thedozer

Economics of Oil Futures Trading, Part I

governments role: leave it alone

if the 'hedge funds' or whatever else you deem responsible for this unreasonable price of oil are behind high oil prices, why are there riots in Spain, India and China?

Furthermore if we (US Gov.) pass legislation restricting the market and speculation within the market, this is only valid on US soil. What makes you think for 1 second that other countries won't fill the void.
No sooner than the passing of this said legislation our US hedge funds would be immediately setting up sister companies on foreign soil to resume trading.

you either believe in a free market or not. The same hedge funds that went belly up with the housing boom will likewise do the same when the oil bubble bursts (As it will).

I would be interested in your differentiation of speculators and future buyers as both are in for their own interests... making money or preserving margin on future revenues.

you want to burst the oil bubble? Do it. Drill, explore explore new technology and implement. Speculators will have little foothold on a 'volatile' oil market when the threat of a rouge terrorist nation is eliminated via the US becoming self sufficient.

Don't fool yourself though. Just as soon as we become self sufficient and realize our potential of supplying oil to the world the private companies that had the stones to invest in exploration will look to be compensated fairly for their share of the kill. As they should. But THIS amount of 'newly delivered' supply will not be near as volatile or subject to sharp speculation as the status quo.

Lastly since day one in our economy there has been 2 components
supply, demand... with that there has been companies buying futures or speculating on the price of futures. Prior to 2005 we were okay with the way the market worked. However if speculators were really the big bad wolf, why were prices acceptable then. How can you blame the speculators and turn a blind eye to the growth of both China and India?


And who are you to say that the prices are too high? And tell me... when did they get there?