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Re: Why Did Oil Prices Drop?

 
 
Whiskers
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      10-11-2008
On 2008-10-11, Buffalo <(E-Mail Removed)> wrote:
> Anyone or everyone know?
> I don't.
> Sounds like the greedy got burnt and stopped speculating on oil.
> What is the real reason??


The speculators are guessing that the financial upset will reduce demand
in the future, so the speculators aren't so willing to risk getting stuck
with oil they paid more for than they can sell it for.

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-- ^^^^^^^^^^
-- Whiskers
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      10-11-2008
Whiskers added these comments in the current discussion du jour
....

>> I don't.
>> Sounds like the greedy got burnt and stopped speculating on
>> oil. What is the real reason??

>
> The speculators are guessing that the financial upset will
> reduce demand in the future, so the speculators aren't so
> willing to risk getting stuck with oil they paid more for than
> they can sell it for.
>

I am not a proponent of the many conspiracy theories surrounding
Big Oil but I do strongly think that the futures markets including
the so-called speculators had to pretty much withdraw because they
could no longer get financing at all in the current credit crunch
and/or they were no longer willing or able to pay what it might
cost. Either way, for a couple weeks now, the more understandable
supply and demand curves have dictated prices.

You are also right, I think, that the speculators that are still in
the game are afraid of not being able to unload the oil because
their buyers can't get credit or perhaps because they're afraid of
what our Fed or the G7 or even the G20 might do if they get scared
enough and reckless enough to majorly move into nationalization of
all financial institutions as well as artificially propping up
their currency values against other currencies they float against.
The basic problem driving the market down so fast all week was
people are just so damn scared to be in the market at all, but them
savvy speculators are even more scared, as you say, to accidently
get caught holding the bag.

--
HP, aka Jerry

"Don't say 'can't' when you really mean 'won't'"
 
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      10-11-2008
timotimo added these comments in the current discussion du jour
....

> Obama will probably make a lot of otherwise untapped oil
> available (use it or lose it policy). This will bring the
> price down too.
>
> Assuming hes president which looks highly likely.
>

Obama ain't gonna be able to do a damn thing domestically any more
than McCain will if he manages to stage an upset. These guys can
only print so much money before it dawns on them that they simply
cannot fund their individual pet projects, no matter which any of
us may like or dislike.

The use it or lose it policy is effectively in place right now if
you consider that there are other ways to prevent oil exploration
other than creating prohibitions in Congress, chiefly just throw up
enough roadblocks such as the always easy environmental impact
statements that will take far longer than the techical side of
drilling. Why do you suppose those greedy oil companies aren't
drilling on the 64,000,000 acres they already have leases on? 'Cuz
they can't, and partially because much of it doesn't really have
any oil.

Anyting that Obama and the Ultra Left green loons may be able to
push through on use it or lose it will tend to increase prices, not
decrease them because the little extra oil that might be added to
our domestic supply will continue to be constrained indefinitely.

--
HP, aka Jerry

"Don't say 'can't' when you really mean 'won't'"
 
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      10-11-2008
philo added these comments in the current discussion du jour ...

>
>> Obama will probably make a lot of otherwise untapped oil
>> available (use it or lose it policy). This will bring the
>> price down too.
>>
>> Assuming hes president which looks highly likely.
>>

>
>
> Assuming Obama wins, he'll be inheriting a nice mess.
>
> From the debates, he seems like a well focused person.
>
> Though I really do respect McCain...
> he has made a few too many "poor judgment" calls to get my
> vote.
>
> That's why I posted the link (above) to Buckley's statement.
>

Funny story adapted from a business environment: After his
innauguration, Obama is invited by Bush to stop by the oval and
get a bit of advice from the outgoing president. When they get
their, Bush says there are 3 sealed envelopes in the desk and
Obama can just open them each time he gets into trouble.

So, a little while goes by, Obama gets into trouble and opens the
1st envelope. "Blame your predessor" it says, he does, and gets
out of trouble. A little more time goes by, he gets into trouble
again and opens the 2nd envelope, which says "blame the unions".
He blames the Federal employees union and squeaks by again.

Finally, he gets into trouble a 3rd time, opens the last envelope
and reads:

WRITE THREE LETTERS.

Seriously, I think that a senario like that is possible if you
wink a little. I'm sure that Once the new president, whoever it
really is, gets on the job and actually takes a look around, he
will quickly discover that options are severely limited on
domestic economic issues, healthcare reform, and even the war in
Iraq. No president inheriting a major mess has been able to do
much until/unless he's able to get it under control.

My take, YMMV.

--
HP, aka Jerry

"Don't say 'can't' when you really mean 'won't'"
 
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      10-12-2008
philo added these comments in the current discussion du jour ...

> It's true...
> a "leader" only has so much he/she can actually control.


No matter what it may have sounded like, I wasn't making an oblique
attack on Sen. Obama. The same story could apply to McCain or any
new president. There really is some OJT that comes with the
territory.

But, in this particular election, circumstances starting just a
month ago have entirely changed the complexion of what either Obama
or McCain's true flexibilty may really be. We know that each would
approach the job vastly differently but both would be equally
constrained by the fiscal realities I've outlined.
>
> I do work, from time to time...for a guy who founded one of
> the largest chemical company in the US...
> after 40 years he was kicked off the board of directors.
>
> A common story!
>

Sometimes there's justice, and sometimes there isn't. Prevailing
wisdom right now of an almost 100% sampling of the American people
that are majorly ****ed off that their government would even
attempt to spend so much of their tax dollars on helping greedy
executives knocking down tens of millions of dollars in
compensation even as they're allowing their companies to flounder,
untold number of elected politicians from both parties that somehow
forgot who their bosses really are, and the terminally stupids,
numbering well in excess of 5 million who knowingly or unknowingly
signed up for loans that wouldn't even pass the laugh test for
reasonableness.

