I can’t say it’s all about speculators. China has agreed to cut back. Demand has been falling in the USA. I think though, at this point, the US government is the only government that isn’t providing gas relief for it’s citizens. The US gov will spend billions to socialize corporate losses but won’t do jack shit for it’s citizens. Something is wrong here.
Wow, so much wrong-ness packed into so little space. Let’s take a closer look:
The speculators are largely insignificant in all of this. So it’s not even CLOSE to being about the speculators.
Yeah, that happens. When prices go way up, demand falls. Also, when it rains, the grass gets wet.
Except for Europe.
If anything is wrong, it’s in socializing corporate losses, not in the lack of major gas subsidies. And BTW, I don’t think the US gov does a whole lot of socializing of corporate losses, though there are occasional exceptions (Bear Stearns, and perhaps Freddie Mac/Fannie Mae, depending on how that turns out.)
What is the US government supposed to do? Subsidize gas costs even more? As you even pointed out, less demand will cause prices to fall. If we make gas artficially cheaper, it will only encourage more use, increasing demand, and bringing prices back up.
This is the same reason why the McCain proposal for a gas tax holiday is so laughable. It’s a short term feelgood solution that does little to help in the long run.
Money like that would be better spent, IMHO, on repairing the nation’s crumbling infrastructure.
And on a completely unrelated note, I had to share the awesome ad I got for this thread:
When people say that a barrel of oil is $127.95 today or down $3.09 for the day (actual closing price for today), what they mean is that is the price for a barrel of oil on NYMex that will be delivered on August 8, 2008 – one month from today. This price is defined by investor activity on the New York Mercantile Exchange. The price of a barrel of oil is the price of a barrel of oil on a futures market. Speculators aren’t merely involved; their actions are the direct cause of the price.
Every event you mentioned that would explain this drop happened before the price run-up; even discussions about China have been around for months.
People make this same mistake with stocks. You’ll hear on the News: Apple stock went down today, based on rumors of Jobs’ ill health. But it’s not his health that affected the stock price; it was purely the buying and selling of the stock that did it. The rumors caused more sellers than buyers, leading to the price decrease, but what you’re saying is equivalent to saying that the investors weren’t involved at all. Yet they were the direct cause, and Jobs’ health the indirect cause.
Anyone who says differently is repeating a sales pitch.
Edit: I mean goddammit IT’S RIGHT THERE IN THE FIRST LINE OF THE ARTICLE: “NEW YORK - Oil prices tumbled more than $3 a barrel Tuesday as Tropical Storm Dolly grew increasingly unlikely to threaten supply, giving traders one less reason to buy as a strengthening dollar helped keep prices in check.” So in summary, don’t.
This is an honest question, are traders and speculators really the same thing? I always thought speculators were people buying oil just to sell it again (that is, people who have no intention of ever taking delivery), whereas traders might include companies that actually need oil. Does that make sense, or am I confused?
My memory of Econ 101 is pretty fuzzy at this point, but I think subsidies move the supply curve rather than demand curve. Consumers are still willing to buy the same amount of the product at any given price, but because suppliers are being paid extra by the government for every unit they sell, the supply curve is effectively shifted downward.
Understand that rising gas prices are a Good Thing, as it’s the only thing that will make my short-sighted fellow citizens invest in needed infrastructure changes like public transportation and alternative fuels.
So, no, we shouldn’t fucking subsidize gas, you dumbass (insert your own snarky comment here about subsidizing oil to the tune of $500B via the war in Iraq - I’m too tired to beat that dog again). You might as well subsidize cigarettes.
Or rather, it’s a slightly bad thing today. This thing is likely to get far worse before it gets better. Better to have a price spike now that spurs action/innovation now than try to hold off on action for as long as possible and thus guarantee that oil shortage becomes as bleak as possible before finally start to react to it.
Its funny that this is the one topic that the far left and far right have in common.
The far left is upset that oil is going down because oil is what fuels our evil industrialization. Modern society is bad people. We should all be one with nature and build grass huts, and live to be only 32. The earth needs to be GREEN!
On the other side of the coin. The far right is upset oil is going down because despite telling anyone who will listen that the cost of oil is solely based on the sky rocketing demand that will never come down or ease up for a moment and that the little old speculator, excuse me, investor had nothing to do at all with the price run up; people have seen the end of the bubble and are moving to the next thing. Why can’t people see that with a little less critical thinking and more panicing we can make the dream of $400 barrel a reality! Its going to happen, why not today???