Eisboch wrote:

"JoeSpareBedroom" wrote in message
...
"Eisboch" wrote in message
...

"jps" wrote in message
...


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the
demand tanked.

Eisboch

There is no single reason, and you are fully aware of that fact.

Explain why the price took so long to tank after demand dropped.

http://www.cbsnews.com/stories/2009/...n4707770.shtml



The JimH theory?

Eisboch

No, if that was correct, it would still be up at $4/gal.

I pity that poor marina. Next summer they will be selling gas at
$5/gal, while everyone else is selling it for $2.75. My guess is the
gas will turn into shellac before they sell any.

Eisboch wrote:

"jps" wrote in message
...


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the demand
tanked.

Eisboch
The apparent unlimited supply of gasoline. The price of gas started down
the day after President Bush rescinded clintons off shore drilling ban.
When the apparent supply was severely limited under the ban the price
went up, when the apparent supply became unlimited without the ban the
price went down. Simple economic theory.

On Tue, 20 Jan 2009 19:12:55 -0500, "JoeSpareBedroom"
wrote:

"jps" wrote in message
.. .
On Tue, 20 Jan 2009 18:24:32 -0500, "Eisboch"
wrote:


"jps" wrote in message
...


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the demand
tanked.

Eisboch

Concurrent with congress announcing that they were going to
investigate why oil prices were rising while demand was dropping and
supply was increasing.

That's not a commodity market. They were trading contracts as
investment instruments.

There were many investment banks and large funds investing in oil
futures that had no interest whatsoever in purchasing oil.

Do a little research and you'll find plenty of info...


If I recall correctly, Eisboch doesn't agree with that theory, even though
many experts in the oil business do.

It's the only real-world explanation there is. Oil prices became
unhitched from supply/demand and the only way that happens is when
participants are speculating.

THey now know that huge institutional buyers were buying contracts as
if they were stocks. They had no interest in holding the millions of
barrels of oil they were buying.

On Tue, 20 Jan 2009 19:20:35 -0500, Keith nuttle
wrote:

Eisboch wrote:

"jps" wrote in message
...


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the demand
tanked.

Eisboch
The apparent unlimited supply of gasoline. The price of gas started down
the day after President Bush rescinded clintons off shore drilling ban.
When the apparent supply was severely limited under the ban the price
went up, when the apparent supply became unlimited without the ban the
price went down. Simple economic theory.

Then why were oil prices spiking last summer even as demand had
dropped and supplies were rapidly climbing?

Speculation, and it wasn't the people who store or refine who were
doing it.

On Tue, 20 Jan 2009 18:24:32 -0500, "Eisboch"
wrote:


"jps" wrote in message
.. .


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the demand
tanked.

Pure speculative bubble burst by the absence of free money with which
to speculate.

--

"All right everyone, line up alphabetically according to
your height."

Casey Stengel

Eisboch wrote:

"JoeSpareBedroom" wrote in message
...
"Eisboch" wrote in message
...

"jps" wrote in message
...


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the
demand tanked.

Eisboch

There is no single reason, and you are fully aware of that fact.

Explain why the price took so long to tank after demand dropped.

http://www.cbsnews.com/stories/2009/...n4707770.shtml



The JimH theory?

Eisboch

On a large scale, it would be true. At a marina - notsomuch.

"JoeSpareBedroom" wrote in message
...
"jps" wrote in message
...
On Tue, 20 Jan 2009 18:24:32 -0500, "Eisboch"
wrote:


"jps" wrote in message
...


That's what caused $4 gas, not supply/demand. Get an education
please.

Please explain the drop from $140/barrel to $34/barrel when the demand
tanked.

Eisboch

Concurrent with congress announcing that they were going to
investigate why oil prices were rising while demand was dropping and
supply was increasing.

That's not a commodity market. They were trading contracts as
investment instruments.

There were many investment banks and large funds investing in oil
futures that had no interest whatsoever in purchasing oil.

Do a little research and you'll find plenty of info...


If I recall correctly, Eisboch doesn't agree with that theory, even though
many experts in the oil business do.


I don't doubt for a minute that investment speculation drove the price up.
But the reason it became of interest to the speculators was still
fundamentally based in supply/demand.

