the artificial drop in oil prices is the work of unscrupulous, unregulated speculators

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any commodities trader knows that it's just as easy to go short as it is to go long, i.e., bet on, and thereby drive, prices down instead of up.

a $10 drop in oil prices in two days is unheard of. it couldn't possibly be for real reasons. somewhere, some dastardly dicks figured it was time to engineer a "correction" and, for the sake of their own selfish profit, decided to short oil and hammer the stock prices.

have they no sympathy for all the people who depend on ever increasing oil prices? what about the oil execs? what about the saudis?

will someone PLEASE pass a law or something? these speculators have to be stopped!

[spanone]

1. here was my question

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3630118

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4. well, the idea is that if the economy is sucking even more (e.g., fnma and/or fhlmc fail), then

everyone would tighten up, resulting in less oil demand. it's not so much driving in and of itself, but everything, including how much we consume (remember, oil is necessary to produce and ship just about everything).

[bbinacan]

6. I believe that GNMA

is government backed. You must mean Freddie Mack.

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8. doh! thanks

:hi:

[readmoreoften]

2. That's my guess.

[tulsakatz]

3. I was wondering why the gas prices hadn't changed.........

any time the price of oil goes up, they change the gas prices immediately!! But this time the price of oil goes down and the gas prices have remained the same for almost a week.......

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5. economists call gas prices "upwards-sticky"

they go up quickly, but then stick there.

whenever oil prices go up, they raise gas prices immediately, often even in anticipation of the next shipment.

but when prices go down, they wait at least until the next shipment arrives, and often until a nearby competitor lowers prices first.

it's all a function of the unusual price elasticity of gas. in the short run, we'll pay almost no matter what the price is.

[tulsakatz]

7. that figures.........

in the end, the customer pays no matter what!!

I heard one time when the price of gas goes up, it goes up by a lot and when it comes down, it comes down by a few cents at a time and boy, is that true!!

I know it's not much but even if they lowered it by a few cents at a time, at least it would look like someone is trying to do something about it!! As it is now, the price is high and keeps getting higher and no one seems to care what it is doing to our country, the economy or anything else!

[Liberal In Texas]

9. Ravi Batra on Hartman today said selling short should be illegal.

There are so many ways to game the system with this tool. It's as bad or worse than buying on margin that inflated the market before the crash in '29.

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12. i think markets are FAR more efficient WITH short selling

although anything is subject to abuse. being able to only go long means that excessive prices can't easily be corrected.

shorting is especially useful as part of a more complex trade, e.g., shorting one stock and buying another if you simply think that one company is going to outperform its competitor.

of course, there's vastly more abuse and problems in the insipidly bullish advice that usually emanates from the brokerage houses.

[aspergris]

10. rubbish

1) speculators (myself included) are a relatively small portion of the volume in crude futures trading

2) supply and demand in the futures contracts will and does move this market, just like it moves EVERY market subject to these market forces

This is not a bad thing. It's a "thing".

Yea, it sucks (unless you were long from 60, that oil is up in the 130's

But this drop is no more "artificial" than the rise was.

Bubbles happen and have happened for CENTURIES. Whether it's tulip bulbs, the nifty fifty, tech stocks, gold (multiple times), oil, orange juice, coffee, etc. that's how markets and price discovery works


exactly what law would you propose to stop EVIL SPECULATORS? Seriously?

Are only hedgers to be allowed? and how do we check that? should the average trader (myself included) be prohibited from trading oil? only the elite traders get to trade it?

seriously.

it's a WORLDWIDE market with scores of thousands of particpants.

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11. (shh! i'm a speculator too....)

sometimes it's fun not to put the :sarcasm: emoticon in :)

did you really think i was arguing for sympathy for the oil execs and the saudis?

[aspergris]

13. I just think

that if you look at the history of capital markets, especially futures markets - which have existed for centuries. the first were in scandanavia iirc, you realize that bubbles etc. are practically inevitable.

a 2 way auction market means there is no "central authority", and in a worldwide economy - that's generally a good thing.

It can result in some WACK overreactions (to both sides), but what possible solution is there?

I didn't play oil/ Today I played corn, the financials, and the dow futures.

[unblock]

14. i agree, to some extent bubbles are inevitable

but sound long-term fiscal management of a diverse economy keeps bubbles contained to one market, or one part of the economy.

texas has long specialized in the boom-and-bust cycle, but it never affected much of the rest of the country in a big way.

now, our beloved leaders have brought that disease to the economy at large after years of pursuing high-oil price policies.