*YOU* are responsible for high gas prices

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On Fri, 23 Mar 2012 07:15:42 -0500, The Daring Dufas

Having the EN&T specialist play around in there sounds a lot safer for the ear drum, and some other delicate machinery in there, than a quick pass with the Hoover.
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On 3/24/2012 3:54 PM, snipped-for-privacy@att.bizzzzzzzzzzzz wrote:

All I know is from my own personal experience. It works, your eyes may sink into your skull a bit but will eventually pop back out the first time you experience any constipation. ^_^
TDD
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On 3/23/2012 7:30 AM, Kurt Ullman wrote:

I snort water from the shower head too, it does help. ^_^
TDD
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Han wrote:

If you put water, hot or cold, up your nose you can die from an aquatic amoeba that eats your brain.
"(CNN) -- It's eerie but it's true: Three people have died this summer after suffering rare infections from a waterborne amoeba that destroys the brain. "
http://www.cnn.com/2011/HEALTH/08/17/amoeba.kids.deaths/index.html
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I've used just saline nose drops, in the past. It works well for cleaning the nose out, too. It's a lot less painful than "Hoovering" the nose, I would think! ;-)
The doc gave me a steroid nose spray, today, and changed the antibiotic. This one is weird; two the first day, then one a day for four. He said it says in the system for ten days after. We'll see if it can knock this thing out.

Actually, most of the congestion and drip is gone. I still have sinus pressure, something going on with the ears, and can't talk, very little drip and I'm not coughing up anything.
The doc told me that, with the new antibiotic, it should be 50% better in four or five days, or come back. I won't be back in town until next Saturday, maybe, so...
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Sounds like a Z-pack. My kid thinks they are a wonder drug for sinus infections.
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Yeah, I think that's what the doc called it. The antibiotic is Azithromycin on a pop-out card, with the pills marked for days. On day two, my ears and throat still feel like ground beef.
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Hedging and gambling, right?

No, I didn't know that, and perhaps it's a good thing, right?

You're right, it isn't simple, but you do know that false rumors have affected the price of oil, right? Such as the false claim that there was an explosion/breach of a Saudi pipeline recently?

Right.
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Han
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Which doesn't address the core issue, which is evidence to support the claim being made that it's speculators that are keeping up the price of oil.

It also goes directly against the theory that speculators are deliberately manipulating the oil futures market. Here's the data from the latest CFTC report from Mar 6:
Long # % Short # %
Producers/Users 256,000 51 16 330,000 52 21
Swap Dealers 125,000 17 8 324,000 29 20
Managed Money 255,000 85 16 46,000 32 3
Others req to report 141,000 60 9 114,000 47 7 eg large specs
Total contracts outstanding is 1,580,000 which represents about 20 days worth of worldwide production.
Long/Short is the number of contracts currently held
# is the number of traders reporting in that position category
% is the percentage of all the contracts outstanding that category represents
You tell me how from any of that you can deduce that speculators are what is driving the price of oil.

So, what? False rumors have been knows to effect the price of all kinds of things.

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Unfortunately your definiton of speculating is not consistent with any accepted definition. Neither the common usage nor the usage as defined in the futures markets require that a speculator have any inside information. Perhaps that's where you've gone wrong.
A speculator as pertinent to this discussion is simply someone who takes a position in the futures market on the belief that the market is going to move one way or the other so that they can profit. A hedger is someone that enters the futures market to offset a risk they have in their business or financial interest.
Examples:
George thinks the price of soybeans is headed higher and wants to profit from it. He goes long 5 November futures contracts, covering 25,000 bushels.
Stan, a farmer in Illinois, is happy with the current price of soybeans and doesn't want to risk it going down before he harvests and sells his crop. He sells 5 Novemeber futures contracts.
Stan, the hedger has just transferred the risk to George, the speculator. Nothing at all to do with inside information, market manipulation or anything sinister.

Sure there is nervousness. If it's nervousness that's a problem, then we might as well just shut down all the worlds finanacial markets.
The obvious problem with the nervousness makes oil go up theory is there are speculators and hedgers on BOTH sides of the market. There are speculators long and speculators short. So, for this "nervousness" to translate into marching prices up, somehow the ones on the long side would have to be doing one hell of a lot better job than the ones on the short side. And while the prices are being worked up through nervousness, the hedgers, ie oil producers, would have to decide not to take advantage of those prices going higher, ie they would have to sit on their hands instead of profitting by selling into the increased prices that they as producers should know are not real and sustainable. Instead, if at least some of them behave rationally, then as the prices try to move higher, they have difficulty doing so because the oil producers sell into the rally. You;d have speculators buying and the oil producers, the really smart money giving them all they want until they choke.

