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Soultrader

Obama Wants Energy Speculator Crackdown

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Politics aside, I wish we could get someone who understands economics in the White House. This isn't the first time a basic Economics 101 lesson would help a lot. What's he want to do? Limit/Regulate the US oil futures market? All that would do is shift volume to other (international) exchanges.

 

Speaking of economically minded politicans, check out Ross Perot's new site. There's some really good information there about the current US economic condition.

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It's all talk to appeal to the idiocy of the public.

 

They need to focus on far more important economic concerns then the price of oil. If in fact all that volatility is due to speculation, then it will all leave some day which will cause the price to drop. When the Dow, S&P, and Gold are all going shit f**k crazy it makes sense to throw some money in oil which seems to only go up. It will hit a tipping point, and all that money will be wiped out. Look what happened to gold.

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Agreed. Promising to "fix" the oil markets simply buys easy votes ("oh no, the gas prices!") and ignores many of the larger issues.

 

Plus, high oil boosts the alternative energy markets. Isn't that what he wants? Put a ceiling on oil (or however he wants to do it) only prolongs serious money going to R&D for cheap, safe, clean energy. Whoops...

The campaign said Obama's proposal is part of his broader energy strategy that calls for reducing oil consumption by 35 percent by 2030.
35% is nothing if nucular power is utilized again. And unfortunately, Presidencies only last 4-8 years, so a 22 year plan may boil down to all talk and no action.

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Guest forsearch

He also wants to increase the cap gains rates - something that won't go down well with the futures traders in Chicago.

 

You may recall that it was a Chicago pol, Rostenkowski who got the capital gains tax break for the futures traders extended.

 

I suspect that it's all talk for the masses, and the Daley machine will prevail in keeping at least the cap gains for futures traders in tact.

 

Plus, having Gov. Corzine (ex-Goldman Sachs) on point for his economic plan is meant to send a reassuring signal to the market.

 

-fs

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Any attempt to manipulate a fair traded market will usually fail. If the price of oil is like the tech boom bubble and not ultimately caused by demand being greater than supply then it will go the same way and collapse again. If not then trying to stop it rising in price will quite simply fail in my view.

 

 

Paul

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It's all talk to appeal to the idiocy of the public.

 

They need to focus on far more important economic concerns then the price of oil. If in fact all that volatility is due to speculation, then it will all leave some day which will cause the price to drop. When the Dow, S&P, and Gold are all going shit f**k crazy it makes sense to throw some money in oil which seems to only go up. It will hit a tipping point, and all that money will be wiped out. Look what happened to gold.

 

Without sounding like some minion- darn near every time I read one of your posts it makes me think- "damn this guy is one smart MoFo"

 

All so very true, it is politics- every candidate is finding the "hot button" issues and playing to the voters. Today it is oil spiking and the candidates are all over it, when more and more of the housing bubble bursts, you'll see the candidates start talking about how we need gov't regulation of predatory lending- I hear the following "I will make these banks and lenders accountable, they will have to answer to why they took advantage of the american people (read: ignorance) to make a buck"

 

Oh and watch for this: Couple weeks before the election Osama Bin Laden will be captured- thus ensuring a Republican victory for the White House. The American people will think that the war is now "Good Again" and throw their support behind a 71 year old putz who will keep us in Iraq fighting for THEIR freedom..

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Oh and watch for this: Couple weeks before the election Osama Bin Laden will be captured- thus ensuring a Republican victory for the White House. The American people will think that the war is now "Good Again" and throw their support behind a 71 year old putz who will keep us in Iraq fighting for THEIR freedom..
I used to be very politically minded and get engaged in political discussion at large. I have since realized that it is near impossible to get a truely honest and brilliant man in the oval office. Instead of benefiting from solid ideas and reform, politicans mostly pander for votes. For instance, I've yet to hear what the two viable canidates plan to do about government spending or Social Security.

 

I used to "support the war". After educating myself a little more, I think it's sick, and the unintended consequences will be greater than anyone could have imagined. However, my "support" for the war has nothing to do with my love for America or support for the troops. To throw those uncorrelated and unconnected ideas together is just stupid. In my opinion, we simply do not and cannot understand the politics and culture there. It seems George Washington was right:

Peace, commerce and honest friendship with all nations; entangling alliances with none.

