"BAR" wrote in message
...
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the day after President Bush rescinded clintons off shore drilling ban.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?


If it really has slowed down, it could be due to lack of funds for margin
trading.

On Tue, 20 Jan 2009 20:51:24 -0500, "JoeSpareBedroom"
wrote:

"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.

Actually it wasn't peanuts - it was a fairly substantial piece of GS's
business model - they had both sides of the trade including the margin
loans.

Had traders coming, going and everywhere in between.

And that doesn't include their own trading and analysis desks.

When the history of this bubble is written, it's going to have GS's
name all over it.

--

"Far better it is to dare mighty things,
to win glorious triumphs even though
checkered by failure, than to rank with
those poor spirits who neither enjoy nor
suffer much because they live in the gray
twilight that knows neither victory nor
defeat."

Theodore Roosevelt

On Tue, 20 Jan 2009 21:06:13 -0500, BAR wrote:

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?

Ever heard the term bubble?

Did folks continue to invest in .coms after the bubble burst?

Are people rushing into the landholding business right now?

Think there's a lot of liquidity out there for investing?

On Wed, 21 Jan 2009 00:39:31 GMT, Wizard of Woodstock
wrote:

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.

Hooray! Are you listening Eisboch? Thanks Tom.

jps wrote:
On Wed, 21 Jan 2009 00:39:31 GMT, Wizard of Woodstock
wrote:

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.

Hooray! Are you listening Eisboch? Thanks Tom.


When I stopped by the bank Saturday, I think the mortgage rate
chalkboard said standard second trust mortgages could be had for a 4.1%
fixed rate. Anyone dumb enough to still have confidence in the stock,
commodity or futures markets could take out a big second trust and
speculate to their heart's content.

jps wrote:
On Tue, 20 Jan 2009 21:06:13 -0500, BAR wrote:

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?

Ever heard the term bubble?

I remember when the Internet bubble started to burst, December 1999, and
when it fully burst March 2000.

Did folks continue to invest in .coms after the bubble burst?

Yes they did and they still do.

Are people rushing into the landholding business right now?

The smart ones are. Real estate is cheap right now.

Think there's a lot of liquidity out there for investing?

Depends upon what you are invested in.