That was the whole point. lol
Actually, wrapping screwed it all up. If you want, here's the CFTC Committment of Traders Report that shows the positions in all the futures markets held by anyone that has more than the reporting limit in number of contracts.
http://www.cftc.gov/files/dea/cotarchives/2012/futures/petroleum_sf030612.htm
Light sweet crude is the oil contract of interest.
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wrote in

You've gotten Trader to admit that there has to be regulation on free markets to prevent people from doing serious economic harm. Bravo, Han. (-:
The numbers speak volumes about how different the current oil market is from 8 or 10 years ago:
<<In a five year period, Masters said the amount of money institutional investors, hedge funds, and the big Wall Street banks had placed in the commodities markets went from $13 billion to $300 billion. Last year, 27 barrels of crude were being traded every day on the New York Mercantile Exchange for every one barrel of oil that was actually being consumed in the United States.>> source:
http://www.cbsnews.com/2100-18560_162-4707770.html
Twenty-seven speculative transactions for every barrel of oil actually consumed. Two thousand years ago the Romans realized the dangers of speculation in "lifeline" commodities and made certain attempts to rig market prices of grain punishable by death. In their time, the most important commodity was bread. In ours, it's oil.
<<In its 2009 Trade and Development Report, the United Nations Conference on Trade and Development (UNCTAD) contends that the massive in?ow of fund money has caused commodity futures markets to fail the "ef?cient market" hypothesis, as the purchase and sale of commodity futures by swap dealers and index funds is entirely unrelated to market supply and demand fundamentals, but depends rather on the funds' ability to attract subscribers..>> source: http://www.nakedcapitalism.com/2011/02/why-the-krugman-i-see-no-commodities-speculation-analysis-is-flawed.html
What they're saying is that the current speculative environment is now entirely different than the one that originally evolved to limit risk to farmers and other commodity producers. Now it's overrun with investors looking to make a killing, not as a legitimate way to hedge risks. Where does the money they make come from? Your wallet at the gas pump. The higher speculators can drive prices for something vital to the economy (that people can't put off buying for very long) the more money they can make. When speculators make a killing, they can take those earnings and use them to drive up prices of other commodities. even further.
-- Bobby G.
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Since oil is fungible and a world-wide market, this is a bogus stat. The REALLY interesting one would how many are traded worldwide versus how many are use worldwide.

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wrote:

I had to look up fungible, and I'm not sure I fully understand anything more than a version of "easily substituted". Statistics are always suspect, since we usually don't know all the premises and limitations to the calculations. But bogus is too strong a word, IMO.
Nevertheless, since the US share of the world oil market is in the order of 25%, substantially more than the ~4% as the 27-fold multiple of trades over uses of 1 barrel suggests, the much repeated selling of that same barrel of oil seems excessive. In the aggregate and on average such trading cannot possibly reduce the average price of oil, since every trade costs something.
So, yes the trading functions a bit to hedge and keep the prices in a free market range, but that range is increased by the speculation.
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Han
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And your definitive proof for that would be? Crickets. Have you ever traded a single futures contract? I can just as easily make a case that speculation decreases the range. Again, there are speculators ON BOTH SIDES, LONG and SHORT. You raised the example of rumors moving the market. Let's say oil was at $100 and some rumor starts moving it to $103. There are speculators that have been around for decades. They know that most of these rumors are just that, rumors. So, seeing it move up $3, they now have an opportunity to short it, expecting it to move back down. Later in the day, the price settles back to $102 and the speculator covers the short, taking his profit. That action lessens the price move. It's also what a huge amount of that volume is all about.
Regarding daily volume in futures, you've got it all wrong. First, the CBS comparison of futures volume versus US usage, as Kurt pointed out, is totally bogus. Oil is a worldwide market, people use oil all over the world. Participants in the US futures market are all over the world and they will continue to be, unless we let you drive them out. In which case, the business will just move to a more friendly country where perhaps it will be less regulated. How would you like that?
If you compare the futures volume to worldwide production, about a weeks worth of contracts change hands each day. So, for CBS, the correct ratio is not 27:1 but more like 7:1. Now it's kind of odd that someone who AFAIK has never traded a single futures contract of any kind would know what the "right" volume should be. But tell us, what is the right number from your magic ball?
What you have backwards here is that volume is a bad thing. It's a very good thing that leads to efficient pricing and liquidity. Let's say you need to sell 1000 shares of a stock first thing Monday morning. Which market would you rather that stock be in? The pink sheets of stocks where if you're lucky, they might trade a few thousand shares a day? Or would you want it to be one of the NASDAQ stocks where they do millions of shares a day? In the latter case, you could enter a market order, have it filled in a second at a fair price. Try that in the other market and see what happens. The more activity you have in a trading environment, the better.
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wrote:

