Jake, if you listened to the news friday, they are saying that the biggest single day spike in oil prices ever was due to comments by officials in Israel saying that an attack on Iran appears to be unavoidable. I would say that was pretty solid evidence that the threat of war with Iran MOVES THE MARKET!
Nuf said!

"That takes some real gall to just completely blow that off with the non answer of "irrelevant" and "anecdotal""

You were talking about the Bell System, please demonstrate the relevence of that.

p.s. you said "That's the problem with socialism, it removes incentive for people to do useful things."

And I answered with a long list of examples of useful things that people have done under socialist systems and their variants from the regulated monopoly of AT & T to Saab, Volvo and Nokia, to England's health care system all working large scale systems that provided or provide real goods and services to real people.

That takes some real gall to just completely blow that off with the non answer of "irrelevant" and "anecdotal" do you care to expand on those terse incorrect non answers or would you rather just concede this line of argument to me?

So if I were to buy an actual real Saab made in an actual real country running under socialist regulated capitalism that is anecdotal!!!!???? Come again? That Saab is every bit as real (and a good deal better quality product) than a Chevy sort of made here from parts from around the world.

"Yeah the phones never worked during the time Bell Corp. was a regulated monopoly, oops."

Irrelevent.

"This is proof that people can be motivated to do high quality work for reasons other than sheer speculation fueled greed IMO"

It was anecdotal with all the problems thereof, although I agree there are other reasons rather than profit for people to do things.

@JK

"That's the problem with socialism, it removes incentive for people to do useful things."

That's an assumption that the high tech products like cars and cell phones from Europe obviates. People work for all kinds of motivations such as pride, social prestige, a sense of community and altruism, and wanting to have a comfortable and fair return for their labor.

If you saw Sicko you'd have seen that doctors in England under socialized medicine are hardly suffering rather they are living very comfortable upper middle class lifestyles. What is not seen though in the English medical field is the excesses of America, i.e. a whole feet of 100,000+ sports cars, multiple million dollar vacation homes, investment houses, etc. All that money for excess in facts makes our medical prices go higher (the money come from somewhere), and in fact our HMOs are more bureaucratic and inefficient than single payer health care contrary to Libertarian dogma.

This is proof that people can be motivated to do high quality work for reasons other than sheer speculation fueled greed IMO. Try another line of argument this one fails.

True the Bell system was later broken up.

You have to wonder however if the economy would be more stable and just if it hadn't been broken up and left in a more "socialist" state. This sort of regulated capitalism seems to work pretty well in the EU. The size of the total EU economy is roughly similar to the U.S. economy (so don't give me that b.s. about small and homogeneous) and the Euro is kicking the dollars ass down the block. Could it be that the "market" is not the all seeing eye that the business wing of the right wing claims it is?

IMO many Americans would probably trade a slightly slower rate of growth (which we will need with resource constraints anyway) for more job and housing security if they even knew such an option existed. Alas all we get from the MSM is very crude sheer propaganda about how Europeans are "cheese eating surrender monkeys." Monkeys that BTW Cheney is investing in heavily:

"Cheney has dumped another (estimated) $10 to $25 million in a European bond fund which tells us that he is counting on a steadily weakening dollar. So, while working class Americans are loosing ground to inflation and rising energy costs, Darth Cheney will be enhancing his wealth in "Old Europe". As Blackburn sagely notes, "Not all bad news' is bad for everybody.""

http://www.counterpunch.org/whitney07052006.html

for Cheney knows what time it is even if he is withholding that information from the rest of the American people

Yeah the phones never worked during the time Bell Corp. was a regulated monopoly, oops.

"A Brief History: The Bell System

For much of its history, AT&T and its Bell System functioned as a legally sanctioned, regulated monopoly. The fundamental principle, formulated by AT&T president Theodore Vail in 1907, was that the telephone by the nature of its technology would operate most efficiently as a monopoly providing universal service. Vail wrote in that year's AT&T Annual Report that government regulation, "provided it is independent, intelligent, considerate, thorough and just," was an appropriate and acceptable substitute for the competitive marketplace.

1965, Electrical Switch.

