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If you REALLY want to know why gas prices are high....
It's not speculators. Speculators can only move the market temporarily and cannot permanently escape the underlying physical reality of supply and demand.
It's not OPEC. As the Saudis have informed everyone recently, there's certainly no shortage of supply.
It's not The President....at least not directly. Although I do find it curious that the liberal media isn't crucifying him like they did Bush.
It's not even the Congress....although our War/Peace novel of refining requirements and environmental regulations make gasoline more expensive to deliver to the pump for everyone.....and the Federal taxes on each gallon certainly don't help (along with state taxes).
It's the Federal Reserve, Ben Bernanke and his entourage of idiots.....
Here's a chart of the Real Broad Dollar Index (trade weighted).
Ask your illustrious President (who recently "campaigned" at a town hall meeting) who's trying to hide the Fed's role by blaming evil speculators....why EVERYTHING is more expensive now.
Do yourself a favor, check the price of coffee. Soybeans. Wheat. Corn. Pork. Beef. Milk. Steel. Aluminum. Gold.
What you'll find is that these evil speculators must be VERY busy, because everything is more expensive today....
But still, the Federal Reserve is convinced there's no inflation when it's obvious that everyone in America is paying more for everything.
When will Americans WAKE UP. The Fed is one of the chief culprits of the mess we're in.
A recent Freedom of Information Act suit against the Fed, (where we basically had to sue the effing morons to get them to release who they're giving these $Trillions to) revealed that not only is the Fed systematically crushing the dollar, but they're financing foreign banks and countries (like Lybia that's supposed to be on economic sanctions via UN resolution) while US banks were failing.
I'm certainly not an elitist, but damn we are a country of uneducated, apathetic morons. I guess if people can come home from their crap-slave job and play Wii golf and watch dancing with the stars, they really don't care
Combine the Fed's reckless policies with our political leaders inability to even give any glimmer of hope of derailing the runaway train that is our debt and you have the international faith in our dollar at an all time low.
So if you want to know why going to the gas pump is a crotch kicking contest (where you get to go second), then don't believe the hype. It's not speculators. It's not OPEC. It's the Fed and Ben Bernanke.
While I don't totally disagree with your conclusion, I would argue that the speculator does play some role in this as well as OPEC (they are a cartel and turn the valves to suit thier $ wants).
I agree that both play a role, but in this situation, with a broad increase in ALL commodities, it's difficult to say the significant driver in oil prices is OPEC or speculators.
If that assumption were correct, it would follow that OPEC was somehow manipulating ALL commodities markets (corn, wheat, cocoa, orange juice, pork, beef, gold, silver, etc, etc,) and that speculators are just running rampant in all markets, neither of which is a very strong argument.
The plain fact is that EVERYTHING costs more now, not just gasoline...and for Obama to try to deflect blame away from Bernanke, just shows how dumb the American people are.
You could eliminate speculators from the equation by reducing the markets to spot and futures for only consumers and end users, but I think in the end, you'll still find the problem is still there......higher prices.
Speculators add to the volitility/liquidity, and OPEC isn't squeeky clean, but as the Saudis have pointed out, there's no shortage of supply. OPEC isn't manipulating in this instant.
The culprit is the weakened dollar and the main reason for that is our jacked up monetary policy and the minor reason is our elected leaderships' continued failure to reign in spending/debt. As a result, people are losing confidence in our $ and our ability to make good on our obligations, which is why S/P is threatening to downgrade our bonds and why our $ is becoming worthless and why everything is costing us more dollars to purchase.
There are some major flaws in the logic presented in that article:
1) "Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities," he argues. "Not by companies that need oil, not by the airlines, not by the oil companies. But by investors who profit money from their speculative positions."
Apparently the reader is supposed to believe that these speculators are long Crude oil and holding their positions steady month to month. Um really? Since we are all speculators on this forum perhaps you can tell me who exactly trades like this. I knew guys who did that 10-20 years ago. But almost no one trades that way now. Why? Overnight volatility and choppier trends on longer timeframes. Can it still be done? Sure. Is that how the majority of speculators trade. Unlikely.
2) He asks: "Who is buying 287,494 contracts (1,000 barrels per contract) for May delivery that can't possibly be delivered for $2.49 more than they were priced the day before? These are the kind of questions that you would think regulators would be asking – if we had any."
Even though Phil in the article is supposed to be some stock guru he clearly doesn't understand free market economics. One of the primary purposes of a futures contract is to hedge against future prices. If oil prices in the futures market are going up firms that produce goods from crude oil and are concerned about futures prices will buy crude futures. It's an insurance against the risk of future price spikes. They are willing to pay a premium to ensure against future risk.
Pretty ironic that a site called "Zero Hedge" doesn't understanding basic futures hedging principals.
when it's obvious that everyone in America is paying more for everything.
