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101 Comments
- ivanmarsh, on 07/10/2009, -7/+31It shouldn't be legal to buy and sell something that doesn't exist to manipulate the price of something that does.
- novenator, on 07/10/2009, -10/+29I'm not sure I agree with the jist of the article. Aren't speculators the ones that drive up prices in the first place at the slightest hint of instability in any part of any oil producing country?
- inactive, on 07/10/2009, -9/+20Another great example of PR and spin in America.
- inactive, on 07/10/2009, -4/+15When oil was $140 each barrel was traded 27 times (!) by speculators before it was passed to a consumer. In the 1930's the government created regulations limiting the number of speculators, recognizing that too many speculators hurts consumers. In the 1990's however, Goldman Sachs and others lobbied for and received exemptions to those regulations.
- northwatuppa, on 07/10/2009, -2/+10fta: So much money has piled into oil that there's a belief that there are too many people involved in the futures market. In fact, the opposite is true. The participants are so few that a couple of major players can, if they choose, garner absolute control, cornering the market and creating a price bubble for their own benefit.
If there are only a few wealthy traders, they can establish a monopoly and run up the price of oil at will. Having more traders makes it hard to "corner the market" and control prices.
It's kind of like restricting voting rights. Fewer people get to say who governs. It is also easier to influence or control a small number of voters. More voters = more democracy. - 3tcp, on 07/10/2009, -1/+8Taxes on trades will be priced into the market and do nothing to reduce predatory behavior.
- dclaw, on 07/10/2009, -5/+12this is bs. You used to not be able to speculate on oil at all. And because of that. We never had an oil bubble till they allowed speculation. Go back to the old system and save us all some money at the pump.
- AmnesiacJack, on 07/10/2009, -8/+15Sorry Time I'm going to have to call BS on this one.
- BDOUG, on 07/10/2009, -5/+12I wonder how much Goldman Sachs pays Time.
- GnomeProfit, on 07/10/2009, -2/+8The very last sentence in the article is the most important.
"Ari J. Officer, a regular contributor to TIME.com, works at a Chicago-based proprietary trading firm."
Duh, he doesn't want caps on speculating because he is a f*cking speculator. - YoungRamblings, on 07/10/2009, -4/+10The sad thing, not one person who is against "oil speculation" can tell me - how exactly - it actually happens.
- Kate1240, on 07/10/2009, -2/+8This is what the stock market is all about.."A couple of major players can, if they choose, garner absolute control, cornering the market and creating a price bubble for their own benefit." The rest of the people are puppets used to create hype.
- Bloodwine, on 07/10/2009, -6/+12We need less speculation. Oil was stabilized around $30-50 per barrel before the rules were changed in the early 2000's (2002? 2003? I forget the exact year). The change in rules allowed people to buy oil contracts without taking delivery, which pretty much allowed every scumbag speculator to come along and try and flip oil contracts.
Easy fix for oil: change it back to where if you buy an oil contract, you have to take delivery. - Cerin, on 07/10/2009, -4/+10Yes, let's completely de-regulate those with the most influence over the economy. Nothing bad could come of that...
- ivanmarsh, on 07/10/2009, -6/+11Yes they are. The price of oil has absolutely nothing to do with supply and demand. At this point speculation is the sole driver of the price despite little change in the actual supply or demand.
- roddack, on 07/10/2009, -1/+6so the answer is the barrel of a gun?
- fauxbro, on 07/10/2009, -2/+7I'm currently shorting oil through double short ETF and doing quite well. I think i'll be doing some profit taking. Besides it's a global commodity and how can the U.S. gov't controll the prices when we are a minority global producer?
- WasabiBomb, on 07/10/2009, -3/+8@tweedius- "The market always works"
...for itself. And what's good for the market is not always good for the consumer or for the economy in general. - trafficlight, on 07/10/2009, -2/+7I don't think you understand how speculation works.
- mrmod, on 07/10/2009, -0/+4Are you represented?
