So, The Senate and The House begin pushing anti-speculation

[johnaries]

energy laws, and suddenly as if by a miracle oil prices start coming down. Coincidence?

[Cerridwen]

1. Horse out of barn - close door.

Turn heat down on soon to be boiling frogs before they croak too loudly until they can turn heat up again to bring to a roiling boil.

Nope, I'm not surprised.

[Captain Angry]

2. Yep.

Oil prices fall with demand fall, as well as new lows in financial sector draw new investment.

If there is a serious push to fix something without 200 loopholes, we might see the speculators begin to actually worry about Congress.

[Mind_your_head]

3. Anti- speculation.....hmmm.......

WHAT does that REALLY mean? Investing in businesses that may take a long time to develop/'emerge'??? But may still be VALUABLE????

Oh no, non, no, non.........*cough* choke* no...... won't/can't happen

[johnaries]

5. Errr, nooo. Google "Enron Loophole".

The piece of shit amendment that Mr. Mental Recession Phil Gramm pushed through that allowed Enron to create the California "energy crisis" back in 2000. They closed the loophole for natural gas, but not for oil. The new legislation seeks to make energy speculation transparent and regulate it.

[Andy823]

4. I agree.

They are worried that if the price "doesn't" come down, congress might actually do something by getting rid of loopholes, and putting tougher regulations on them, and they don't want that! If congress backs down, they will just start over after the elections, but if congress has a backbone and passes a bill to crack down on them, then maybe just maybe, we will see some "real" reduction in oil prices!

[gratuitous]

6. Now we need a law against selling short

Why, it's unamerican to make money when a stock goes down!

[aspergris]

12. thats silly for a # of reasons

Among those are that shorts provide BUYING pressure on stocks, when they have to cover.

Shorts help with price discovery.

Also, in FUTURES markets, which is how most oil is traded, you HAVE to have shorts. In fact, futures markets (which are zero sum) have the EXACT SAME # OF SHORT CONTRACTS AS LONG CONTRACTS AT ALL TIMES.

Which I would be 99% of those decrying "evil speculators" don't understand.

I'll repeat.

At any given time, in any futures market - there are EQUAL # of shorts and longs. They HAVE to be the same.

[gratuitous]

16. Perhaps my post wasn't stupid enough

Oh well, as the New Yorker found out, satire and irony are tricky instruments and can as often be wielded against their users as their targets.

[Monk06]

7. If you want to put the fear of God in Wall St, force all commodity speculators to take

physical delivery on their contracts. You want
to bid $100 a barrel hoping that it will be $120
in three months? Fine, BUY at $100 and TAKE DELIVERY
in three months THEN SELL for $120.

That would end speculation in a heart beat.

[johnaries]

8. Actually, that's one of the things they're trying to address. nt

[aspergris]

15. that's silly for a # of reasons

Including that futures markets ALWAYS have an equal amount of shorts and longs, to cancel each other out.

ALWAYS . This is why they are zero sum markets.

Also, futures markets are DESIGNED to let commercials (producers and consumers) both hedge.

And that wouldn't be possible w/o allowing for them to trade in many cases w/o physical delivery.

[Monk06]

17. I didn't mean my remarks to be taken too seriously. For one

thing you can't regulate speculation. Every law
has a loophole its just a matter of time before
imaginative traders find it.

Secondly how could you force traders to take
physical delivery. If you tried the energy
supply train would bottle neck and grind to
a halt.

Thirdly, as you say, hedging serves the useful
function of mitigating risk during price volatility.

My post was an exercise in spleen with a certain dash
of despair that there is no such thing as a free market,
working according to rational rules, controlled by
honest public spirited capitalists.

The world monetary system itself is a crap game with
the house holding the advantage.

[aspergris]

9. here we go again. no

I said WEEKS ago, the support level in front month oil was 130.

That was technical support

What the house and senate are wanking about has nothing to do with it.

Oil was overbought.

For pete's sake, the senate and house haven't been doing the same with corn, and it's down 25% in a couple of weeks.

.

[Subdivisions]

10. Isn't it funny how one pundit's attribution for high prices is "speculation" and

DU takes off with it like a rocket?

I don't think you should talk about oil prices and markets unless you've at least done a little studying on the subject first.

[aspergris]

11. I agree

the same du'ers who are so (allegedly) critical of the MSM are more than happy to embrace the MSM memes when it suits their agenda. the latest is: "evil speculators!"

These people who wouldn't know a futures contract if it bit them in the okole are CERTAIN it's all these evil spec's fault.

Why?

Because the media TOLD them.

lol

[KharmaTrain]

13. The Speculators Are On To The "Next Big Thing"

Food. The oil game is not as lucrative for now...and the "pain threshold" is now at $4...people will be happy to see prices "go back" to those levels...and then in a few months, when the heat is off, move the level higher again...it's been the game they've been doing for the past 6 years.

The "smart money" that isn't on the sidelines are heading over to the commidities pits. The combination of high oil prices and bad weather make this fall's crops a money pit just asking to speculate in. Good chance most the big players are already in and just waiting...then watch prices on corn, wheat and other major commidities start to climb as bad reports and delivery and distribution problems will drive the prices even higher.

[ProfessorGAC]

14. Nope

It's not a coincidence. Folks lay low whenever someone puts the magnifying glass on their business.

And, they don't want anyone really examining things. Despite what the Tribune said in its editorial, speculators serve no useful purpose.

Folks who have taken business classes, gotten an MBA, or have worked in industry on projects to remove unnecessary expenses from an operation always look for the elimination of Non-Value Added steps. (NVA) It's in nearly every textbook on operations management and in many accounting books too.

Well, the last thing the speculator industry wants is this spotlight, because they'll be identified as one of those NVA steps. They provide no value to the producer, to the consumer, to the vendor, to the overall macroeconomy. They are a layer of profit taking that adds nothing to the equation. Even liberterian economists would see the importance of slicing a non-value added step out of the supply chain! So, would those Paulian republicans and even some neocons.

So, they have got to calm down, because the last thing these guys want is to have people realize that they are really doing nothing but gambling with a strategic resource.
The Professor