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To: xjcsa

I appreciate your thoughtful reply, however, I think you have failed to consider the impact that a “middleman” has on prices. They are not in for nothing. There may be risks involved, but if so, then the potential for profit must also exist.

“the speculators are just middlemen....

Speculators play no real part in it; they’re just along for the ride like everyone else.”


22 posted on 06/01/2007 10:51:43 AM PDT by gas0linealley
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To: gas0linealley
I appreciate your thoughtful reply, however, I think you have failed to consider the impact that a “middleman” has on prices.

And that impact is always to raise prices? That's funny. I guess you've never been involved in the financial markets.

26 posted on 06/01/2007 11:06:42 AM PDT by Toddsterpatriot (Why are protectionists (and goldbugs) so dumb?)
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To: gas0linealley
They are not in for nothing. There may be risks involved, but if so, then the potential for profit must also exist.

Of course there's potential for profit, but it's no different than stock traders on the floor at NYSE, or other commodity traders in Chicago. They try to buy low and sell high; they're not just buying, buying, buying, because then they'd have to take delivery. They have to sell it too, to someone who can actually use it. There's serious risk to the speculator; if they guess wrong then prices will tank at the wrong time and they'll lose their shirts.

Speculators cannot affect prices in the long term, because they have no real effect on either side of the supply/demand equation. They sell the same amount of oil that they buy over time, so their net effect over time is essentially zero.

By definition, speculators are speculating (betting) on the future price of oil. If they bet right they'll do well, if they bet wrong they'll do poorly, but they have no real effect on the outcome of the bet over time.

29 posted on 06/01/2007 11:22:19 AM PDT by xjcsa (In memoriam...Jerry Falwell, August 11, 1933 - May 15, 2007. Enter into your eternal inheritance.)
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