- mizike, on 07/10/2009, -5/+9Are there any problems that the ol' invisible hand can't fix? Well, except for the numerous and inevitable problems that it creates while supposedly fixing things that is...
- PhilliesBlunt, on 07/10/2009, -2/+6Taxes without representation.
- clickmyface, on 07/10/2009, -3/+7Yeah, speculating oil prices = freedom. Its right there in the constitution.
- whytlessphysh, on 07/10/2009, -1/+4Increasing the margin will definitely lead to fewer speculators. Of course the ones who are left will have money enough to buy influence and keep *all* competition out of the market. Once upon a time there was an oil speculator by the name of Rockefeller who did that...
- tgc1, on 07/10/2009, -5/+8I disagree 100% more speculators would mean more trading the price up. More people needing to make money means the PRICE GOES UP. Why the ***** would anyone be in a speculative market where no money could be made? This article is ***** nonsense.
Speculators and futures traders should be banned from energy markets. Those markets should be protected. IT ends up costing the end user a ***** ton for something that should otherwise be cheap. You tack on the mammoth taxes the government nails to it, and you get a populous and an infrastructure that is brought to its knees. Shipping goes up, therefore EVERYTHING goes up. - rockytop9808, on 07/10/2009, -2/+5And that is what a lot of people fail to realize.
This article was spot on in pointing out that the Obama administration is about to cede power to a select few groups. You'll never be able to "regulate them out of existence". Instead, you'll interfere and give power to a small group that could shaft the entire nation. - RonPauls, on 07/10/2009, -0/+3The article's right
Very few people on Digg understand markets - ZenMojo, on 07/10/2009, -0/+3So, basically, we need more oil speculation so we can artificially drive up the price even more as demand increases? Whaaaaaat....?
- jwhitman89, on 07/10/2009, -3/+6Speculators play an important role in the economy. They take on lots of risk that oil companies don't want to take (i.e. they want to sell their oil NOW not later) in the hopes of making a profit. During hard times, these guys get the shaft because oil prices drop and people have less money to spend. In booms, they roll in the dough because people need more oil and have more money.
The problem with the current speculation environment is that the government has driven out all but a few speculators. The ones that are left are able to collude and work around the natural control of competition. - LokitheComplex, on 07/10/2009, -2/+5Adam Smith disagrees with you.
- rjey, on 07/10/2009, -1/+3Until we have regulations in place so that those who want the hedging exception in these speculator markets (hi Goldman Sacks we are are looking at you) can actually demonstrate their USE of the commodity then we will remain at the mercy of these banks.
We are merely pawns right now and GS is the biggest offender in all of this and they have the federal government backing them up. - inactive, on 07/10/2009, -4/+6Typical dumbass. And by that I mean you.
- JohnGalt750, on 07/10/2009, -0/+2Anyone that's against speculation care to describe a better alternative?
- dhughes, on 07/10/2009, -4/+6 People just don't seem to (or want to) understand futures/commodities markets, they lump it in with stocks and day traders who want to make a quick dollar.
If futures contracts didn't exist for the items that are commonly traded; oil, coffee, soybeans etc. would jump dramatically and drop dramatically in price as they came in and out of season.
Storage in warehouses and having people willing to risk money to store them and to have a guaranteed customer later in the off season or years later is a stabilizing force in the market. Sure there are people who want to make money and in the article "speculators try to benefit from fluctuations in prices" sure is right look at the cocoa market the chart looks like someone having a heart attack and to speculators that can be a good thing. If you think the fluctuation in oil is bad now with the summer rush imagine if it wasn't as controlled as it was now, it would be insane!
It's like saying mortgages are stupid because so many people got one who shouldn't and the economy collapsed because of it, blame the people don't blame the market or method uses to trade.
