[outsitWrord]

It shouldn't have an effect on gas prices, which are priced based on supply and demand. It would only affect oil company profits.

Don't forget speculation. Right now, there is no problem with supply--it's adequate. There hasn't been a change in demand. What's driving prices now is speculation.

[enteltcheft]

Don't forget speculation. Right now, there is no problem with supply--it's adequate. There hasn't been a change in demand. What's driving prices now is speculation.

There has been change in demand in the US; in the worst parts of the recession demand was lower, as things improve it is rising and prices with it. Current high prices are driven partially by speculation but supplies really are lower; Libya is not producing as much as it was. And long-term global demand continues to rise.

[Yifnvmzp]

It shouldn't have an effect on gas prices, which are priced based on supply and demand. It would only affect oil company profits.

Of course it would. If you were running a company, and were going to lose $4 billion, would you just be like "aw shucks" and eat it, or would you raise prices to make up for lost income?

Don't forget speculation. Right now, there is no problem with supply--it's adequate. There hasn't been a change in demand. What's driving prices now is speculation.

Speculation and inflation.

[hrthwhr]

Of course it would. If you were running a company, and were going to lose $4 billion, would you just be like "aw shucks" and eat it, or would you raise prices to make up for lost income?

In industries with elastic demand, no, companies do not do this--they price based supply and demand ultimately what the customer is willing to pay. Gas prices are at the point where consumers really are driving less in response to prices so I do not think that the very profitable and conservative oil companies would raise prices and kill demand if they lost their subsidies.

[Paiblyelaxy]

Don't forget speculation. Right now, there is no problem with supply--it's adequate. There hasn't been a change in demand. What's driving prices now is speculation.

I don't think speculators can move the market like this, but let's assume they can. Who gives the fuel to the speculators? The Federal Reserve.

Either they provide the cheap credit directly (interest rates at zero) or they drive people to real assets (those fearing dollar devaluation) or they encourage speculators because they need to look at yield somewhere.

As mentioned on another thread active here, gas in terms of gold and silver is pretty consistent over time or is getting lower.

[Percocetti]

I don't think speculators can move the market like this, but let's assume they can. Who gives the fuel to the speculators? The Federal Reserve.

Either they provide the cheap credit directly (interest rates at zero) or they drive people to real assets (those fearing dollar devaluation) or they encourage speculators because they need to look at yield somewhere.

This may come as a shock to to, but many speculators are guys with a lot of their own money, who invest in these things simply to make more money.

[SweetCaroline]

Oh back to the topic of Medicare and seniors.

If the government wants to get rid of Medicare and privatize it, I think thats fine. Its a simple solution, you calculate the amount of hard earned dollars that people have put into the system and refund it to them. I don't see why thats such a big deal?

Oh wait...duh...I forgot, the entire federal budget is essentially a giant ponzi scheme designed to take as much as it can and make huge promises. But when it comes to pay the piper the coffers are empty and you get a big ole frowny face in exchange for your investment.

Yes, and then they 'euphimistically' call the money you deposited over your working years an "entitlement," go figure.

[machpamb]

I don't think speculators can move the market like this, but let's assume they can. Who gives the fuel to the speculators? The Federal Reserve.

Either they provide the cheap credit directly (interest rates at zero) or they drive people to real assets (those fearing dollar devaluation) or they encourage speculators because they need to look at yield somewhere.

As mentioned on another thread active here, gas in terms of gold and silver is pretty consistent over time or is getting lower.

Every "market" moves with speculation, that's how markets work.

[Reafnartefs]

This may come as a shock to to, but many speculators are guys with a lot of their own money, who invest in these things simply to make more money.

The argument is that they would put their money in less risky investments if Feds would let interest rates rise.

[DoniandaCoado]

I agree. Once people get free "goodies" from the government, it becomes a "right" and people can't function without them.
sad.

[SinyugiN]

The argument is that they would put their money in less risky investments if Feds would let interest rates rise.

While I agree the Fed needs to let interest rates rise, the basic premise of the argument is flawed. Speculators put their money where they can get the best return. Since heroin and cocaine are illegal, oil is the next best thing. Addict is going to pay whatever it takes--oil is not a high-risk investment.

[LarryRda]

While I agree the Fed needs to let interest rates rise, the basic premise of the argument is flawed. Speculators put their money where they can get the best return. Since heroin and cocaine are illegal, oil is the next best thing. Addict is going to pay whatever it takes--oil is not a high-risk investment.

Oil has LOTS of risk. At the top end are oil exploration firms who have the most risk. The least risk and lowest returns are refiners. You'll hardly ever see Valero's stock shoot the moon.

[xanaxnewtrader]

In industries with elastic demand, no, companies do not do this--they price based supply and demand ultimately what the customer is willing to pay. Gas prices are at the point where consumers really are driving less in response to prices so I do not think that the very profitable and conservative oil companies would raise prices and kill demand if they lost their subsidies.

Well I guess we just disagree. I don't see any way they don't adjust gas prices if they lose the subsidy. If anything, it should be slowly phased out or coupled with allowing them to tap into more of our natural resources.

[12ZHeWZa]

Oil has LOTS of risk. At the top end are oil exploration firms who have the most risk. The least risk and lowest returns are refiners. You'll hardly ever see Valero's stock shoot the moon.

Broadly, true. But the speculation now is in, and the prices are being driven by, the futures market.

Oil Roulette: Rising Oil Prices Harm American Families but Enrich Serial Speculators