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...

"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.

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.

"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.

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