Isn't this a much bigger source of the oil price problem than anyone gives it credit to be?
We all want to blame the oil companies trying to make a buck, some want to blame the Arabs, some know that the demand in oil consumption of countries like China and India is increasing the price and that supply is off because of instability in Nigeria and the lunatic in Venezuela. But very few are taking into account the commodities speculators on Wall Street who are making money hand over fist betting on the flow of oil. Is there a way that we could take them out of the equation and bring the price down to a sensible level?
March 24th, 2010 at 5:06 pm
If speculative trade was out of the picture, not ony would oil be around 60-$70 a barrel, but food prices would be much lower to.
But the right will always blame everyone other than the people making money. Not sure how that logic works, because if you are making money on something, you have to be increasing the price from what you obtained it for.
i tell people what you suggested all the time, and get mad thumb-downs from cons who want to blame everything but the realistic problem.
March 24th, 2010 at 5:06 pm
Another source of the problem is the declining value of the dollar.
Everytime the privately-owned Federal Reserve cuts interest rates and prints money out of thin air, the value of our money declines. And has done so by 35% since 2001.
Yet nobody talks about reigning in the Federal Reserve. I think it is time for the Federal Govt. to seize the bank and nationalize it.
March 24th, 2010 at 5:06 pm
Its a combination more of the falling dollar, rising inflation and stagnant wages…
Not only are most people still earning a pay similar to their 2002 level, but the dollar’s value is dropping meaning that salary is even less than what it was in 2002. Couple that with inflation and you have two negative factors sinking our dollar.
take away the dropping dollar and its not nearly as bad as it is today because people are still getting by…..increase wages helps even more because then people are getting a little bit ahead versus treading water with a weaker dollar.
March 24th, 2010 at 5:06 pm
You hit the nail on the head.
March 24th, 2010 at 5:06 pm
Commodity speculation has always been part of the process true enough but it’s not the underlying reason. Wall Street knows like you do the dollar isn’t going anywhere but down and they’re betting on it since oil is an import.
More important Americans have a sad tendency to use misdirection or dance around a problem as opposed to actually addressing an issue.
Like the other poster said about the declining dollar. It’s easier to let the populace think they’re getting gouged by the oil companies and to some degree they are as opposed to a $10 TRILLION debt being the real cause. Look at the show Congress put on by hauling in the oil company execs. Not one mentioned the falling dollar and God forbid anything was said about the undeserved tax breaks. Congress knew the root cause but it gave the false impression of actual concern.
See some of my other answers. I’m constantly talking about that deficit as well as the 2 bombers that crashed at $1.483 BILLION total.
March 24th, 2010 at 5:06 pm
That is a very large part of the cost of oil. I have read that it is about $20 – $25 per barrel. The problem with the commodity markets is that there is too much investment capital out there and not enough places to invest it. It’s another aspect of supply and demand. If you think oil prices are crazy, track the price of Copper or Nickel.
I don’t think you can remove oil from the commodities market. Even currency is traded like a commodity. The only way to reduce demand is with high prices. Alternative energy sources are only viable in a high priced market as well.
The only answer I see is to develop these new alternative energy sources. By diversifying our sources of energy we would reduce the importance of oil in the overall energy equation. This would reduce the margin the speculators can demand.