The guy that doesn’t care one bit that when the machine does pay out it is with someone elses money, someone who what trying to do the same thing as him but lost instead of won. That is how that kind of speculation works, it simply churns existing money, the winner wins at the expense of the loser. This is a totally different concept of “prosperity” than creating new wealth through production (work), wealth that never existed before. Creating new wealth doesn’t happen on the trading floor, or in the casino, it happens on the factory floor, or in the farmers field.
” EPA mandated summer blends that add about 30 cents a gallon to the cost ...”
and shuts down production during the change overs between blends, which adds to the costs of production and to the lower production of the final products...
and different cities have different blends at the same time, thus a shortage in one city may not relieved by another city’s approved summer blend.
There should not be so many different summer blends.
The Government remains the biggest oil profiteer...
Who does he purchase from?
The feel good term these leeches use for that is “shorting the market”. Think about that for a second what kind of ethics does it take to bet on the market declining?
Futures traders are evil because they make prices go up? Futures traders are evil because they make prices go down? You're hilarious.
“Less liquidity.”
How does being less liquid make the market less efficient? Use the Amaranth fund involvement in NG futures as an example of non-delivery speculation increasing market efficiency though more liquidity. I’m kinda dumb so as you explain non-delivery speculation = efficiency though liquidity using the Brian Hunter/Amaranth example make it easy to follow and how it is good for the consumer.
“Investors in the fund.”
So it is people outside the tidy little group of non-delivery speculators and brokerage firms isn’t it? You have been implying the gains and losses stay within that group, they obviously don’t.
“And what does that do to prices?”
Well do you suppose oil prices will rise above a non-speculative level - just like natural gas did? When NG rose above the non-speculative level the consumer paid more than he would have if non-delivery speculation had not taken place. The consumer will never get that money back, even if the NG price goes back down. So here again the cost of non-delivery speculation is outside the tidy group of speculators and brokerage firms you implied it stays within.
That really is an irrelevant point, since it was in the $1.99 to $2.00 range less than a year ago.
Adjusted for inflation, a 5 cent candy bar from the 40's should be about $6.40 (5(40) 10(50), 20(60), 40(70), 80(80), 1.60(90), 3.20(2000), 6.40(2010)
The problem with non-delivery speculators is they don’t care about anything but their own pocket book - like a bank robber doesn’t care about much more than stealing money.
Are you implying non-delivery speculators are super altrustic people with the good of the market and consumer at heart?
You’re hilarious.
I just about forgot;
“Who does he purchase from?”
Other leeches like himself.
And he could care less about any collateral effects, that is the nature of a leech.
If I go to my corner gas station and tell the owner that I'd like to buy 100 gallons of gas today, to be pumped into my car one year from now. Regardless of any price we mutually agree upon, does that make me a bad person? Does that make the owner a bad person?
How about if I tell the owner that I'll pay him $500 for the rights to any profit above todays price plus $.50 for 1000 gallons sold by his station one year from now - am I a bad person? Is the gas station owner a bad person? Or are we only bad people if the price for gas one year from now results in one of us making money off of the bargain?
I maintain my securities in a margin account, which allows other people to borrow those securities and sell them short - does that make me a bad person, or just the folks who borrow my shares?
By the way calling anyone involved a “Leech” is typical Marxist-Leninist pap.
“How about if I tell the owner that I’ll pay him $500 for the rights to any profit above todays price plus $.50 for 1000 gallons sold by his station one year from now - am I a bad person? Is the gas station owner a bad person? Or are we only bad people if the price for gas one year from now results in one of us making money off of the bargain?”
Why in the world would you or he do that?
The Shell CEO said the high crude prices last summer were not a supply problem. When non-delivery speculation drives the crude price up who is making more money? Isn’t it crude oil producers including Islamic nations bent on destroying the west? Does the non-delivery speculator who made money on the rise care about that? I really don’t think so.
Fewer buyers and sellers (speculators) in the market means larger spreads and smaller quantities can be traded without causing a change in the market.
I’m kinda dumb
At least when it comes to markets.
efficiency though liquidity using the Brian Hunter/Amaranth example make it easy to follow and how it is good for the consumer.
His large buys and sells enabled other consumers and producers to more efficiently execute their trades.
So it is people outside the tidy little group of non-delivery speculators and brokerage firms isn’t it?
The investors in the fund who lost money were speculators. The investors in the funds who made the money he lost were also speculators.
Well do you suppose oil prices will rise above a non-speculative level
What is the definition of non-speculative level?
You still haven't explained how a futures contract purchase raises prices. Try again?
Sometimes they add money to their pocketbook, sometimes they lose money.
Are you implying non-delivery speculators are super altrustic people with the good of the market and consumer at heart?
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. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.
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