The United States government accepted this principle, initially in a 1913 agreement known as the Kingsbury Commitment. As part of this agreement, AT&T agreed to connect non-competing independent telephone companies to its network and divest its controlling interest in Western Union telegraph. At several later points, as political philosophy evolved, federal administrations investigated the telephone monopoly in light of general antitrust law and alleged company abuses. One notable result was an anti-trust suit filed in 1949, which led in 1956 to a consent decree signed by AT&T and Department of Justice, and filed in court, whereby AT&T agreed to restrict its activities to the regulated business of the national telephone system and government work.

Over the years AT&T's Bell System provided what was by all accounts the best telephone system in the world. The system made steady progress towards its goal of universal service, which came in the twenties and thirties to mean everyone should have a telephone. The percentage of American households with telephone service reached fifty percent in 1945, seventy percent in 1955, and ninety percent in 1969. Much of the leadership came by application of science and technology developed at AT&T's Bell Telephone Laboratories subsidiary."

http://www.corp.att.com/history/history3.html

"BOTH are polices of the neo-con Bush"

Thank you for your response. Speculation in markets is like a natural law, and there have been no changes in fow futures contracts work under Bush.

"many other people here at CD OTH would say the correct price is labor + raw materials, + a SMALL amount of profit for reinvestment, executive salaries, and a return on shareholder investment"

This is artificial in a free market. Most of the factors you list are "sunk costs", wikipedia has a good article on that.

"to make hundreds of millions a year on the back of working people"

And I of course reject this characterization. If you remove the profit motive for innovators to do their thing which is where jobs come from, the jobs will go away. Workers exploit the opportunity granted to them by their employers. They need each other.

That's the problem with socialism, it removes incentive for people to do useful things.

p.s. real cultural conservative traditionalists ought to question usury which is a sin according the Catholics, something for pseudo "conservative" business types to think about as they bandy the C word about.

P.S. Jake I think part of the problem here is that we have different definitions of correct price, yours is in essence tautological the correct price is what it ever happens to be, i.e. whatever the market will bare. I and I will hazzard a guess many other people here at CD OTH would say the correct price is labor + raw materials, + a SMALL amount of profit for reinvestment, executive salaries, and a return on shareholder investment say along the lines of Ma Bell when it was regulated in the 50s. This means further that it is IMMORAL for CEOs, CIOs, and the major stockholders to make hundreds of millions a year on the back of working people who are paying an UNNECESSARY 4 dollars a gallon to buy gas to get to work, and high food proces as a knock on to the high energy prices.

You can whine but that's socialism, well guess what socialism starts to look pretty good when it looks like neo-conservative ill management of the market with speculation and unnecessary wars has added a 2 dollar a gallon premium to fuel prices. The "freedom" to be a self serving prick on the backs of the poor does not impress me.

Reagrdless of whether it's the war or speculation BOTH are polices of the neo-con Bush pseudo "conservative" (but not real conservatives I'm quite certain Russell Kirk would disown them) elite which ought to be punished for artificially high prices AND the suffering caused by the war.

"I'm betting on speculation + war not correct price amidst noise."

There is never a way to know for sure, you are entitled to this opinion. I don't beleive what happened with oil prices in the last year is all "noise", a doubling of the prices couldn't just be that IMO, but it will take a few years to look back and see.

"jake made a key point that was glossed over in the back and forth."

Thank you.

Being a skeptic doesn't make one a neocon shill. I recommend Bertrand Russell's "Skeptical Essays" for an elucidation of skepticism's virtues.

jake made a key point that was glossed over in the back and forth. It's fairly obvious that demand in developing countries and instability in the Middle East are both price factors. The question is how to QUANTIFY each one. In other words, if you took the war out of the equation, speculation would still affect the price. How much? We don't know. It doesn't even merit a guess without having reviewed all the pertinent economic data, which I doubt anyone in this thread has done, including me.

What a bunch of sophistry either 4/gallon is the correct price now or it's been inflated by speculation and the war. Since the price of producing oil has not gone up drastically recently, I'm betting on speculation + war not correct price amidst noise. Which is not even "noise" BTW but an ever upward trend in the last months. You just refuse to admit that your beloved "free market" can be hopelessly broken from within by speculators or war mongers leading to one sector of the economy running up a bubble while the rest of us suffer with high priced food and gas. It's this sort of thing that has wisely led continental Europe to keep the corporations and banks on a tight leash for the common good and makes me wish I lived in a civilized country.