I am focusing on the example you give above. The rumor that ups the price to $103, the speculator shorting it, and then the price falling back to $102, from the initial $100. Seems to me there is a net increase in this example and also a cost of trading. Or is all that trading back and forth free? It may be a small amount, but there is a cost, and it all adds up. Maybe that is why the price always goes up fast, and comes down slow.
And you're right, I am leery of sticking my neck out and going into futures. So I know nothing about it ...
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Han
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It's hard to estimate what effect speculation has on a market. The speculator/business lock ratio on oil has flipped from 1:2 to 2:1 in the past ten years or so. One thing to consider is the massive amounts of money available to speculators, the various hedge instruments available to offset or dampen losses, and tax strategies. Most price-setting is determined by computer algorithms. The Borg is here. I traded various futures for a couple decades. Nearly all "technical" (charting) combined with fundamentals. Last time I traded oil I bought at 17 and sold at 19. Last time I traded sugar - a couple years ago - I got burned for $4k, and quit trading. Can't take the risk now that I'm retired. And can't make too much sense of the markets. Too much speculative swing due to massive speculator money. But unless somebody can prove market manipulation/collusion, I look at prices as *mostly* a result of simple supply/demand/perceptions. You don't like 5 buck a gallon gas? Tough. Who ever said low gas prices are a "right?" Hugo Chavez. Gas is 8 cents a gallon in Venezuela. For most everybody else the way it works is you pay what the market will bear. Same with gold. My wife won't buy gold jewelry (of course I agree with her (-:) I remember in the mid or late '70's sugar went sky high. We just stopped buying sugar. But oil is more necessary than gold or sugar for most people. So they have to work harder to reduce demand. That's the only solution. I've got no sympathy at all for those driving relative gas-guzzlers and whining about the price of gas. The same with those who got over their head with housing. What were they thinking? Get used to life in the big city. Drilling more won't help except marginally. There's only so much oil, and that's the perception now. Producers will always keep the price as high as the market will bear. Right at the edge. Doesn't matter how much they drill. They will keep the "oil shortage" perception strong, even when there's a glut of current production. Simple profit motive. That's business. The common man's only option is to pay the market cost. Or cut back on usage. The biggest disappointment I have with government is they are too lame to devise a coherent energy policy. We need many more nukes. Decentralized and smaller. That disaster in Japan - what was it, 5 reactors in one place? - just shows how wrong that "strategy" is, and set nuke power back 20 years. Sure, you can use NG for a while. That will run out too. My plan would be to get the French over here. Tell them to think small plants, widely distributed. New electric infrastructure to support electric car use. Millions of jobs. Then put them to work at it. Oil prices would plunge when that was announced. Won't happen until I'm crowned as Emperor. And I won't hold my breath waiting for that.
--Vic
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wrote:

It's not bogus, it's simply limited in scope. Not every statistic has to look at the entire universe to make a valid point. The figures presented here indicate that oil speculation has increased measurably and dramatically in the last ten years. Or is that a point that's really in dispute? People who speculate in commodities will assure you it's a wonderful thing that helps everyone but it has some pretty serious downsides when things go wrong. It's also now far less of a hedging risk tool than a way to make a quick profit.
The refutation to Krugman's article on speculation made it pretty clear that there is virtually no way to get to the numbers you want because of record-keeping issues. How do you calculate the tendency of people to keep their gas tanks as full as possible during gasoline shortages? There are any number of places in the supply chain that can hold inventory that aren't easily accounted for.
Besides, your beef isn't even with me, it's with these guys:
<<Dan Gilligan, President of the Petroleum Marketers Association said "Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions" . . . About the same time, hedge fund manager Michael Masters reached the same conclusion. Masters' expertise is in tracking the flow of investments into and out of financial markets and he noticed huge amounts of money leaving stocks for commodities and oil futures, most of it going into index funds, betting the price of oil was going to go up.>> source:
http://www.cbsnews.com/2100-18560_162-4707770.html
(Kurt, this is not directed at you!) These are industry experts, not Usenet armchair expert wannabees whose only proof consists of expletives and insults and whose only expertise appears to be in saying "bullshit" to anything they disagree with. Sorry if I don't believe someone saying "bullshit" means anything to anyone other than the person that posted it is intellectually bankrupt. The people that claim that there's no price rise involved when speculators enter the market and drive up demand must have slept through the supply and demand part of Econ 101. It seems they especially don't understand price ratcheting and price stickiness if they think the effect of speculation "balances out" in the long run. Look at the speculation in homes. That ratcheted up home prices substantially and only now are they beginning to return to reality.
Without true competition firms rarely lower prices even when production costs decrease or demand drops. Cheaper production costs usually leads to companies taking the difference as profit, and when demand slacks off they are more likely to try to hold prices constant, while cutting production, than to lower them. That's why Exxon & friends have posted record profits. So dreaming that "drill, baby, drill" is going to counter decades of increasing demand and ratcheting prices is pipe dreaming. Especially with a cartel like OPEC that can simply cut back on production when they feel they're selling their oil too cheaply.
-- Bobby G.
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to be valueless/ The figures presented

Nope, but the actual impact on the worldwide market and oil prices is still not exactly settled.

oil deliveries versus oil contracts. All of that takes into account such things because the deliveries don't get made if they aren't needed.

the contracts are actually being fulfilled. Fulfilling them is what takes the oil of the market and is reflective of the demand. The really interesting stat would be how well they reflect the spot demand or other prices of the actual commodity.

That hasn't been the case. One of the more interesting (and overlooked if not actively ignored issues) is that the oil companies have very stable profit margins. So, they make pretty much the same %age on gasoline no matter their costs are. But that also means that the actual profit made fluctuates according to the price. But to suggest not drilling won't have an impact on prices is valid? How is it that the oil decisions of OPEC have such great impact, but ours won't?
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