Oil Prices and Congress

I watched the congress and the senate hearings, interrogating the oil industry’s executives,
treating them as culprits or worse as criminals guilty of making profits on the back of the
regular, poor consumer having to pay a “high” price for gasoline. It reminded me the old communist system I escaped 49 years ago. The communists would have condemned and executed the culprits, the executives.

Of course this is the United States of America, and is not that easy for politicians to eliminate people they don’t like. Believe me, if they could, they would.

The most ridiculous statement was from congresswoman Maxine Waters, stating from the podium of the House of Representative, that the government might have to nationalize the oil industry. How arrogant, or rather stupid that statement can be?

If you think congresswoman Waters is an aberration, think again, she is not. The liberal congress is opening an investigation on “oil futures speculators”.

Futures market has been around for long time. It has served the free trading commerce environment flawlessly for hundreds of years. Japan had a futures trading system for rice going back to 1750.

Communist system eliminated free trade and credit. Under communism, if you wanted to buy a motorcycle, you had to save the money, deposited in the bank to pay in full, and once you had the full amount, you were allowed to place your name on the waiting list that might take a year or more to take delivery of your motorcycle.

If it was left to the Maxine Waters of the world, we would have to deposit money into a gasoline account and wait with a coupon at a gas station to get our two gallon allocation. Of course, I am exaggerating, but maybe not.

Futures speculators are the most honest of the bunch; they are using their own money to make a quick buck. Most of them, 95% loose money in the process. Hillary’s $1,000 investment in futures returning $100,000 was a bogus gain; it was a payout. It was impossible. A $10,000 investment could have returned $100k if everything was right. However, a $10K investment could have resulted in a $100k LOSS just as easily.

Futures trading background

In 1878, a central dealing facility was opened in Chicago, where farmers and dealers could deal in ‘spot’ grain, and immediately deliver their wheat crop for a cash settlement. Futures trading evolved as farmers and dealers committed to buying and selling future exchanges of the commodity. For example, a dealer would agree to buy 5,000 bushels of a specified quality of wheat from the farmer in June the following year, for a specified price. The farmer knew how much he would be paid in advance, and the dealer knew his costs.

The most valuable service provided by speculators: PRICE of Commodity

Light oil crude futures, February 2008 with delivery in August, were trading around $90. Any buyer of crude oil, planning delivery in August, 2008 paid $90 for a barrel of oil. Today, June 2008, you can’t get any future delivery contract at below $130.

Take a look at the chart below:

Light Crude Oil
http://futures.tradingcharts.com/chart/CO/88

The speculators’ reading: Congress is not going to do anything good to help alleviate the problem. Secondly, you are on your own and you will pay these high and even higher prices for the near future.

Full article at  http://traian-forex.blogspot.com/2008/0 ... gress.html

Your history on the background of speculators helps in the understanding of the current Futures Market. Understanding how speculation works and why it does what is does ads another level of my understanding of what is happening in the world of oil.

I took the time to check out your website on Reflections from behind the Iron Curtin.

I would also like to thank you for taking the time to not only post this information to the forum but to make a website that speaks honestly and openly about what communism is and how will affect the people in this country. Communism does not just effect that  ‘the other guy’ it happens to everyone but a few chosen ones. Hearing from someone who has lived within its grasp point out comparisons to what is happening in this country today helps dispel any fears that I have of continuing to speak up against it.
America needs more people such as your self to stand up and make their voices heard.

TrCojoc wrote:
Futures trading background

In 1878, a central dealing facility was opened in Chicago, where farmers and dealers could deal in ‘spot’ grain, and immediately deliver their wheat crop for a cash settlement. Futures trading evolved as farmers and dealers committed to buying and selling future exchanges of the commodity. For example, a dealer would agree to buy 5,000 bushels of a specified quality of wheat from the farmer in June the following year, for a specified price. The farmer knew how much he would be paid in advance, and the dealer knew his costs.

The most valuable service provided by speculators: PRICE of Commodity

Light oil crude futures, February 2008 with delivery in August, were trading around $90. Any buyer of crude oil, planning delivery in August, 2008 paid $90 for a barrel of oil. Today, June 2008, you can’t get any future delivery contract at below $130.

Take a look at the chart below:

Light Crude Oil
http://futures.tradingcharts.com/chart/CO/88

The speculators’ reading: Congress is not going to do anything good to help alleviate the problem. Secondly, you are on your own and you will pay these high and even higher prices for the near future.

Full article at  http://traian-forex.blogspot.com/2008/06/oil-prices-and-congress.html

Thank you for posting this excellent and succinct description of the futures market.  It helps everyone here understand what's going on with this persecution by Congress.

Unfortunately, the Members of Congress themselves don't understand this any more than they understand simple supply & demand.

What really boggles my mind is not that our politicians are corrupt, or greedy, or power-mad -- these are attributes of politicians everywhere.  No, what makes my head spin is how woefully UNEDUCATED most Congressmen and Senators are, especially about economics.  Even if they were pure as the wind-driven snow, how could we expect these people to make rational decisions if they don't have the feeblest understanding of the issues that they legislate.

In short, for the most part, the people we elect are quite simply DUMB and UNEDUCATED. They don't have the faintest clue what they're talking about. How did this happen?  Why does it continue to happen?

..and just think about what tomorrow's gas prices will be when today's price per gallon of crude actually hits the market.