the single most effective thing we could do

[johnpr]

Originally Posted by Otto

About half the price of oil today is the result of such contrived speculation, as opposed to supply vs. demand. Similar story with corn, wheat, etc., which explains food riots in Cairo, and kids eating mudpies in Haiti.

i agree, speculation realy does kill prices.

[ttoyoda]

And, while pondering hair-shirts, go on the NPR website for the Diane Rehm show of Monday or Tuesday of this week, and listen to how your gummit allows regulators in the UK and Dubai regulate the commodity trade of west Texas crude in THIS country,

I am going to take your word for it. My doctor wants me to keep my BP down, and the more I learn, the harder that is to do.

[LostCause]

Originally Posted by Otto

About half the price of oil today is the result of such contrived speculation, as opposed to supply vs. demand. Similar story with corn, wheat, etc., which explains food riots in Cairo, and kids eating mudpies in Haiti.

It's called inflation. Commodities seem more expensive because the dollar has significantly devalued. It's the price to pay to avoid economic catastrophe following dishonest lending.

Speculation is going on, but I wouldn't claim it to be the driving factor.

- LostCause

[Otto]

Originally Posted by LostCause

It's called inflation. Commodities seem more expensive because the dollar has significantly devalued. It's the price to pay to avoid economic catastrophe following dishonest lending.

Speculation is going on, but I wouldn't claim it to be the driving factor.

- LostCause

There's more to it than dollar devaluation, which is a major but not the only component. Increasing demand in the face of relatively fixed supply is another major factor.

Trouble is, the commodity speculators including hedge funds and Goldman Sachs are manipulating the market and hording, or otherwise generating a self-fulfilling prophesy to their own advantage. Some economists attribute this additional pressure to account for ~30% of currently high prices.

OTOH, the speculators may get their asses handed to them if prices head south as the speculative bubble bursts. Then, they'll be trampling all over each other heading for the exits, so as to avoid being stuck with inventory they cannot unload. Markets go down a lot faster than they go up, as fear motivates better than greed.

Go on NPR and listen to the Diane Rehm show on Monday or Tuesday of this week, for an expert explanation.

[Duffman]

Originally Posted by Otto

OTOH, the speculators may get their asses handed to them if prices head south as the speculative bubble bursts. Then, they'll be trampling all over each other heading for the exits, so as to avoid being stuck with inventory they cannot unload. Markets go down a lot faster than they go up, as fear motivates better than greed.

I still question the speculation, you can only speculate prices up for so far and for so long before someone kicks the legs out of your house of cards. Artificially high prices encourage suppliers to operate at full bore and consumers will eventually say no more and stop consuming (realistically a significant reduction). At some point the S=D equation will become out of whack and prices crash. IMO if prices survive the July-August vacation period there is no significant level of speculation involved.

[Otto]

[QUOTE=Duffman;34631]I still question the speculation, you can only speculate prices up for so far and for so long before someone kicks the legs out of your house of cards. Artificially high prices encourage suppliers to operate at full bore and consumers will eventually say no more and stop consuming (realistically a significant reduction). At some point the S=D equation will become out of whack and prices crash. IMO if prices survive the July-August vacation period there is no significant level of speculation involved.[/QUOTE

That's essentially what I just said in the paragraph you quoted. Hedge funds with megabucks are into this, and only have to put up ~7% to hold a chunk of production. Goldman Sachs et al get away with this because their people run our government. Just look where a slew of our Treasury secretaries have come from over the past several decades. Listen to the Diane Rehm show on NPR as noted in prior post.

[diesel_john]

wow we'ave covered alot of ground in this post

diesel is a relative term. diesels can burn anything from wood smoke to lard, and that includes NG, gasoline, methane. so its not us and them, its we. spark ignition engines can be made more efficient, just direct inject the fuel slowly.
Don't get hung up on your grandpa's diesel fuel on account of they don't make it no more in this country. ULSD is not your father's diesel either. folks diesel fuel will soon be more like gasoline and gasoline will be more like diesel so you can direct inject it.

the housing bubble popped
the commodities bubble will pop
the inflation bubble will pop
and then we get to start over with some other cycle.

don't know where you 'll are at, but here the uneducated kids are still getting killed quite regular. if the law don't get them, the mountain will.

don't worry there will be higher margin requirements imposed,
the only problem is that will make it harder for the producers and the processors to hedge their positions, thereby negating the reason for the commodity futures markets in the first place. baby-bathwater.

the housing bubble occurred because someone thought that they could get rich by buying more house than they needed, and the government subsidized the whole bubble by allowing people to deduct the interest on their income tax.

watch the cycles, learn the cycles, time the cycles to your advantage, do not let what other people are doing influence what you do. be a contrarian, many of you are. amen

[hunkybizkit]

the problem with diesel in the USA is so many damn rigs on the highway. too much shipping of small loads in vehicles that get 5mpg -- 18 wheelers. trains are about 10 times more fuel efficient.
the convenience of mail order in the USA is our downfall. delivery trucks abound, and trucking companies are too plentiful. not to mention FedEx, UPS, etc shipping things overnight by Jet. ... no wonder we use so much crude oil.
a change in shipping choices by consumers (you and i) would alleviate the rising cost.
DONT do overnight shipping. it is by far the worst. purchase things from companies nearer to you than farther away. if you live in new jersey, buy things from the east coast instead of the west coast if possible.
how about avoiding products made in china? over 80% of goods in Walmart is made in china. look at the labels if you dont believe me. i would be curious to see how much fuel walmart trucks use in 1 year.

[skyl4rk]

The single most effective thing we could do is for each household to choose to live within bicycle distance from work and shopping.

[Otto]

Diesel John, I'd like to get your farmer's perspective on a couple of things:

First, you mention the commodity problems with buying farmer's crops later this year. Can you elaborate on that?

Second, Oregon State University is doing algae biodiesel research, with an eye to local production and consumption by farmers such that the stuff does not need to be shipped and distributed around the planet.

See: http://www.wired.com/techbiz/media/news/2006/04/70702

I'd be curious that if such a device worked, how would farmers react to the idea of making their own fuel on-site or in the immediate neighborhood.