OT: Oil Prices
60 minutes had a good piece tonight on one theory regarding the price of oil. In summary, it started with the deregulation of trading futures by congress in the late 90s/early 2000s.
"And in 2000, Congress effectively deregulated the futures market, granting exemptions for complicated derivative investments called oil swaps, as well as electronic trading on private exchanges."
The reason for the drop in prices last year:
"The oil bubble began to deflate early last fall when Congress threatened new regulations and federal agencies announced they were beginning major investigations. It finally popped with the bankruptcy of Lehman Brothers and the near collapse of AIG, who were both heavily invested in the oil markets. With hedge funds and investment houses facing margin calls, the speculators headed for the exits."
Story:
http://www.cbsnews.com/stories/2009/01/08/60minutes/main4707770.shtml
Video (summary):
http://www.cbsnews.com/sections/i_video/main500251.shtml?id=4708028n
Something to discuss since nothing else is going on. AJM, please delete if too off topic.
1 recs |
31 comments
Comments
While speculators have a part in it
our historically crappy economy certainly lead to the significant drop in prices as well.
"And the Rangers looking to win it! The Rangers have won it!"
-- Josh Lewin, Sept 23, 2004
by Agreen07 on Jan 11, 2009 8:20 PM CST reply actions 0 recs
When oil was $150
It was pretty clear that derivatives, options and futures were propping it up. The crappy economy just popped the bubble.
Get off my lawn.
by DJCahill on Jan 11, 2009 8:29 PM CST up reply actions 0 recs
I need a little education on how speculation via derivatives, options and futures drives up the price of oil.
Is it something like the supply of oil is spoken for, so if demand increases (or the supply chain is temporarily disrupted) it has a bigger effect since parts of the supply are off-limits due to futures and maybe derivative contracts. Is that the sort of thing you mean?
Personally, I thought that the cost of getting to oil had increased and the amount of oil that was coming from the new wells was not nearly as high as it once was. So, old wells dry up; new wells are costlier and don’t fill the gap left by the dried-up old wells.
Right now, no one can afford to buy it; no demand.
The price of coal has gone down quite a bit as well, even though it has been a cool winter relative to the last few years.
Go Rangers!
by rooster on Jan 11, 2009 10:04 PM CST up reply actions 0 recs
The price of just about.....
every commoditity has crapped the bed. Specs?
by bdavison94 on Jan 11, 2009 10:41 PM CST up reply actions 0 recs
Cost of production, and cost of manufacture
normally doesn’t have a whole lot to do with the price of anything. Much like the cost of players rarely has anything to do with the price of a ticket to the ballgame. Price not equaling cost is one of the first rules of business.
Price is normally set by supply and demand. Folks who purchase derivatives are indicating demand. All of those contracts, options, and exotic derivatives can potentially indicate real demand.
Get off my lawn.
by DJCahill on Jan 12, 2009 4:42 AM CST up reply actions 0 recs
I'm sure Ben aka our resident Suzy Orman
has something to say about this…
"And the Rangers looking to win it! The Rangers have won it!"
-- Josh Lewin, Sept 23, 2004
by Agreen07 on Jan 11, 2009 8:22 PM CST reply actions 0 recs
Heh...
freaking Suze Orman.
Anything that trades is subject to speculation. I don’t think attempting to regulate speculation out of the market is the right idea. Bubbles happen, bubbles pop.
I wouldn’t mind a couple of more price spikes as a motivator for innovation in the energy market (though not necessarily for environmental reasons, more because I’d prefer for the Middle East to never be a strategically significant region ever again).
"I know you're a bit dense but no, it doesn't. Obviously lying isn't a problem for me."
by benmor78 on Jan 11, 2009 8:56 PM CST up reply actions 0 recs
Yeah you are right about the innovation...
clearly the urgency of alternative energy sources (regardless of the motivation (Middle East or environment) becomes lessened when oil becomes cheaper. Perhaps this was most recently manifested in the 08 election when drilling became a less significant topic as prices fell.
"And the Rangers looking to win it! The Rangers have won it!"
-- Josh Lewin, Sept 23, 2004
by Agreen07 on Jan 11, 2009 9:03 PM CST up reply actions 0 recs
As P.J. O'Rourke says...
we’re way out of whale oil. I think we’ll see some changes in how we live and use energy (telecommuting, non-steady state renewables for some energy needs), but it’s an evolving process.
