The price of Oil

Last summer was a nightmare for American commuters. Avg. price of gas went upto $4.5 per gallon. And by September the bubble started bursting.

Speculators created a media spin convincing us that Demand in China and India caused the price hikes, but not them. And then Media also bought that stupid argument. Media started quoting this Goldman Sachs analyst Arjun Rao as Oracle of Oil.

Post Wall Street collapse, no money available for leverage and speculation. Here we're with $1.6 per gallon price.

There's a report on 60 minutes last night. Here it is.



It's a must watch. And here's the text

Let me reiterate one more time. I'm not a commie and I also believe in free market capitalism. But what happened in the last 8 years ain't free market capitalism. It's an incest relationship of wall street, law makers, regulators and media. Yes, media ain't saint.

Here's a sample report by a senior journalist Jon Birger, who was in bed with speculators industry. And here're some calls made by this this Genius.

I'm glad that all it all ended and hope the new govt ends this Wild Wild west attitude in the market.

Peace.

Stupidest biased article ever read

Read this article this morning. I've to disagree with the writer

Ok I'm not a wall street guy, I'm just an average Indian IT guy with too much negative energy. But this guy is really insulting the readers intelligence.

Let's look at his argument. Since the speculators are not taking the physical delivery of the oil, they're not responsible for the exponential growth in oil prices. But if too much money is chasing too few oil contracts, wouldnt' that raise the price

Say a Goldman sachs guy bought an august's oil futures contract for X dollars for the hedge fund in june. He'll sell the contract to a refienry in the month of June for ...say X+Y dollars. So isn't he making a profit of Y dollars and wouldn't that make a difference in the oil price. Now Y dollars is in billions.

Pardon my french here, but how the F in this world speculators arent' causing the increase. Isn't this taught in Economics 101, too much demand and less supply will increase the price.

Now again a stupid theory that india and china are the reason for oil prices. if demand is increasing at 10% why the prices are increasing at 50% rate.

I've to agree that it's free market economy and every one is in here for profit. Commodities trading has been around for ages, but in the last few years only hedge funds started dumping billions. It wouldn't really matter matter if people are hedging gold and silver. But now the commodities traders are after food supplies and oil futures.

Read the readers comments here
Peace.