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Old 03-12-2008, 08:38 PM   #29 (permalink)
ASU2003
immoral minority
 
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Location: Back in Ohio
Quote:
Originally Posted by aceventura3
The point was that "speculators" don't drive the price of oil, they just "communicate" the price of oil.
A few speculators don't drive the price, but when there are enough to buy up any new source of commodity right when it hits the market, they can set the price they want to sell it at. Which is usually the highest price people are willing to pay.

And if you get big companies talking to big finacial institutions that control lots of money, it doesn't seem to hard to guess that both of them want to make as much money as possible anyway they can.

This is the way I see it happening, which may or may not be exactly right. In the past you had one oil company producing so many gallons of gas a day at $1, and people bought every gallon of gas that was produced at $1.25. Then some finanacial people came in and said, let's sell this on the open market. So they came in and started buying gallons at $2 (which the oil companies loved), but they weren't going to use it, and as long as demand for oil stayed constant or went up, everyone else would have to pay $2.25 because that is what the financial institutions would sell their gas at. However, they could easily say, we don't want to sell our gas yet, and since we are limiting supply entering the market, the price will go up. And then they can just sit back and watch the price go up, since it doesn't look like there is much oil coming into the market, but demand will still be high for quite some time.

Last edited by ASU2003; 03-12-2008 at 08:40 PM..
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