"I know you're a bit dense but no, it doesn't. Obviously lying isn't a problem for me."
by benmor78 on Jan 11, 2009 9:37 PM CST up reply actions 0 recs
I agree
completely in regards to ths price spikes. Do you ever read any of Ed Wallace’s work?
by Michael Cave on Jan 11, 2009 9:15 PM CST up reply actions 0 recs
No.
"I know you're a bit dense but no, it doesn't. Obviously lying isn't a problem for me."
by benmor78 on Jan 11, 2009 9:28 PM CST up reply actions 0 recs
You should
a lot the ppl that I work with enjoy his stuff.
by Michael Cave on Jan 11, 2009 9:44 PM CST up reply actions 0 recs
You can't regulate speculation in a global marketplace
If oil derivatives and futures are not permitted in the US, then companies will go oversees to hedge their investments / industries.
Also, no one mentions that companies like Southwest Airlines did well during the oil peak since they actually remembered basic finance and used oil futures to lock-in the cost of fuel. So people want to take that away because of “speculators?” Just because people don’t understand it doesn’t mean that it is evil.
by JBImaknee on Jan 12, 2009 12:30 AM CST up reply actions 0 recs
but when in doubt
blame speculators. same as it ever was.
Mass X Acceleration = Force
by SteveP on Jan 12, 2009 12:58 AM CST up reply actions 0 recs
Or Jews.
"I know you're a bit dense but no, it doesn't. Obviously lying isn't a problem for me."
by benmor78 on Jan 12, 2009 2:57 AM CST up reply actions 0 recs
Or...
Speculating Jews.
"I know you're a bit dense but no, it doesn't. Obviously lying isn't a problem for me."
by benmor78 on Jan 12, 2009 3:34 AM CST up reply actions 0 recs
I blame those damn prospectors

By 2028, Mark Teixeira will be in the HOF.
-The Outlaw
by Gdawg on Jan 12, 2009 11:49 AM CST up reply actions 0 recs
I always enjoy
when “Risk Management” groups kick their own companies in the nuts when their deals fall apart.
Get off my lawn.
by DJCahill on Jan 11, 2009 8:31 PM CST reply actions 0 recs
So..
Is it supposed to slowly creep back up then spike this summer or what?
"Obama is a Christian - He's always been a Christian...But.........what if he is[a Muslim]? Is there something wrong with being a Muslim in this country? The answer is no, that's not America." Colin Powell on Obama/Muslim assertions.
by AirJordan on Jan 11, 2009 8:42 PM CST reply actions 0 recs
thats ok
when it spikes they will blame bush ;)
Scout: He was a first-round pick right? Got a huge bonus?
KG: Oh yeah.
Scout: Well, he spent a lot of it on milkshakes.
by knockoutking on Jan 11, 2009 9:21 PM CST up reply actions 0 recs
There was a bubble,
it popped, but it seems obvious that over the long term the price is going to go up a lot as oil gets harder to find and harder to get out of the ground/ocean/wherever.
G G G E-flat_______ F F F D__________....
by t ball on Jan 11, 2009 9:26 PM CST reply actions 0 recs
We'll all be dead before the world sees that kind of panic.
Right?
by oc on Jan 12, 2009 11:22 AM CST up reply actions 0 recs
Doubt it.
The bubble was built on top of something structural and long term. Just because there was a bubble doesn’t mean there aren’t plenty of reasons for oil to go up. When the world economies start crawling out of the current mess, oil will skyrocket again as demand recovers.
G G G E-flat_______ F F F D__________....
by t ball on Jan 13, 2009 12:14 AM CST up reply actions 0 recs
"AJM, please delete if too off topic."
Oh my gosh people, LSB isn’t a dictatorship – it’s a blog for a reason – to share your opinion. I think all of this stuff about protocol and following directions is dumb. Post what you wanna post.
by aggierangerfan00 on Jan 11, 2009 9:26 PM CST reply actions 0 recs
Don't worry
there really is no protocol. Some people just think there might be so they follow a non-existent one that they thing is appropriate.
"And the Rangers looking to win it! The Rangers have won it!"
-- Josh Lewin, Sept 23, 2004
by Agreen07 on Jan 11, 2009 9:32 PM CST up reply actions 0 recs
Yeah
It’s probably because some people are jerks on here when it comes to posting stuff. You’re right, someone new usually comes on here and gets bashed on their first post.
by aggierangerfan00 on Jan 11, 2009 9:33 PM CST up reply actions 0 recs
Well, here's some news:
Sources: SS Young asks for trade from Rangers
Go Rangers!
by rooster on Jan 11, 2009 9:43 PM CST reply actions 0 recs

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