I think the American people want to see all the real guilty people
punished whether it be Big Oil, Big Finance, Big Wall Street or
even Big Government. And, I think that people who work hard and
manage to pay their bills on time cannot even comprehend what I
think is a true cost of the bailout that may be in excess of $7
trilion. That number is so huges that few people can even cite
examples of how many things they normal consume could be bought
with that much.

--
HP, aka Jerry

"Don't say 'can't' when you really mean 'won't'"
 
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      10-12-2008
philo added these comments in the current discussion du jour ...

> Yep I am certainly among the 90% of Americans who are ****ed
> off.


Me, too. Count me among the vast majority who don't want the pols
to **** away my hard earned tax dollars to anyone, not just the
greedy CEOs.

> The thing that irks me the most is that Bush does to have the
> guts to apologize.
>

There are lots of things we can say about the Bush economic
policies of the last 7+ years including the profligate waste in
spending for the war in Iraq that was never justified, but for
the record, his Administration did try in 2003, 2004, 2005, and
2006 to get legislation enacted to rein in the Fannies and
Freddies. However, even when the Red Team held the majority in
both houses, the Blue Team was still able to block an up or down
floor vote. That is deplorable at best. At worst, our friends
such as Barney Frank, Chris Dodd and Charles Schumer may have had
good hearts by trying to extend the American Dream of home
ownership, but they also raked in hundreds of thousands in
campaign contributions over the last decade. Interesting, the
agent of change from Illinois has been in the Senate less than 4
years, 3/4 of which he's been running for president, yet he is a
close 2nd to Dodd in Fannie/Freddie graft.

> He and his team simply point back to the Clinton years and say
> it's all due to
> the previous administration's actions. Not only is that 100%
> "bull"... but even if it were true, then it's still the
> present administration's fault for not doing something about
> it.


The source is the Clinton Administration when the notion of cheap
loans to poor people to enable them to buy houses. However,
Bush's house isn't too clean, but most of the problem has been
recent. Henry Paulson's predessor as Treasury Sec., John Snow,
sound the alarm bells in 2004 as did the previous Fed chairman
Alan Greenspan, both testifying before a Republican led Congress
that year. But, tragically for the American taxpapers, nothing
happened.

> Anyway, my complaining does me no good. The economy will
> *always* go in cycles...
> and I have just been carrying on as normal.
>

Less than 19% of Americans believe that government can fix any
given problem but between 53% and 70%, depending the poll and
it's subject, say that government IS the problem. There have been
credit crisis-driven economic declines 5 times prior to today
since the Great Depression yet nobody seems to understand ...

"Those who cannot remember the past are condemned to repeat it."
oft mis-quoted as "Those who refuse to heed the lessons of
history are doomed to repeat them." and also oft misquoted as "He
who fails to heed history is forced to relive it." - George
Santayana, Philosopher

--
HP, aka Jerry

"Efficiency is doing things right, effectiveness is doing the
right things" - Peter Drucker
 
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      10-12-2008
philo added these comments in the current discussion du jour ...

> Well,
> as they say:
>
> The road to hell is paved by those who have had good
> intentions.
>
> And I guess I can add:
>
> Those who have had bad intentions are driving on that road!
>

philo, please don't misinterpret my comments as ANY defense of
them who are so obviously guilty. The pols have no direct
criminal guilt yet associated with their actions or inactions,
but rather they are guilty of letting their own good intentions -
that of expanding cheap housing - get compromised by accepting
campaign contributions to the point where they forgot or
intentionally ignored their oversight responsibilities.

I'll ignore the speculators because I think theirs is the
smallest likelihood of criminal guilt.

Which leaves us with the top execes, especially the CEOs, of
Fannie and Freddie, Bear Stearns, Merrill-Lynch, Lehman Brothers,
AIG and many others just now coming to light. In all these cases,
something disfunctional happened to the executive compensation
systems.

For background, most publicly owned companies have strict rules
in their corporate charters that presumably only allow paying of
bonuses and stock options when there are profits, and usually
only when profits exceed a threshold amount.

However, in cases just now coming to light, CEOs conveniently and
successfully petitioned their board to alter the formula on the
pretext that SEC required mark-to-market accounting practices
which forced financial institutions to account for the actual
market value of their loans rather than the face amount. CEOs
contended that these believed paper losses were so severe that
their claimed outstanding management should be rewarded even
though investor share prices were dropping, leveraging was going
up, defaults on loans were rising, and yes, there is now evidence
of intentional or just plain stupid cooking of the books.

If this isn't bad enough to make you want to pummel these guys on
the street, they then realized that their own end was near and
arranged for truly outrageous golden parachutes when they bailed
ahead of the sheriff coming to get them.

Now so jokingly, my recommendation to the Federal wonks giving
away my tax money to save these companies from the excesses of
the clowns who ran them into the ground would be to pack them off
to Gitmo and not let them return until they agree to return to
the taxpapers their entire compensation plus interest and
criminal penalties during the periods in question, likely going
back to at least 2004 but maybe even into the 1990s.

Am I ****ed? Ya think?

--
HP, aka Jerry

"Efficiency is doing things right, effectiveness is doing the
right things" - Peter Drucker
 
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