Comments | peak_oil: Don't Panic??

theheretic in peak_oil

Don't Panic??

Jun 02, 2012 09:56

Oil is down $3.30/bbl to $83.23. The DJIA is down 274 points which is quite a few. This is the sort of crash you expect from full disaster, the likes of which we have with the end of the EU. Of course, if it drops another 1000 points to 10,000-some then I'd say its really crashed. This is more like a small adjustment. It is really interesting to ( Read more... )

Comments 3

ledzilla June 2 2012, 18:55:01 UTC

Speculators bought a bunch of gas believing the US was going to attack Iran soon. Now they have to sell that gas because it's going to get old in another few months. I like watching speculators take a beating, that is the reason for high gas prices, speculation.

theheretic June 2 2012, 19:12:44 UTC

Speculators. The old saw. I have to say, given years of observations, that the "speculators" claim wears VERY thin. At this point anyone claiming "speculators" is immediately suspected of very PARTISAN leanings. Old hands like those of us from this group prior to the current presidential officeholder are a bit cynical to newbies chanting the old words, pretending that will distract us from reality.

The reality is as I've said. The price falls because the Euro is ending. The price will rise because the Saudi bastards of OPEC will cut production. This is how it really is. It is not "Speculators".

ford_prefect42 June 2 2012, 19:34:27 UTC

Actually, speculators serve a very important market niche reducing volatility.

If speculators buy high, and sell low, then they go out of business. Rule 1 of speculation is "buy low, sell high".

That means that when prices are low (excess supply), the speculators take a good deal of it off the market, thus preventing the price from dropping below production cost, keeping production companies from going bankrupt. When prices are high (short supply), the speculators release the stock they purchased during the times of abundance, thus driving the price down.

When prices are high, you should thank the "speculators" for the fact that it isn't higher. When prices are low, you should thank speculators for seeing to it that there aren't supply disruptions when demand increases.