The alternatives for the price rise BTW are ALL grim:

1. War
2. Speculation
3. Profiteering by gouging in the present moment

Take your pick they all stink and show neo-conservatives who run the oil companies, financial markets, and the Fed are failing to manage the economy well to the peril of us all.

"The whole "Chicago" school of economics, Militon Friedman, Ayn Rand, Alan Greenspan."

I never heard any of them deny an irrational component to the markets, and we know that at least Greenspan has affirmed it.

"If your smoothing techniques only give you 20/20 hindsight they are useless "

I only used it to illustrate a minor point. That was that the moving average or other technique to account for noise is more likely to show in retrospect a "correct: price, rather than saying it's correct at any actual point at all times.

If your smoothing techniques only give you 20/20 hindsight they are useless for dealing with the actual problem of speculation, economic bubbles, and market corrections. I'm not looking for description but proscription to stop it from happening in the future. Perhaps limiting companies to some sort of cost plus contracting might help. IMO if we are to have a rational market prices ought to reflect only the price of material and labor plus enough of a profit for reinvestment to keep the operation going. Profiteering and speculation not only create gross unnecessary inequalities but in the long run disastrous market corrections as well that hurt everyone even the profiteers themselves. Contrary to the "free marketers" dogma I think all this shows that the invisible hand smacks us down as often as it feeds us, time to go back to the drawing board.

Who would be your best example of someone prominent that does this?

The whole "Chicago" school of economics, Militon Friedman, Ayn Rand, Alan Greenspan.

Libertarians such as Ron Paul, and of course their thousands of glassy eyed followers on internet forums.

"Why should the noise of speculation be part of the setting of prices at all?"

Thanks for your response. There is *always* speculation in markets, you and I do it at the grocery store. I suspect you are specifically refering to options trading.

"That noise certainly destroys the naive Libertarian idea that the market is some kid of all seeing eye that always sets prices to perfection and leads to the best outcomes "

I have never heard of anyone, Libertarian or otherwise, declaim the existence of a noise producing irrational component in a market. And I have never heard of anyone who dwelled on how "perfect" very short term peak and valley prices are.

"The fact that Libertarians and their camp follower become VERY defensive if you dare even question the ultimate wisdom of the market lends some credence to my idea IMO. "

Who would be your best example of someone prominent that does this?

"Serious question my understanding is that after the great depression buying stocks on the margin was banned?"

There is still margin trading. As I understand it they changed the rules as to how much you could do it vis a vis the value of the holdings in your account.

"Why couldn't we simply make speculation and futures buying illegal"

It would be an intrusion on freedom by the government for one. Financial instuments like bonds, stocks, and futures contracts are all innovative products. Not all of the effects of futures trading are "bad", and like many other things like interest it depends on who you are as to whether an effect is good or bad for you.

A strong case can be made that those who consistently make money in oil futures in either up or down markets actually reduce volatility y cuttiing the peaks and filling the valleys.

"B.S. if that was true everyone would do it "

You may be right if this was some trick as to how to buy stocks, such as the Dogs of the Dow method, but it isn't. Looking at a moving average is just one way of looking backwards. Everyone does that. By itself it has nothing to do with how to act now or what the future may hold. It simply removes the murkiness of noise so that the past trend can be more easily seen.

Why should the noise of speculation be part of the setting of prices at all? That noise certainly destroys the naive Libertarian idea that the market is some kid of all seeing eye that always sets prices to perfection and leads to the best outcomes BTW. IMO Libertarians much like those that believe in intelligent design are pursuing a myth. The fact that Libertarians and their camp follower become VERY defensive if you dare even question the ultimate wisdom of the market lends some credence to my idea IMO.

Serious question my understanding is that after the great depression buying stocks on the margin was banned? Why couldn't we simply make speculation and futures buying illegal, and punish corporations and financial institutions that fan the flames of destructive bubbles?

@JK

"If you account for volatility, such as using a moving average of some number of a set time period (50 day is common) you will create a curve that removes the "noise" of the peaks and valleys caused by the volatility."

B.S. if that was true everyone would do it and we'd NEVER see a large market correction leading to economic disaster. The fact is, is that despite the sophisticated mathematical models speculators are making educated guesses about the future little better than a New Ager staring into a crystal ball. There is no there, there, much like the Enron trading floor in which the computers looking very active but actually weren't even hooked up to the network.

