oil speculation

ebb wrote:
When the price of oil was $140 a barrel, Japan's oil minister said, based on fundamentals, that the price of crude should be $60 a barrel. Five oil-industry CEOs each gave estimates of where oil "ought" to be, with results ranging from $35 to $65 a barrel up to $90. Goldman Sachs forecast a "super spike" to $150 to $200 a barrel.
It seems to me that the price of oil is artificially high due to speculators and the lack of regulation of a commodities market where even small flaws in the design of the market can cause enormous harm to consumers in little time. Many investors buy oil stocks as a hedge against inflation so when our government allowed Exchange Traded Funds, ETF, into the commodities market, investors turned speculators. Unregulated Hedge funds also buy oil commodities so the price of oil went up because too much money was chasing to few commodities. When the price of gas reached $4.00 a gallon, demand dropped and speculators saw the price of oil was too high so they started selling short.
So who benefited from the high price of oil? Oil producers made excess profit over the fundamental price of oil, so they supported the price run up. Speculators made money as the price went up and down. So who lost money and inconvenience? Oil consumers every where. So who is to blame? This is another fine mess those Republican voters have gotten us into. When are regulators going to start working for the American people instead of the Republican Party? The Republican Party represents big business and the super wealthy.
What else can be done to control the price of gas and encourage conservation? Congress should impose a percentage tax on gasoline and raise the personal income tax exemption to $50,000 per person. When speculators perceive the demand for gasoline will go down they will leave the market and the price of oil will fall back to more normal levels.
Monday, 11 August, 2008
9/11/2008 1:21:59 AM