Main > Everything Else
Who actually buys crude oil?
MonMotha:
One other thing to remember: the market for crude (and most other commodities, as well) is governed not just by simple supply and demand but also by a little bit of speculation. Everything is done on futures contracts. Basically, somebody is willing to trade the ability to potentially make a lot of money for the ability to know exactly what they'll get paid for something they don't yet have. Crude tends to be traded about a full month ahead of when it is to actually be delivered.
Present supply and demand is a big chunk of what determines the value, but there are also speculators who think that something will happen between now and when the contract is due to be fulfilled. They will bid the contract lower or higher in response. If they get it right, they make a bunch of money. If they get it wrong, they lose a bunch of money. In 2009, speculation was tending to drive prices down below what would have probably been "set" by simple supply/demand (hence <$2/gal gas) on the belief that the economy was going to tank worse and demand would continue to drop. Now, speculation is likely driving the price up on the belief that there will be future supply disruptions due to the various "issues" in the middle east (where a lot of oil comes from).
In a nutshell, you get to pay more for gas NOW so that some billionaire financier can make a bunch of extra money with little risk (since ol' Uncle Sam will apparently bail him/her out if he/she screws up) on the assumption that oil will cost more a month from now. Fun, eh?
Kevin Mullins:
--- Quote from: MonMotha on March 05, 2011, 03:08:24 pm ---In a nutshell, you get to pay more for gas NOW so that some billionaire financier can make a bunch of extra money with little risk (since ol' Uncle Sam will apparently bail him/her out if he/she screws up) on the assumption that oil will cost more a month from now. Fun, eh?
--- End quote ---
And regardless of what (i.e. nothing) happens these companies will just go on about their merry way as if nothing happened to you and I as well.... and then the cycle will come back around and begin again.....for no real reason.
Ed_McCarron:
I keep waiting for the gov't to declare gas a necessity and start regulating it's pricing or cutting the taxes on it.
What? It could happen. :laugh2:
t3design:
Not sure if gas is necessity, but beer certainly is. :cheers:
Ed_McCarron:
--- Quote from: t3design on March 06, 2011, 12:58:18 am ---Not sure if gas is necessity
--- End quote ---
Most people can't get to work without it. It's easily as much of a necessity as toilet paper.
Navigation
[0] Message Index
[#] Next page
[*] Previous page
Go to full version