There is always some combination of market efficiency and irrationality at the same time at work. The irrationality contributes to volatilty. If you account for volatility, such as using a moving average of some number of a set time period (50 day is common) you will create a curve that removes the "noise" of the peaks and valleys caused by the volatility.

"stock prices were being set by the judgment of millions of "highly knowledgeable" investors."

This strongly suggests *all* the investors are "highly knowlegable".

"the judgments of millions of investors, many of whom are highly knowledgeable"

This does not.

You're slipping Jake:

"We can readily describe this process, but, to date, economists have been unable to anticipate sharp reversals in confidence. Collapsing confidence is generally described as a bursting bubble, an event incontrovertibly evident only in retrospect. To anticipate a bubble about to burst requires the forecast of a plunge in the prices of assets previously set by the judgments of millions of investors, many of whom are highly knowledgeable about the prospects for the specific companies that make up our broad stock price indexes. "

http://www.federalreserve.gov/BOARDDOCS/SPEECHES/1999/19990827.htm

"when people ignore you:

I was not "ignored" in this thread you smacked ass.

"Crayon Boy is a special case."

And no doubt his latest tantrum stems from is miserable failure at getting people to ignore me in this thread. He's dishonest and pathetic.

"The highest monetary authority during those bubble days, Alan Greenspan, chairman of the Federal Reserve, consistently told us that the market was efficient and stock prices were being set by the judgment of millions of "highly knowledgeable" investors."

Utter BS. The article cites *zero* examples to support this. And you say this after posting Greenspans famous Irrational Exhuberance quote *yourself*.

"Hypocrite much?"

You will see that I never go first. Crayon Boy is a special case. Like a preadolescent boy he has been dogging me after I bloodied his nose in a couple other threads using facts and reasoning.

p.s

JK said: "Such classy behaviour here in the Common Dreams public comment forums. Common Potty Mouths would be more like it."

and then jk said: "Shut the fuck up asshole."

Hypocrite much? Those that live in glass houses...

"In March of 2000, the Nasdaq stock market, hyped with spurious claims for startup tech and dot.com companies, reached a peak of over 5,000. Eight years later, it's trading in the 2,300 range and most of those companies no longer exist. From peak to trough, Nasdaq transferred over $4 trillion from the pockets of small mania-gripped investors to the wealthy and elite market manipulators.

The highest monetary authority during those bubble days, Alan Greenspan, chairman of the Federal Reserve, consistently told us that the market was efficient and stock prices were being set by the judgment of millions of "highly knowledgeable" investors."

http://www.counterpunch.org/martens05062008.html

Hmmm sounds like someone we know who resents being compared to the delicious fig fruit.

Shut the fuck up asshole.

also: stop whining

"Jake Newton does it bother you that commodities speculation is causing inflation which is not economically sustainable?"

Everything is up. Even sawdust. Yes it bothers me, mainly because it makes it harder to make ends meet. But sometimes speculation does the opposite for commodities.

Your use of the phrase "not economically sustainable" is interesting and I agree with the principle. What do you think that implies?

Jake Newton does it bother you that commodities speculation is causing inflation which is not economically sustainable?

"Now that you understand where I was coming from, please take another try at responding to what I wrote."

Where I had, in fact, agreed with much of what you said and even compimented you.

"That condition NEVER obtains on the level of the market as a whole or we wouldn't see the sort of recessions and depressions we see EVERY decade or so."

What do you mean by "market as a whole"? I was talking about the markets for various commodities and for the futures contracts for those commodites. Recessions and depressions apply to the economy as a whole, that is quite another thing.

"Investment house!!!!???? "

"You fucking self centered prick!!!! "

Such classy behaviour here in the Common Dreams public comment forums. Common Potty Mouths would be more like it.

"Does it occur to you that some of us can't afford to buy housing at all to even live in, and are forced to rent despite doing hard manual labor for self centered pricks like yourself?"

Simmer down. Did it ever occur to *you* that you completely misunderstood the point of the statement? That I was only using it as an example, and didn't mean anyone here in particular, and that maybe you should try not to so unreasonably project your preconcieved notions into what I mean?

