Opposing view: Burst the oil bubble

Discussion in 'Wall St. News' started by S2007S, Jun 30, 2008.

  1. S2007S


    Opposing view: Burst the oil bubble

    Mon Jun 30, 12:21 AM ET

    By Byron Dorgan

    Skyrocketing gas prices have Americans outraged — and rightfully so. Nothing in the fundamentals of supply and demand justifies a doubling of oil prices in a year.

    I and others have pushed for investments in renewable energy, conservation and expanded domestic production, but we also need to bring immediate relief at the gas pump.

    The most effective way to put instant downward pressure on gas prices is to crack down on oil speculators.

    There is a carnival of speculation in the energy futures market. Speculators make money hand over fist while American families get stuck with the bill each time they fill up their tank. Skyrocketing gas prices are damaging our economy.

    Every day, 20 times more oil is traded than delivered. Because of the way energy trades are regulated (or not regulated), speculators control vast amounts of oil by putting down as little as 5% of the purchase cost.

    In short, speculators use money they don't have to buy oil they'll never get. The market is treated like a 24-hour casino while the regulators are asleep.

    Some say oil speculation isn't a problem, that it doesn't affect gas prices. But plenty of experts disagree. An international investment firm recently said, "We are seeing the classic ingredients of an asset bubble." They called it "oil dot-com." I agree.

    I believe in markets, but the energy market is broken. It's our job to fix it so legitimate trading is protected.

    I've introduced legislation to wring the excess speculation out of the marketplace, and to restore the market's original purpose of allowing producers and consumers of energy to hedge their risks.

    My legislation, called the "End Oil Speculation Act," would shut down casino-like betting. It does not affect legitimate hedging, but it would require energy speculators to put 25% down on their trades, instead of just 5%, and would convene an international group to ensure speculators can't go offshore to hide their trading.

    We have a choice. Do we sit back and watch this energy bubble grow as it hurts our economy, or do we take steps to stop the speculation that is driving up energy prices?

    This is one bubble that I can't wait to burst.

    Sen. Byron Dorgan, D-N.D., is chairman of two energy-related subcommittees.
  2. Sheesh... does the "good Senator"* not realize there is a short position to offset each long?

    Getting speculators out of the market MIGHT bring down prices... might not, too.

    *oxymoron, of course
  3. S2007S


    As he said its being treated like a 24 hour casino which he is absolutely correct, when speculation in the oil market ends oil is going to fall so hard you will think its going back to 1997 levels....

    :p :p :p :p :p

    Tech bubble

    Housing bubble


  4. S2007S


    Take speculators out of the market and I think oil would be around 85-100 a barrel.

    This is just like the dot com years, everything was being hyped up to the point where you thought it was going to last forever, IT DIDNT, the same thing is going to happen in the oil markets, oil is going to collapse just like the dot coms and housing prices.
  5. LOL.... classic example of Fundamental Analysis... and why we traders should generally not use it.
  6. Oil's inherent value is about $55 a barrel, if the CEOs of the five largest oil companies sworn testimony before the senate is to be believed.

    So, they've said only $88 of the price of each barrel of oil is due to speculation.
  7. You don't imagine the oil CEOs are trying to deflect possible blame onto the speculators?

    Nobody really knows.... we'll just have to see. Put your money down and give the wheel a spin... :D
  8. For Fuck's sake..
    it's not a bubble..
    WAHHHH...'I Feel for the American families who fill up their gas tanks"...
    Look, there's 6 billion shares of XOM floating...there's about 6 billion people in the world..
    Buy a fuckin share of stock and take part..

    Another Gooberment official talking big stick, and doing nothing..
  9. S2007S


    It sure is a bubble, this sounds like 1999-2000 all over again, and just like the run up in real estate prices, its going to last forever, haha, I remember arguing with a few people back in 2006 about the bubble, they claimed it wasnt a bubble, boy were they wrong and you will be wrong about this one, its a HUGE, HUGGGGGGGGGGGGGEEEEEE BUBBLE.....
  10. USO is a sell for more then 2 years IMO

    here is what is should do in 2-3 months
    I think its over

    <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1977068>
    #10     Jun 30, 2008