Do futures trading and commodity trading distort the spot price in a negative way?

Discussion in 'Commodity Futures' started by afiacpti, Nov 1, 2021.

  1. RedSun

    RedSun

    This is completely not true. I worked for both power and nat gas desks. I know how we do the power dispatch and nat gas nomination. All for profit....

    For integrated utilities, we did not care much about profit.
     
    #31     Nov 7, 2021
  2. Sig

    Sig

    Of course you didn't care about profit because it was guaranteed! Not only that, monopoly utilities make more money the more money they spend, 10% of a $1.5B base is 50% more than 10% of a $1B base, so they are literally incentivized to spend as much ratepayer money as possible with the utility commission the only check. Your boss didn't need to tell you to worry about profit, the less efficient you were the more money the company made so all they really have to do is let entropy and natural laziness take its course and that, paradoxically, boosts profit. As opposed to competitive suppliers who have to fight each other to make anything at all and so have every motivation to be as efficient as possible and sell at the minimum cost possible.

    The bottom line is that before deregulation the monopoly made 10% profit all day every day on their generation. After deregulation the merchant power guys now make a couple percent...if they're lucky. Where did that 10% profit come from? The ratepayers of course, and they're the ones benefiting from competition. Again, it's inconceivable to be arguing FOR monopolies where not structurally necessary. Where has that ever produced optimal results for consumers?
     
    #32     Nov 8, 2021
  3. RedSun

    RedSun

    There is enough arguments on energy de-regulation. No points to continue.

    But the fact is that, futures market clearly distort the real physical markets. All the profit margins from nat gas fracking and power generations go to the hedge funds or private investors. Those profit should stay with rate payers.
     
    #33     Nov 8, 2021
  4. Sig

    Sig

    The only way you accomplish that is nationalizing the franking and power generation businesses. See Mexico for a recent example of how that works out in this sector.
     
    #34     Nov 8, 2021
  5. RedSun

    RedSun

    Can you get over from arguing? Enough is enough?
     
    #35     Nov 8, 2021
  6. Sig

    Sig

    Sure. For what it's worth I find you to be both an interesting poster and someone who can disagree without being disagreeable, so I certainly am not trying to annoy you and apologize if I did.
     
    #36     Nov 8, 2021
  7. RedSun

    RedSun

    Complete nonsense. Just can't get over. Bad, bad....
     
    #37     Nov 8, 2021