Take a deep breath. Pay attention very closely now: Housing is one of many markets. There was a housing bubble. It seems as though the bubble has burst. Investment home in particular seem to have had their prices beaten up the most. Those in the market for such a thing, not me, not you, not anyone in particular, may find it to be a good time to by an investment house.

Get it? I hope you find this clarification helpful. Next time if you aren't sure about someone's meaning just ask them nicely to clarify, or you're liable to throw a bloodclot.

Now that you understand where I was coming from, please take another try at responding to what I wrote.

"Does it occur to you that housing is a basic human right "

I am close to what you would call a classical liberal, so no, I don't agree with you on this point. And before you rupture your spleen again, this belief does not make me a bad person. And it has nothing to do with the discussion we were having of oil markets and speculation, so I see no point in discussing it with you.

"I am your worst nightmare Jake Newton "

*shudder*

"an extremely intelligent (my IQ consistently tests between 140 to 150), well read"

Modest too I see. I don't doubt your test scores, but I think it's *unwise* of you to jump to all sorts of unreasonable conclusions over a simple statement or two, and you should also try to keep your emotions in check from now on.

I know that Jack London wrote fiction, and I have read Burning Daylight a few times and liked it. Are you familiar with that title? It has plenty of the Marxist bent that you would expect and most likely enjoy.

@Jake Newton

"where ongoing speculation in a market is dominated by people who know what they are doing, there isn't likely to be any bubble/collapse, so it's a non event that isn't noted by anybody."

That condition NEVER obtains on the level of the market as a whole or we wouldn't see the sort of recessions and depressions we see EVERY decade or so. It's not just individual investors, it's society as a whole we need to look at if we are to be decent moral people. Just because YOU are doing OK it does not follow that many people aren't suffering due to this extremely dysfunctional system of inflating and deflating speculative bubbles.

"The other side of that is blood in the streets where there needn't be. Is it time to buy an investment house in your market yet?"

Investment house!!!!????

You fucking self centered prick!!!! Does it occur to you that some of us can't afford to buy housing at all to even live in, and are forced to rent despite doing hard manual labor for self centered pricks like yourself? It is just this sort of massively out of touch rhetoric that causes some of us to fantasize about the streets "running with the blood" of blood sucking sociopathic greed balls like yourself. It was pathetic when Bush I was so out of touch that he couldn't run a grocery store bar code scanner and it's enraging and pathetic when you ASSUme that we all have enough money for "investment" houses.

Does it occur to you that housing is a basic human right and ought to be available to all in need as is recognized in civilized places like continental Europe?

I am your worst nightmare Jake Newton an extremely intelligent (my IQ consistently tests between 140 to 150), well read working class person who is more pissed off about the poorly managed parasitic exploitation that your class engages in than you can even imagine. Again read Jack London's "Iron heel" to see how that all plays out. Some us will not be merely co-opted by being invited into the speculators club, you've been warned...

"Basing current prices on speculation about the future is just plain foolish because it so often wrong. "

Thank you for your response. I would agree that it's foolish for people who don't know what they are doing. A lot of unknowledgeable people can make money for a while just by rideing a trend, but they won't know when to get out or stay out and will be the ones who lose the most.

"In the 90s dot commers deceived themselves that the dotcom boom would last forever and ran up prices accordingly,"

A good example, and the more level headed didn't get burned.

"Looking at the bigger picture allowing speculations (fantasies) about the future to effect current prices is not a rational way to run an economy because ultimately that means running an economy based on peoples FEELINGS about how things will be in the future,"

First, I disagree with your characterization that *all* of it is "fantasy" or "feelings". I would only apply this to those who don't know what they are doing, who when they make money are lucky, not smart, and will eventually lose money. Those who know what they are doing will have a much better wherewithal to know if the market is making any sense based on fundamentals.

"that has always in the long run had disastrous effects whether it was the Dutch Tulip frenzy of the 1600s, "

I disagree on the "always" part but the well known examples are good, dotcom and tulips are well publicized examples of collapses. OTOH where ongoing speculation in a market is dominated by people who know what they are doing, there isn't likely to be any bubble/collapse, so it's a non event that isn't noted by anybody.

If a futures market is dominated by traders who always make money whether the price of the commodity goes up or down, the effect is that swings in supply are actually mitigated by their activities and the price is thus made less volatile.

