JEM

SemGroup's Fall and the Impact on Oil

Actually despite inventory reductions in gasoline, there is no fundamental support for oil at $150. Maybe the inventory numbers are due to barge traffic issues. Energy usuage as the price of oil has increased is declining in the US as well as the fast growing economies of China and India. I am not sure how far it has to fall, but if you cannot get pump prices closer to $3 in the US, I am not sure you will see a change in behavior. People have begun replacing the heavy car fleet for a lighter more gas efficient one. Something needs to change that buying behavior - and $3.80 gas isn't going to do it more than $4.00 gas started it. The bulls are wayyyy out in front and will seize on any issue to try and keep the price up. As the bears come in under them watch the cards begin to fall. Another SemGroup will appear.

There are more SemGroups out there that were allowed to hedge positions without any verification they had the financial wherewithal to cover them. Speculation is fine, but if I am not forced at the time of placing my "bet" to declare my financial support for that bet, why do we wonder why all these hedge funds seem to keep going under. I am loathe to invite government regulation because that invites its own kind of hell, but if the market is unwilling to police the "money down" requirements, we are going to get regulation we don't want to begin to invite.