Posted on 09/15/2008 5:55:33 AM PDT by IrishMike
It was said to be the year of speculators gone wild. Seemingly everyone in Washington, including Barack Obama and John McCain, decided that oil prices were soaring because profiteers and middlemen were manipulating the futures markets. "Speculators" were spotted everywhere this side of the grassy knoll.
The only problem is that there's no evidence to support the conspiracy theories -- and sure enough, federal regulators dismantled this Beltway consensus late last week. In one of the broadest and most authoritative studies to date, the Commodity Futures Trading Commission has offered hard statistical data that financial trading hasn't been driving price moves. The CFTC conducted an unprecedented Wall Street data sweep and scrutinized millions of transactions worth billions of dollars between January and June of this year. ...................................
Then again, the speculation furor was never about the evidence. The politicians wanted a fall guy for rising prices, since the real explanations of supply and demand and the falling dollar were partly their fault. On that point, the CFTC rightly notes that the expansion of commodities indexing can be partially explained by investors seeking to "hedge against inflation." It's not surprising that traders have been driven to commodities to protect themselves, given that the Federal Reserve, Bush Administration and Congress have all trashed the dollar.
No doubt the politicians will keep trying to shoot the price messengers, but thanks to the CFTC they look increasingly silly in doing so.
(Excerpt) Read more at online.wsj.com ...
Easy fix, you buy it you pay for it and you prepay the fright, no more special deals for special people.
Call me crazy, but I read investment in the oil futures market rose from 39bil to 139bil this past year. Sounds like spec dollars to me.
That was because every one and their mother was trying to figure out where oil was going to be and to hedge their costs.
Airlines, Commodity buyers, everyone. It wasn’t so much “speculators” as it was the market needing to properly price the asset.
No one talks about “Speculators” getting killed as oil comes down (and there are lots of losers)
I don't claim to fully understand the oil market, but I have studied economics. I am hoping that the current spike in oil prices is speculation. The long term price of any commodity is driven by the law of supply and demand. Speculators and emotion may sometimes drive the price higher than it otherwise should be, but these higher prices are unattainable in the long run. In the end, the speculators get theirs.
If the fox guarding the hen house did a study on the safety of chickens you would get the same results as speculators saying they are as pure as the wind driven snow. An air dance on wall street next to one of their collapsed gods would be helpful.
You may be right. It’s just that 100bil in new cash seemed an awful lot of money. Losing big is the nature of speculation.....as is winning big.
>>The politicians wanted a fall guy for rising prices,
CYA, WSJ?
This oil speculator thing was just another big lie by dems.
Want proof? Oil is down 40% since the dollar has rebounded a bit. You can scream speculation all you want, but it plain ain't so.
“It wasn’t so much “speculators” as it was the market needing to properly price the asset.”
I agree with you, but isn’t that “speculation” by definition?
Whether it’s done with “Monopoly Money” by market “players” or by an institution wisely trying to manage its assets, the effect is still the same, and I believe it has been a bigger factor than supply vs demand over the past two years.
But I guess it gives us something to talk about!
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