A similar idea occurs when you happen on a supply of something that you like such as canned peaches at a very attractive price, you speculate that it will benefit you in the long term by stocking up now by7 buying way more than you usually would. The benefit would be even greater if you knew for some reason that the price of canned peaches will double over the next few months. So based on your knowledge and an attractive buying opportunioty you act now and your personal economy benefits.

So people who are consistently good at speculation help the overall market by adding stability, where as the pretenders louse thing up for everyone. I didn't make this up BTW, I read it in an economics book.

"and run up of fuel prices. "

Are you saying the fuel market is a bubble that will burst?

""Irrational exuberance" (Alan Greenspan) ring a bell Jake Newton?"

It's a very good point. The other side of that is blood in the streets where there needn't be. Is it time to buy an investment house in your market yet?

Jake Newton said:

"What about those speculative activities that result in "windfall" profits on deals that result in *lower* prices of a commodity? Is that moral or immoral? It's the other side of the same coin."

Basing current prices on speculation about the future is just plain foolish because it so often wrong. For example I remember reading "Wired" magazine in the 90s when the cover talked of the "long boom."

http://www.wired.com/wired/archive/5.07/longboom.html

In the 90s dot commers deceived themselves that the dotcom boom would last forever and ran up prices accordingly, that of course was a sheer fantasy and had disastrous effects for people that invested in the tech boom, and people working in the tech industry whose stocks didn't vest until the boom evaporated. In retrospect articles like the "long boom" seem like a laughably foolish anachronism, but at the time they were taken VERY seriously by people with real power. And no it's not the fault of the little guy who was duped, it was the fault of the big players who fanned the flames of that speculative frenzy.

Looking at the bigger picture allowing speculations (fantasies) about the future to effect current prices is not a rational way to run an economy because ultimately that means running an economy based on peoples FEELINGS about how things will be in the future, and that has always in the long run had disastrous effects whether it was the Dutch Tulip frenzy of the 1600s, or the current housing crash and run up of fuel prices. It seems our society is under attack on all sides from those prioritize fantasy over reality, whether it is space case New Agers, fundamentalist Christians, or commodity, currency and stock speculators. I do wonder how long a society can survive that disdains the "reality based community." Energy prices ought to be determined by empirical knowledge of costs plus enough profit to reinvest and keep the systems running, period, end of story. Energy policy for the future ought to be determined strictly on an empirical basis of known supplies and how long they last period, end of story. Speculators do naught but distort rational decision making to the peril of our planet, and the little guys personal finances for survival.

"Irrational exuberance" (Alan Greenspan) ring a bell Jake Newton?

Nothing on gulfpub, nothing on gulfoilandgas...

" just did a quick google search and found many articles from financial publications regarding prices rising on fears of attack on Iran and you can too, as can any trader reading the pubs."

Can you link to one that makes your case the best, or quote one that tells us what the "attack on Iran" premium on oil is these days?

I just did a quick google search and found many articles from financial publications regarding prices rising on fears of attack on Iran and you can too, as can any trader reading the pubs.

"Any oil futures trader NOT watching this closely is a fool."

Mike, they look at everything. And there's lot's of them too. If the possible attack on Iran makes a big difference on this, they would tell us so. Without such evidence, your belief that it weighs so heavily is only your guessing.

BTW, I am sure there are plans for an attack. There are probably several. For every war or attack that actually occurs there are plans for a dozen or more that never happen.

" completely agree. But the real question is whether they are working into the mix an inevitable attack on Iran which of course may have an effect on supply. I see no evidence that they beleive as you do on this."

Jake, the attack on Iran is not "inevitable", if it were oil prices would already be over $250/brl, but the percieved risk of an attack on Iran has certainly been skyrocketing over the last year. Any oil futures trader NOT watching this closely is a fool.

"Jake, you're not being honest."

Why?

"Any oil futures trader that doesn't put a huge amount of weight on possible disruptions of supply that is already falling short of demand is a fool."

I completely agree. But the real question is whether they are working into the mix an inevitable attack on Iran which of course may have an effect on supply. I see no evidence that they beleive as you do on this.

Jake, you're not being honest.
Any oil futures trader that doesn't put a huge amount of weight on possible disruptions of supply that is already falling short of demand is a fool.

"The only person with a chance to top Bush as the worst president in the history "

Focus Mike.

