"Cole Firearms Inc." <colefirearms11@[EMAIL PROTECTED]
> wrote in message
news:xk8Wj.399$qH4.383@[EMAIL PROTECTED]
> The links in the piece can be found here:
> http://johnrlott.tripod.com/op-eds/FoxNewsDefSpeculators051208.html
> This piece is mistitled.
>
> Article published Monday, May 12, 2008, at Fox News.
>
> High Gas Prices Are Not Something New
>
> By John R. Lott, Jr.
>
> With oil prices closing above $125 a barrel of oil on Friday, angry
> politicians are blaming the higher prices on everything from
> speculators to greedy oil companies. Last week some Democratic
> Senators demanded "urgent action . . . to adequately investigate
> whether speculators are driving up prices."
>
> Democrats are proposing to protect the American people from "greedy
> oil traders who manipulate the market." Senator Barack Obama wants
> price gouging by oil companies to be a federal crime.
>
> Everyone wants lower prices, but many politicians seem unable to
> understand that speculators actually smooth out wild swings in prices.
**Bull****. For an alleged economist, you know ****-all about speculators.
Speculators WANT wild fluctuations in prices. The bigger the fluctuation,
the bigger their profits. It matters not if the price rises or falls. They
can sell short during falls and buy during rises. Either way, they make
money. Leveraging ensures that profits can be spectacular.
> Speculators make profits by buying oil when the price is low and
> selling it when it is high, and doing that protects consumers.
**Yes. However, speculators can make money, regardless of which way the
market goes. They have ZERO interest in keeping prices low (or high). They
only care about the movements. The bigger the movement, the bigger the
profit. One would think, that as an economist, you would know this stuff.
Share traders have been doing this for decades.
> Tensions rose last week because of Venezuela financing Columbian
> terrorists. Columbia looked like it might retaliate and send troops
> into Venezuela, the world's sixth largest oil ex****ter.
>
> There was an obvious risk that Venezuela's oil ex****ts could be
> stopped. Oil prices increased immediately. They didn't wait for the
> war to actually break out. By buying oil now in order to set it aside
> if supplies are interrupted if the conflict escalates, is good for
> consumers. Storing oil for then will prevent what would have been even
> higher prices. Politicians obviously thought speculators were
> unjustified to start bidding up prices. After all, war might never
> occur. Yet, if speculators didn't do that and Venezuela's ****pments
> are halted, the much bigger increase in oil prices would surely cause
> politicians to really call for the scalps of everyone in the oil
> business.
>
> The speculators are taking a real risk with their own money.
**Not all of them. In fact, not even most of them. Banks, superannuation
funds and other entities are all involved in speculating on oil prices.
If no war
> occurs and prices fall, few in congress are going to shed tears over
> the money that the speculators would lose.
**There is no evidence that they would, necessarily, lose. Which you
SHOULD
know. It is the movement that matters, not the absolute price of whatever
commodity is being traded.
If war breaks out and
> prices only rise a fraction of what they otherwise would have gone up,
> who is going to thank the speculators for a job well done?
**The speculators do nothing to help anyone, but themselves and their
employers. It's just gambling, for ****'s sake. They know the risks.
>
> Speculators are actually extremely accurate in predicting the future.
**Some are. Some aren't. As you SHOULD know: For every winner, there must
be
an equivalent loser. Think of it this way (why do I need to explain this
stuff an economist, for ****'s sake?):
If a speculator thinks prices will rise, he buys. The speculator who
sells,
then loses potential profits as a consquence. If a speculator thinks
prices
will fall, he sells. The speculator who buys, then loses, because he pays
too much.
> But it is not just in oil prices.
**Indeed. Currencies, ****k bellies, wheat futures, gold, silver, etc. They
all work the same way. Someone wins, someone loses. The consumer of those
commodities hardly ever gains.
Trevor Wilson
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