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Oil Futures

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HiTech

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Man oh man I wish these idiots who have the power to screw around with oil futures would just calm down and not get all fidgidy every time there is less than a slight hint of a confrontation in the Middle East. Those screwballs are the main reason for the chronic fluctuations in fuel prices. I swear that everytime a bullet is fired from an Arab's AK-47, they switch to panic mode and start driving up oil prices.:mad:
 
The futures can be voliatile, that's fine since it's not real. What ticks me off is the gas stations being super sensitive to minor changes in the oil future price. It's not like the future price is what they're currently paying for oil, or are ever likely to pay, thanks to distributor contracts, not to mention they're selling refined stock not crude oil. It is amazing there is no 'slack' in the supply chain... Daddy War-Bucks twitches the chain on one end with crude futures, and thanks to constructive interference from wave propagation along the chain, we get a 25 cent increase followed by a 5 cent decrease at the pumps.
 
Would y'all like to imagine a world in which the futures market did not exist at all? Wholesale producers and consumers of all kinds of commodities would have to bear the risk of price fluctuations. Says me there would be no food on grocery store shelves, or lumber to build houses, or fuel to power cars and generate electricity.

You should be careful what you wish for since you just might get it.

Homework Question:
What two kinds of market participants make a futures market possible?
 
I'm not saying to dissolve the futures market, but rather those that are involved in it should be less twitchy. Then again, I don't know the very details of it all, I admit.
 
With fortunes to be made and lost I'd be a little twitchy if it was my money on the line. The answer to the homework question is that there are hedgers and speculators. Speculators assume the pricing risks that the hedgers wish to avoid. There just is no better mechanism to eliminate the possibility of arbitrage and assure fair pricing than an efficient futures market. If you have one, a Nobel in economics will be your reward.
 
Wow, after reading all that I see the makings of a fine upstanding citizen to fill the new government position of Secretary of the Economy, or Secretary of the Future.;)
 
Except that governments inevitably screw things up as opposed to making them better. I'm just a good 'ole free market capitalist. IMHO the best government is limited.
 
Good 'ole free market capitalism created the tobacco industry. Then again a perfectly good idea like communism (which really is an ideal form of government) has been completely ruined by every practical attempt at implementing it, due to the fact that it was implemented by people with ulterior motives. That's why I'm firmly a passive Anarchist =) Let the world do whatever it wants and try to make the best of whatever the current system has to offer. If the government ever really gets bad enough enough I might move to a more active Anarchistic stance but I don't see that happening in my lifetime. Roosevelt said it well with "Speak softly and carry a big stick."
 
Sceadwian said:
Good 'ole free market capitalism created the tobacco industry. "

...and the automobile industry
... and the movie industry
... and the airline industry
... and the electronics industry
... and the widget industry, and just about anything else you want to mention. Didn't necessarily invent those things, just made them better to serve more people so they can sit in their world-wide McDonalds eating french fries and drinking Cokes while they bad-mouth Uncle Sam Givaway.

I grant you one thing - Teddy R. was right, and we should pull out and let the third world get along as best it can. Talk about doing their homework!!!
 
I make no apologies for my opinions. The world is what it is, and I'll be damned if I can do anything about it.
 
That's the great thing about opinions Papa, everyone is allowed to have one, and by large and far everyone is allowed to express it. Just keep in mind a direct rebuke or disagreement with your opinion should never be taken personally or seriously. After all, the fastest way to get someone to disagree with you is to state something as absolute fact.
 
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