It's turned into a long war of attrition. Common terms and phrases.
The drastic rise in the price of oil and gasoline is in part the jesse broulette of forces beyond our control: As high-growth countries like China and India increase the demand for petroleum, the price will go up. But there are factors contributing to the high price of oil that we can do something about. Chief among them is the effect of "pure" speculators -- investors who gambling golf line and sell oil futures but never take physical possession of actual barrels of oil.
These middlemen add little value and lots of cost as they bid up the price of oil in pursuit of financial gain. Today, speculators dominate the trading of oil futures. According to Congressional testimony by the commodities specialist Michael W. Masters inthe oil futures markets routinely trade more than 1 billion barrels of oil per day. That estimate is bolstered by a recent report from the Federal Reserve Bank of St.
Many economists contend that speculation on oil futures is a good thing, because it increases liquidity and better distributes risk, allowing refiners, producers, wholesalers and consumers like airlines to "hedge" their positions more efficiently, protecting themselves against unseen future shifts in the price of oil.
But it's one thing to have a trading system in which oil industry players place strategic bets on where prices will be months into the future; it's another thing to have a system in which hedge funds and bankers pump billions of purely speculative dollars into commodity exchanges, chasing a limited number of barrels and driving up the price. The same concern explains why the United States government placed limits on pure speculators in grain exchanges after repeated manipulations of crop prices during the Great Depression.
The market for oil futures differs from the markets for other commodities in the sheer size and scope of trading and in the impact it has on a strategically important resource. There is a fundamental difference between oil futures and, say, orange juice futures.
If orange juice gets too pricey perhaps because of a speculative bubblewe can easily switch to apple juice. The same does not hold with oil. Higher oil prices act like a choke-chain on the economy, dragging down profits for ordinary businesses and depressing investment.
When I started buying and selling oil more than 30 years ago for my nonprofit organisation, speculation wasn't a significant aspect of the industry. But injust a few years after oil futures began trading on the New York Mercantile Exchange, Goldman Sachs made an argument to the Commodity Futures Trading Commission that Wall Street the high cost of gambling on oil who put down big bets on oil should be considered legitimate hedgers and granted an exemption from regulatory limits on their trades.
The Commission granted an exemption that ultimately allowed Goldman Sachs to process billions of dollars in speculative oil trades. Congress was jolted into action when it learned of the full extent of Commodity Futures Trading Commission's lax oversight. This is an important step, but limiting speculators in the oil markets doesn't go far enough. Even with the restrictions currently in place, those eight investment banks alone can severely inflate the price of oil.
Federal legislation should bar pure oil roulette secret entirely from commodity exchanges in the United States. And the United States should use its clout to get European and Asian markets to follow its lead, chasing oil speculators from the world's commodity markets. Eliminating pure speculation on oil futures is a question of fairness.
The choice is between a world of hedge-fund traders who make enormous amounts of money at the expense of people who need to drive their cars and heat their homes, and free roulette software cheat world where the fundamentals the high cost of gambling on oil life the high cost of gambling on oil food, housing, health care, education and energy -- remain affordable for all.
Skip to main content. The roulette and system, a former U. Distributed by the New York Times Syndicate. Click here to download it for your device. The Daily Star Breaking news alert on your phone. Find more information on SMS subscription. Leave your comments Comment Policy. Latest from Star Live. In case you missed it.
A concern for the region. Dragon fruit kindles hope. From land of death, despair. The Joy of Cropping. India keeps off the Bali declaration. Multimedia you may like.The drastic rise in the price of oil and gasoline is in part the result of forces beyond our control: As high-growth countries like China and India. Interesting opinion piece here from the New York times. Thought I'd throw it out there see how people feel. If speculation, as this article say is. When international crude oil prices fell by over $50/barrel between June They can be unscrupulous, at times ruthless, especially when the stakes are high.