Not sure how to do a quote in quote, but the comment about good data is a valid one. It is one of the IEAs monthly bitch topics in the monthly oil market report. OECD countries are generally very good at reporting consumption, imports exports and stock levels. The rest of the world, not so much and China is pretty much a disaster as far as consumptions, stock and refineray capacity data is concerned. The middle east is pretty sketchy on its true production capacity and the build in floating storage capacity in Iran as ever is a bit of a wild geuss. Internal consumotion and refining capacity in Russia away from the IOCs is also a dark art.
So with uncertainty in data comes risk, and risk always has a price tag attached.
Under what mechanism would the taxpayes save those who chose to dabble in the futures market.
In the dot com stock bubble burst I don´t recall the tax payers bailing out those who lost money when they were left holding worthless equity in worthless companies.
Sure for the housing market the taxpayers bailed out a bunch of banks, and frankly the goverment dudes who allowed the banks to take risks, ultimately with taxpayers money, need a hefty slap. Is there any mechanism you could cite whereby the taxpayers and government are required to prop up those investing and loosing their shirts in oil futures?
Now if there is then I would suggest that it would be one time that government intercession into a market would be prudent, mainly to ensure that those playing are adequately covered for the risks they are taking and are not over extending themsleves.
Seriously…do you know what ‘uncertainty in the market’ means? Put another way…is anyone denying that this wasn’t a factor? Do you comprehend that there are multiple factors that impact the price? And that there are multiple factors that impact and encompass the word ‘speculation’?
I’m going to say this as gently as I can (because of the forum we are in)…the price of oil on Friday is for oil that will be delivered IN THE FUTURE. It’s not the price of oil being delivered on Friday. Do you understand that? So…the fact that oil jumped this week is because there is uncertainty about supply 6 months or more in the future. Do YOU know what supply is going to be like 6 months or a year from Friday? Do you know what the dollar will be like 6 months or a year from Friday? Do you know what demand will be like 6 months or a year from Friday?
edit: And btw, would you stop saying that supply is increasing while demand is falling? Unless you have a cite to back that up of course.
Can you wrap your mind around the fact that people are uncertain about what those factors may be like 6 months or a year from Friday? I’m not asking you to actually read what people have posted in this thread over and over again (that is a lost cause IMHO)…just to try and wrap your mind around what ‘uncertainty’ means in terms of the market by trying to project what things MAY be like months into the future based on how things were on Friday. Could you…well, just TRY?
-XT
Interesting article
Some relevant quotes:
Those in this thread who think the speculation angle has been overblown: is using Badri’s quote (post #144) a sufficient cite that speculation is outweighing fundamentals? I know that “appeal to authority” is a type of logical fallacy … was wondering if this guy could be used as a credible source in this debate?
It’s interesting to me that Badri goes out of his way to mention “one or two speculators” (though he’s probably talking about banks, not individual people, right?). Almost gives credence to the handful-of-moustache-twirling-baddies theory.
Consider yourself lucky. Last year when I asked for a cite about oil demand gonzo gave me a New York Times article from 2005. :rolleyes:
It’s not an appeal to authority, since he is providing evidence that there is no current shortage, and he should know. There are no lines for gas in the US, there are no virtual lines for gas in the world. Perhaps the prices are being affected by concerns for the situations in six months, but they are impacting us now. Plus the statement implies that production can be increased if need be. Thus, no immediate shortage.
I wonder what would happen to prices if, instead of saying there was no need to increase production, he said that because of the impact on the world economy they were thinking of increasing production. Pop goes the bubble is my guess.
You do realize, don’t you, that part of “supply and demand” means future supply, not just current supply. A businessman would be pretty poor if he failed to take into account the future supply of his inventory (or the future demand for that inventory). So when oil prices jump in the anticipation that future supplies of oil will be tighter, that’s perfectly consistent with supply and demand.
No, you made it perfectly clear that a few people (who apparently have no evidence to back it up) say this. You have proven nothing, merely provided pretty useless cites (as usual).
I would think you would see some drop in price , however the market would wait to see if actual production rose. There are those who think OPECs ability to raise production is very limited.
I think he is credible but has an alternate agenda. There are those who beleive differently
No doubt Badri is correct, in that no one is currently queeing for oil, however the issue remains, what will be the situation several months out. Given supply is very tight with little option to raise supply, then any interuption to the supply will have people queeing , or at least bidding more for the available oil on the spot market.
ETA deleted bit mind saw that didn´t exist
Well, to be fair, he is asserting that evidence exists. I’d like to see it, this alleged evidence.
The alternative explanation, much more conspiratorial and more in line with the oddball consensus of Americans (and a good number of people in this thread), is that he’s merely saying it to take the heat off of himself and his organization and put it somewhere else, being the head nogoodnik in the most evil entity of all, OPEC, the thieving Arab nations that cheat hardworking Americans out of money in conjunction with those, lying, conniving, greedy domestic oil companies who starve little babies for profit.
I think I got that right, didn’t I? Someone will be along to back me up shortly, that opinion is pretty mainstream at the moment. :rolleyes:
In the book “TWILIGHT IN THE DESERT”, the author voices the theory that SA has rather limited reserves of oil-and that thir production is actually beginning to decline. Is this the proof? SA rebuffed Bush’s request to pump more crude-is tjis the proof? Or does SA have enough cash, and doesn’t want to sell today for $130/barrel, what they can sell a year from now for $150??
If SA oil is actually in its decline phase, then we had better start deveoping electric cars, nuclear power plants NOW! :eek:
If you’re talking about lines for gas including diesel, then China definitely has that problem, worse than the US in the 1970’s. I posted a NYT article about 10 hr long lines where truckers could only buy 1/4 tank. The article also focuses on massive pollution and lack of standards abroad leading to bribery to use old trucks that wouldn’t be used anywhere in the Western world.
And, as was the case in the U.S. in the 1970s, idiotic government policies are the cause of these “shortages.”
Holy crap, I agree with you! China is subsidizing gas prices, and thus controls imports - thus, a “shortage.” If the US did that, there would be a shortage here too.
I’m pretty sure that’s the second sign of the Apocalypse. 
I predict that the moment consumption starts dropping worldwide due to the price OPEC will find it in their heart to increase production just enough to lower prices to the optimal level - for them.
I’m getting out my anti-Rapture beanie even as I type.
If consumption starts dropping worldwide, won’t the price start to come down anyway? Why the need to increase production?
Because if they increase production to lower prices, they don’t run the risk of having consumer nations structurally lower demand. Say people respond to higher prices by reducing their driving. They’ll start driving again as soon as prices go down. However, if the prices are high for long enough to drive lots of people into hybrids or other high MPG cars, the demand is decreased permanently.