Here's what I was posting back in May 2008. Rather prescient if I do say so myself.
Posted on 01/14/2009 6:22:10 AM PST by marshmallow
(CBS) About the only economic break most Americans have gotten in the last six months has been the drastic drop in the price of oil, which has fallen even more precipitously than it rose. In a year's time, a commodity that was theoretically priced according to supply and demand doubled from $69 a barrel to nearly $150, and then, in a period of just three months, crashed along with the stock market.
So what happened? It's a complicated question, and there are lots of theories. But as correspondent Steve Kroft reports, many people believe it was a speculative bubble, not unlike the one that caused the housing crisis, and that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia.
To understand what happened to the price of oil, you first have to understand the way it's traded. For years it has been bought and sold on something called the commodities futures market. At the New York Mercantile Exchange, it's traded alongside cotton and coffee, copper and steel by brokers who buy and sell contracts to deliver those goods at a certain price at some date in the future.
It was created so that farmers could gauge what their unharvested crops would be worth months in advance, so that factories could lock in the best price for raw materials, and airlines could manage their fuel costs. But more than a year ago those markets started to behave erratically. And when oil doubled to more than $147 a barrel, no one was more suspicious than Dan Gilligan.
As the president of the Petroleum Marketers Association, he represents more than 8,000 retail and wholesale suppliers, everyone from home heating oil companies to gas station owners.
(Excerpt) Read more at cbsnews.com ...
And mostly financed with Lehman money, according to one school of thought. When Lehman cratered, so did the price of oil.
Do polar bears crap on ice bergs?............
Is the pope German?
Congress’ policy of restricting domestic supply certainly helped in keeping expectations of Peak Oil and international political supply disruptions in the fore-front of expectations. Speculation in driving the price up eventually causes its own downfall through either driving demand down and supply up or in eventually having the “truth” become public knowledge.
So what? What do you want to replace the free market with?
Well said Red Bager. Speculation is a component of all markets - that are not government controlled that is...
The New York Mercantile Exchange is not the only place on the planet where oil futures are traded.
Is the Pope Catholic?
It’s not a “free market” when losses are made whole by the taxpayer.
Lehman was never that big but blame them 20% is my guess
Russians and Iranians also had an interest in jacking the oil price
Does Howdy-Doody have a wooden butt?
Here's what I was posting back in May 2008. Rather prescient if I do say so myself.
So far that doesn’t happen in the oil market. But yes, they (kind of ) know what they want to replace free markets with. It won’t be pretty.
You're correct of course. But don't you think there is a line to be drawn somewhere between betting and investing? What do you call it when pension funds place multi-million dollar bets on short term swings in commodity prices? Is this investing for the long term interests of the pensioners?
I am frankly starting to get really angry.
Despite oil falling for days, gas didn’t budge.
Then it increased only a few cents yesterday and gas goes up five cents.
Ridiculous.
I want every single oil company bankrupt, OPEC officials all arrested....
They are all crooks.
Good call. Congrats.
Asked who was buying this “paper oil,” Masters told Kroft, “The California pension fund. Harvard Endowment. Lots of large institutional investors. And, by the way, other investors, hedge funds, Wall Street trading desks were following right behind them, putting money - sovereign wealth funds were putting money in the futures markets as well. So you had all these investors putting money in the futures markets. And that was driving the price up.”
In a five year period, Masters said the amount of money institutional investors, hedge funds, and the big Wall Street banks had placed in the commodities markets went from $13 billion to $300 billion. Last year, 27 barrels of crude were being traded every day on the New York Mercantile Exchange for every one barrel of oil that was actually being consumed in the United States.
Everyone knew the pyramid scheme based on constant expansion could not last. When things like mortgage derivatives began to smell bad, everyone said, "GET IT NOW ONE LAST TIME!"
My business is sensitive to the price of metals like copper and tin. Tin peaked at $25,000 a ton last Summer. It is now around 11,000.
Things like gasoline peaking in tourist season can only arouse suspicion.
I just got a call from a broker a few days ago regarding gold.
Well, not REALLY gold. PAPER that would say I had gold, and that I was enough of an idiot to Buy High.
They never stop trying. There is still a little stringy flesh left on the corpse...Let's get the rest of it.
"The free market" is a myth. There's no such thing as a completely free market. That's why we have the SEC for instance, ineffective though it is.
There are already regulations governing how markets function.
After we sift through the ashes of the current mess, there'll likely be a few more.
Despite oil falling for days, gas didn’t budge.
In fact it went up a little bit. I’ve been running on empty for a couple of days waiting for it to come down.
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