I agree with the article there should be more 'distribution', like a distributed computer system, spread the load around to prevent a catastrophe. - al3efroman, on 07/10/2009, -0/+2The New York Mercantile Exchange began allowing the trading of oil futures in 1983, after Regan removed existing price controls in 1981. It is important for all sides of this discussion, however, to remember that oil trading is truly global in nature. Just because the US has or does not have a futures market for oil does not mean, globally, that futures trading would somehow cease in other countries. This is from where the whole foreign energy dependence hot-button issue stems.
Source: New York Mercantile Exchange
http://www.nymex.com/energy_in_news.aspx?id=eincru ... - JohnGalt750, on 07/10/2009, -0/+2And your alternative to the free market is what exactly?
- esc27, on 07/10/2009, -1/+3Author drives a Prius.
Actually he makes one good point which is the whole situation is likely more complicated than simply "speculation=bad" and needs to be researched and properly fixed. - Ferretman, on 07/10/2009, -0/+2We need more speculation. This is what drives prices up and down and they're both win-win:
- When they're up people drive more efficiently, switch to more efficient vehicles, and alternative energy options can compete effectively.
- When they're down people's money goes farther, they can *afford* to do more to stimulate the overall economy, and alternative energy producers have to work to increase their efficiencies.
Honestly it's all good. - dhughes, on 07/10/2009, -0/+2 That's news to me, I'm not an expert or even close to one, when was that changed it must have been a long time ago, decades?
Pretty much any commodity allows you to buy and sell contracts without taking delivery if you sell or buy the contract before expiration/settlement, and has been that was since commodity contracts were created. It may not have always been that way but ever since I paper traded in them (mid 1990's) you didn't have to take delivery if, as I said, you sold it first (or bought it, if shorting). - 2Six119, on 09/10/2009, -3/+5wtf TIME....really?
- r00fus, on 07/13/2009, -0/+1Please instruct us, o wise one...
Or do you even know wtf you're talking about? - drazen77, on 07/13/2009, -0/+1I love all the coments who condemn speculation and at the same time spout off how ignorant they are of it.
If you don't know anything about it, then research it before running your mouth off in the comments section. - uncleosbert, on 08/10/2009, -0/+1i don't think that's what he was implying. though, i would rather people weren't pissing in the pool we still have to swim in. if you are making a buck here and there in the commodities market, you're probably spending it almost immediately at the pump.
- s73v3r, on 07/10/2009, -0/+1I have people sent to Congress tasked with representing me. Whether or not they actually do represent my interests is another thing, and if they don't, its my responsibility to try and get them replaced with someone who will.
- N01SE, on 07/10/2009, -0/+1Why is the global economy based on speculation in the first place? Please, I really do not understand this stuff at all. So they sell stuff that hasn't been produced yet, they're essentially taking orders for stuff not produced. I thought competition, consumer demand, and product supply determined the price of something. Why would anything else determine the price?
- Shwaavay, on 07/11/2009, -0/+1Turns out it was in 1983... You were a little off.
http://digg.com/business_finance/Why_There_Should_ ... - Shwaavay, on 07/10/2009, -0/+1Please provide a source for your claim that trading futures is new. I don't completely doubt you, but I could swear I read a book on trading oil futures during the 90's.
- jsffive, on 07/10/2009, -1/+2Of course the ***** at Time want speculators... after all, THEY can afford to put gas in their BMWs. As long as they keep lying us into wars and doing the bidding of their masters, they'll always be able to afford high gas prices.
***** them. Stop reading their rag, put them out of business, make them beg in the streets, and see how they feel about oil speculators THEN. - N01SE, on 07/10/2009, -1/+2biased yes, useless no. that's the difference there. better to come from an unbiased source.
- N01SE, on 07/10/2009, -0/+1Disagree, because speculation could be manipulated to make the price of lithium powered batteries (or the compounds used in production of) and other products used for energy efficiencies incredibly high, that's exactly what they will do, as soon as people switch to all electrics, wind power, etc. the prices of those can be inappropriately manipulated just like any other commodity.
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