I have heard this discussed on talk radio and seen some articles about it.
Oil futures trading used to be regulated because it was considered a strategic commodity. Since deregulation prices have sky-rocketed with many ENRON like trading practices and possible price fixing going on.
Clip from article-
Oil energy futures speculation drives rising cost
by End the Enron deregulation loopholes!! Tuesday, Jun. 03, 2008 at 11:12 AM
Senate hearing covers rising price of oil, witnesses testify that continued deregulation of energy futures speculation encouraged by ENRON-esque corporations is approx 1/3 of the price at pump..
by Tuesday, Jun. 03, 2008 at 2:06 PM
Today on C-SPAN there were Senate hearings about the rising price of oil, and several expert witnesses, George Soros, Mark Cooper and others testified before Senate members that three factors contribute to rising oil costs; increasing demand and decreasing supply (creeping peak oil), price fixing by OPEC & petroleum corporations AND energy futures speculation by ENRON-esque corporations that continue to benefit from deregulation of speculation on future energy markets, aka the "ENRON loopholes". The easiest factor to reduce the ransom price of oil by at least 1/3 of current prices is to regulate energy futures speculation and close the ENRON loopholes..
Re: Oil energy futures speculation drives rising cost
Prices are determined by supply and demand, people can argue about speculation all they want, but if demand didn't exist at those prices they wouldn't be that high.
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Re: Oil energy futures speculation drives rising cost
Compare oil to the water supply. Water is not traded as a commodity. But what if it was ? Speculators know the public needs water and they would immediate bid up the price because of the need. If regulation removed speculation from bidding up the value oil, the price would fall.
This whole issue is about what is called the "Enron Loophole" in deregulating oil. PLug that loophole and the price will fall significantly.
Re: Oil energy futures speculation drives rising cost
Originally Posted by FloggingSully
Prices are determined by supply and demand, people can argue about speculation all they want, but if demand didn't exist at those prices they wouldn't be that high.
That's true but people have to drive in public transportation challenged environment.
Also, rich men need to keep their wives happy by keep bringing in the cash since the housing bubble has collapsed. Oil is the fall guy. Every time we will up at the gas stations we are sponsoring desires of the rich.
Re: Oil energy futures speculation drives rising cost
In the end I think both issues are driving up prices but I bet oil prices would be below $100 per barrel without specualtion. They would be somewhere around $60-70 per barrel. True Americans can drive less and speculation would decreae but Chna and India make sure that doesn't happen.
Re: Oil energy futures speculation drives rising cost
Originally Posted by FloggingSully
Prices are determined by supply and demand, people can argue about speculation all they want, but if demand didn't exist at those prices they wouldn't be that high.
In this case, as in the ENRON example, prices can be "fixed" and artificially inflated. During the ENRON debacle power companies were actually shutting down power turbines to purposefully decrease the amount of power available and then raising prices because of a "supply vs. demand" problem that ENRON had artificially created for profit.
RYou gave a great example if the scenario were to happen with water.
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Re: Oil energy futures speculation drives rising cost
Originally Posted by RYou
Compare oil to the water supply. Water is not traded as a commodity.
Water is also not controled by private companies or imported from other countries. Are you suggesting we socialize oil supplies the way we have our water supply?
__________________
There's no such thing as a pretty good aligator wrestler.
Re: Oil energy futures speculation drives rising cost
Originally Posted by RYou
Compare oil to the water supply. Water is not traded as a commodity. But what if it was ? Speculators know the public needs water and they would immediate bid up the price because of the need. If regulation removed speculation from bidding up the value oil, the price would fall.
This whole issue is about what is called the "Enron Loophole" in deregulating oil. PLug that loophole and the price will fall significantly.
I think we talked about this last fall when water shortages were occurring in Atlanta. One of the problems in Atlanta was that they were using more water than was being replenished naturally. At one point, GA legislators were concerned that Atlanta had only 80 some days of water left.
If water were deregulated, the price would have gone up enough to curb usage, and there would not have been such a shortage.
Remember that the free market allocates resource to where they are most dear, by way of scarcity, choice, and cost.
Re: Oil energy futures speculation drives rising cost
Remember that the free market allocates resource to where they are most dear, by way of scarcity, choice, and cost.
skipster, is it possible for the free market to get to the point where people don't have any more money to buy even a pair of shoes because everything is spent on water and gas whereas big business has no desire to sell much of anything but water and gas because people are spending all their money on these two vital items?
Re: Oil energy futures speculation drives rising cost
Originally Posted by FloggingSully
Water is also not controled by private companies or imported from other countries. Are you suggesting we socialize oil supplies the way we have our water supply?
Regulation is not socialization. Don't confuse the two things.
Water in many areas is under private control.
When a person or corporation holds a title deed to land they often control the mineral rights and water rights to that property.
If water were to become as valuable a commodity as oil is I can see the day when water prices will be THE major concern for a family just to survive.
The topic was and still is the government should return to regulation of oil pricing futures.
Don't confuse a capitalist economy with the Democratic government system.
Because we have a capitalist style economy does not mean the government should or would allow a completely unregulated market.
__________________
If we don't fight hard enough for the things we stand for, at some point we have to recognize that we don't really stand for them.
Oil energy futures speculation drives rising cost 
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