It's like a huge, high gain servo system out of wack.. A small change in
input causes a much bigger change in output.

Eisboch

On Tue, 20 Jan 2009 19:59:00 -0500, "Eisboch"
wrote:

I don't doubt for a minute that investment speculation drove the price up.
But the reason it became of interest to the speculators was still
fundamentally based in supply/demand.

I disagree.

Supply wasn't an issue - there was so much oil flooding the market
that they had (and still have) oil floating out and about on tankers
just waiting for some place to put it. Demand wasn't an issue either
- did you have lines waiting for gas even after Katrina?

No.

It was pure speculation. Money cost next to nothing and when you
could place a bet on oil going up due to market psychology with money
that cost you nothing and make 150% in a week on that bet everybody
wanted in on it further driving the price up - it was a classic tulip
bulb bubble.

Consider that you could have a rise in the per/bbl cost of oil if
there was fog in the Houston Ship Channel. I don't know about you,
but I doubt there is ever a day when there isn't fog in the Houston
Ship Channel - or so I've been told. And we're talking $5/bbl rises
here - that's speculation. Somebody sneezes in Iran, the price goes
up another $5/bbl - that's speculation. Goldman Sachs, who clears all
the oil trades in the world by the way, publishes a report saying that
demand will drive up the price to $150/bbl and damned if the traders
didn't try to get there.

It's not coincidence that when the capital markets started drying up
and the hedge money market funds started losing money that the price
of oil suddenly and dramatically dropped a full 2/3's of it's value.

It wasn't demand, it was pure speculation.

That's my story and I'm sticking to it. :)

--

Math illiteracy affects 8 out of every 5 people.

"Wizard of Woodstock" wrote in message
...
On Tue, 20 Jan 2009 19:59:00 -0500, "Eisboch"
wrote:

I don't doubt for a minute that investment speculation drove the price up.
But the reason it became of interest to the speculators was still
fundamentally based in supply/demand.

I disagree.

Supply wasn't an issue - there was so much oil flooding the market
that they had (and still have) oil floating out and about on tankers
just waiting for some place to put it. Demand wasn't an issue either
- did you have lines waiting for gas even after Katrina?

No.

It was pure speculation. Money cost next to nothing and when you
could place a bet on oil going up due to market psychology with money
that cost you nothing and make 150% in a week on that bet everybody
wanted in on it further driving the price up - it was a classic tulip
bulb bubble.

Consider that you could have a rise in the per/bbl cost of oil if
there was fog in the Houston Ship Channel. I don't know about you,
but I doubt there is ever a day when there isn't fog in the Houston
Ship Channel - or so I've been told. And we're talking $5/bbl rises
here - that's speculation. Somebody sneezes in Iran, the price goes
up another $5/bbl - that's speculation. Goldman Sachs, who clears all
the oil trades in the world by the way, publishes a report saying that
demand will drive up the price to $150/bbl and damned if the traders
didn't try to get there.

It's not coincidence that when the capital markets started drying up
and the hedge money market funds started losing money that the price
of oil suddenly and dramatically dropped a full 2/3's of it's value.

It wasn't demand, it was pure speculation.

That's my story and I'm sticking to it. :)


And the clearinghouse sees all that trading as a big fat cash cow, even if
they're making peanuts per trade. I know this next idea will seem insane,
but I wonder if a clearinghouse might be able to exert pressure to make sure
the government doesn't look too closely at this scheme.

jps wrote:
On Tue, 20 Jan 2009 19:20:35 -0500, Keith nuttle
wrote:

Eisboch wrote:
"jps" wrote in message
...

That's what caused $4 gas, not supply/demand. Get an education
please.
Please explain the drop from $140/barrel to $34/barrel when the demand
tanked.

Eisboch
The apparent unlimited supply of gasoline. The price of gas started down
the day after President Bush rescinded clintons off shore drilling ban.
When the apparent supply was severely limited under the ban the price
went up, when the apparent supply became unlimited without the ban the
price went down. Simple economic theory.

Then why were oil prices spiking last summer even as demand had
dropped and supplies were rapidly climbing?

Speculation, and it wasn't the people who store or refine who were
doing it.

Why aren't people speculating now?