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60 Minutes: Oil Prices Manipulated

Discussion in 'Sports and News' started by Boom_70, Jan 11, 2009.

  1. Boom_70

    Boom_70 Well-Known Member

    Interesting segment on 60 Minutes tonight:

  2. GoochMan

    GoochMan Active Member

    If ever there were a time to bring back the public hanging, it was for Ken Lay and those Enron thieves.
    Generally speaking, more and more of these stories are going to come forward. I'm still a bit amazed that Madoff is among the living.
  3. harbinger

    harbinger Member

    So let me get this straight:

    Wall Street speculators, investment banks and hedge funds were responsible for the rise in oil and gas prices ...
    that led the economy to sour ...
    that led to job losses ....
    that led to mortgage failures and the housing bust ...
    that led to the Wall Street collapse ...
    that has left this country with the worst recession since the Great Depression.

  4. Simon_Cowbell

    Simon_Cowbell Active Member

    Well... what a stunner... right up there with the sun coming up in the east.
  5. slappy4428

    slappy4428 Active Member

    Ragu's head just exploded...

    Day ain't over yet...
  6. harbinger

    harbinger Member

    And it's none of our business who Dick Cheney met with when he formed that energy policy.
  7. The Big Ragu

    The Big Ragu Moderator Staff Member

    The thread title is misleading. That link doesn't say the oil commodities market was manipulated.

    There was definitely a bubble in the oil futures market. It definitely popped. It's actually swung too far in the opposite direction on the way down, and as soon as deflation fears die down, the price will begin to rise again. No one thinks twice about it when the price goes way down, though. Where are the calls for regulation now?

    You need speculators to create a futures market. And that speculation means that oil prices will never be purely tied to the supply of oil and the worldwide demand. Why is this shocking to anyone? When oil starts to increase in price again, a major reason will be that investors will be looking to it as an inflation hedge. Those people will be investors, not end users. In other words, speculators. And the run up in price will won't be caused by a shift in supply and demand for oil, although those are the factors that determine long-term prices.

    If you want commodity prices to be tied purely to supply and demand at any given moment -- and not as a long-term proposition, as they generally are -- then you can't have futures markets. Futures market require people who are investing, as well as people who use the commodity. There is no future's market without investors--or speculators.

    When that article pointed out that the price of oil jumped $25 in one day, and that couldn't have been tied to supply and demand, it's like saying when the Dow has a huge run-up in one day there is something not right because all those companies didn't suddenly become way more profitable overnight.

    No one thinks twice about that, though, nor is there anything suspicious about it. Markets react for zillions of reasons in the short-term. Their efficiencies are shown in the longer term, not on a day by day, or sometimes even a month-by-month basis.

    Everyone is focused on oil, because they feel it when the go to the gas tank, but lots of markets behaved similarly. The S&P 500 lost 38 percent in 2008, with some big spikes and a huge sell off at the end of the year. Speculators make up the equity markets also. It's the nature of investing.
  8. HejiraHenry

    HejiraHenry Well-Known Member

    Time for you to take your Bush Derangement Syndrome shots, my friend. They're $20 at the drugstore, just like for the flu. And free on Jan. 20!

    Funny how the mortgage meltdown supposedly demonstrates the need for more government intervention in markets (when the opposite is more likely true) but the "energy crisis" is the result of Big Oil and Big Evil Government being in cahoots.
  9. Boom_70

    Boom_70 Well-Known Member

  10. slappy4428

    slappy4428 Active Member

    Well, it got better.
  11. The Big Ragu

    The Big Ragu Moderator Staff Member

    I was wrong, Boom... I didn't predict the worst financial crisis in living memory.

    At the time I posted that you were posting over and over about manipulation and posting muddled things about speculators that made no sense. The were A implies Z posts, with A and Z having nothing to do with each other.

    The same speculators that were the boogy men last summer are the ones who drove the price down, though. And just as the market got too heated too soon, it has gone lower now than the change in the demand-supply scenario given the recession warrants. Markets move in both directions, is the point, and there is no evidence of any manipulation.

    And yeah, I was wrong in that post, no less wrong than the last time you quoted it. I didn't predict a meltdown in the world's credit markets creating a worldwide recession and taking the energy market with it.
  12. Pete Incaviglia

    Pete Incaviglia Active Member

    My favorite part:

    "From quarter four of '07 until the second quarter of '08 the EIA, the Energy Information Administration, said that supply went up, worldwide supply went up. And worldwide demand went down. So you have supply going up and demand going down, which generally means the price is going down," Masters told Kroft.

    "And this was the period of the spike," Kroft noted.

    "This was the period of the spike," Masters agreed. "So you had the largest price increase in history during a time when actual demand was going down and actual supply was going up during the same period. However, the only thing that makes sense that lifted the price was investor demand."
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