11-07-2008, 09:05 AM
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#27 (permalink)
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| Gone Off
Join Date: Dec 2005 Location: shelf
Posts: 9,549
| Quote:
Originally Posted by blackgang   However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation. Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs. Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. | Thanks, BG. I've read this in other channels. Yes, the airlines are hurting right now. I think the hurt is painful. As for commodity speculation, I doubt there will be be any restrictions. This is worlwide speculation, also. Not only for Light Crude but other commodities: sugar, corn, metal, gold, wheat, etc. All I can say is: go LONG on oil.
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