(02-21-2012 09:07 PM)WMD Owl Wrote:  

(02-21-2012 08:37 PM)Smaug Wrote:  Interesting that the White House said today that there's not much the president can do about the price of gas.
Hmmm...the narrative 4 years ago was that Bush pretty much single-handedly ramped it up.
Second, I guess he meant besides, ANWR. the gulf and the Keystone pipeline.

If Obama threatens to sick the CFTC and his "Pit Bull" Eric Holder on "oil speculators" I bet you would see the rate of crude price increase slow significantly.

I'll bet what you see is all the crude oil trading moving offshore, where the long arm of Eric Holder can't get to them. The Dubai Energy Exchange?

What people don't understand is how speculation affects prices. It drives them up when they are low and down when they are high. Which ought to be what we want.

Let's say I can buy oil and store it on a tanker at anchor in the approaches to Singapore (where there are a whole lot of tankers at anchor doing precisely this) for $1 per barrel per month. Let's say I believe the price of a barrel of crude will be $160/bbl in February 2017. That's 60 months, or $60 in storage charges, from now. So I'll buy oil at something close to $100 today. If I'm on the market buying oil now, that drives the price up somewhat. If I'm right about the 2017 price, I come out okay. But what I'm really hoping for is a spike between now and then. If that happens, I sell what's on the tanker. That drives the price down and attenuates the price spike.