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"Obama also would ask the Commodity Futures Trading Commission to consider whether traders should be subject to higher margin requirements." :roll eyes:

 

Apparently, Obama's a different kind of speculator...

 

Edited by forsearch

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Any attempt to manipulate a fair traded market will usually fail. If the price of oil is like the tech boom bubble and not ultimately caused by demand being greater than supply then it will go the same way and collapse again. If not then trying to stop it rising in price will quite simply fail in my view.

Paul

Oil is not a free and fairly traded market because 90% of world's crude oil is controlled by cartels or governments. In contrast, the supply and demand of the tech bubble wasn't controlled by such entities.

 

I don't think specs are driving the price of oil at all...just basic supply and demand. Unless there is someone hording barrels of oil in their homes and offices.

Some of the producers and hedgers have become speculators in the futures market as well and they have the ability to store crude in the ground, in storage tanks, in tankers, in pipelines, in salt caverns ... and that can be called hording.

 

Something important and not covered here about crude speculation is that one of the oil hedgers, Semgroup, (not a speculator by traditional definition, but an entity that does store and transport oil and supply liquidity to the crude oil market) was stopped out of their hedging shorts and finally had to cover at the highs in crude two weeks back:

 

The company had taken out short positions, or bets that crude prices would fall, as a hedging strategy for oil it intended to move through a subsidiary's pipelines and sell to refiners, according to an affidavit filed in Delaware bankruptcy court by Terrence Ronan, SemGroup's senior vice president, finance.

 

Then, when oil prices rose, SemGroup moved to "cover" its short positions by taking out equivalent long positions, or bets that oil prices would rise.

 

Eventually, SemGroup was unable to put up collateral for its swelling bets and sold its futures account to Barclays Capital on July 16, according to the affidavit.

 

....

 

One theory making the rounds in the market is that as SemGroup's long positions snowballed, so did the oil rally. SemGroup's rapid exit from the market removed a force for upward momentum when the market, under siege from negative U.S. economic indicators, needed it most.

 

"In the three days surrounding that transfer" to Barclays, crude futures "plunged $15.89...thus, with SemGroup removed from the market, crude oil has been free to fall," wrote Stephen Schork, editor of the Schork Report, a newsletter tracking the oil market.

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Why is it that commodities often show more directional moves than equilibrium ranges? At least if I compare this to for example the NQ or the ES...

 

While everybody was complaining about how fast oil was rising, no one seems interested anymore in why it is falling even more sharper than it went up!

 

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oil_crude.thumb.gif.25ddf9b6526d120426d0a8591619defd.gif

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Energy speculation is the recent for the current spike in the prices of gasoline. I want speculators to be regulated instead of restricting them.

 

Regulating the speculation in the share market is an easy option to avoid the undesirable rise in the prices of commodities.

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Energy speculation is the recent for the current spike in the prices of gasoline. I want speculators to be regulated instead of restricting them.

 

Regulating the speculation in the share market is an easy option to avoid the undesirable rise in the prices of commodities.

 

You honestly believe that regulating things means prices will rise less?

The only thing that more regulations leads to is less liquidity, less free market, and ultimately more 'over the counter' transactions.

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Let me get this straight: speculators are evil when they predict prices going up (and are the reason for it) yet they have no role when it goes down?

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Politics aside, I wish we could get someone who understands economics in the White House. This isn't the first time a basic Economics 101 lesson would help a lot. What's he want to do? Limit/Regulate the US oil futures market? All that would do is shift volume to other (international) exchanges.

 

Speaking of economically minded politicans, check out Ross Perot's new site. There's some really good information there about the current US economic condition.

 

I just bet that other, international exchanges wouldn't allow that shift, since it has started a nice little cascade that none of them have enjoyed either.

 

Just because economics 101 paints one picture, doesn't mean there are no worthy alternatives to the status quo.

 

Things will change if deemed necessary, and I bet the international community, outside of the Middle East, won't balk as much as many hope they will.

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