The only person with a chance to top Bush as the worst president in the history of America is "Insane John McSame", if the corporate media gets him close enough in the polls to steal the election, if there is one.

"Making windfall profits based on possible (unknowable) future scenarios when actual costs of production have not risen significantly that cause REAL pain now is extremly immoral "

What about those speculative activities that result in "windfall" profits on deals that result in *lower* prices of a commodity? Is that moral or immoral? It's the other side of the same coin.

"Jake, everyone who expects an attack on Iran believes that Bush will do it before leaving office"

That's fine for *them*, but for what we are talking about, it's only what the pit traders think about such an attack that counts.

Jake, everyone who expects an attack on Iran believes that Bush will do it before leaving office, as he has nothing left to lose. His place in the history books as the worst president in the history of America is already set in stone.

"The propaganda from "Little Hitler" in the White House, the Neo-Cons, the right-wing talking heads and the corporate shill media has been reaching a fever pitch over the last year."

And it's the *sole* reason the pit traders are jacking up the price? I seriously doubt it. What specific tidbit from the sources you cite would you class as the most telling?

" I was referring to your massive amount of rambling."

I've been pretty focused I think on whether armed conflict is a factor. Thanks again for the link.

PaulMagillSmith Excellent post. If the so called market allows for making current windfall profits on FUTURE scarcity then it is hopelessly corrupt and evil and does NOT function as a "free market" that Libertarians (and their hangers on) claim to produce good outcomes for all, but rather is a mechanism to rake in cash for the chosen few based on an unknowable future. Why anyone should be allowed to profit NOW because we are getting peak oil in the future is just plain madness. Madness BTW that will probably cook all out Gooses for buying futures on the margin is what cooked our Goose during the great depression. It's this line of thinking that makes me think we ought to hang the speculators and start over fresh with Credit Unions as our source of investment capital and not parasitic speculators.

And no thinking there will be peak oil will happen and saying the future is unknowable is not contradictory. Perhaps peak oil will cause us to suddenly wake up and switch to non fossil fuel sources in a shorter time frame than speculators predict thus making oil worth far LESS in the future than they thought it would be worth. We certainly DON'T know, but 3 things I think we DO know is:

1. We ought to use less fossil fuels soon, or we are going to suffer severe climate consequences, and that is according to peer reviewed science research compiled by the IPCC.

2. Buying futures on the margin is destabilizing to the economy and the sort of run ups in prices it produced that were unrelated to real production was one of the causes of the great depressionoof the 30s. In other words danger Will Robinson.

3. Making windfall profits based on possible (unknowable) future scenarios when actual costs of production have not risen significantly that cause REAL pain now is extremly immoral and in the short term oil companies ought to be financially punished for these shenanigans and the money invested in alternative energy, and in the long term we ought to structure our economy so these immoral and destabilizing speculations are IMPOSSIBLE.

In the real world more Credit Unions and giant co-ops like Mondragon in Spain (a billion dollar a year business) would be a good start to curbing this sort of profiteering.

Even the disgusting congress passed a resolution declaring Iran's republican gaurd a terrorist organization, clearing the way for "Little Hitler" to use force!

Actually jakenewton, by antidote, I was referring to your massive amount of rambling. Have you read all the comments attached to that item? There's quite a lot more info in them that makes the initail analysis even stronger.

This is the summary of the secondary factors related to oil price, of which your point is just one:

"In summary these secondary factors touted by the MSM, politicians and oil companies are nothing more than an excuse and a distraction from the core problem which is demand growth running ahead of supply growth for over three years now. If the USA, Russia or Saudi Arabia could turn on the taps and produce an additional 3 mmbpd, the oil price would fall tomorrow. But they can't and the only way the oil price will come down is by reduced demand brought about by pricing poor people out of the energy market and by deepening recession."

The propaganda from "Little Hitler" in the White House, the Neo-Cons, the right-wing talking heads and the corporate shill media has been reaching a fever pitch over the last year.

"TurnoffyourTV comments on the article as follows:

"We've been hearing about Iran being bombed since 2004"

A very good point.

No Jake, I'm not losing focus, YOU have "tunnelvision"!
I know that you aren't ignorant enough to have missed all the sabre-rattling by Bush and the corporate media about attacking Iran over the last year. It has been a redux of the propaganda that led us into Iraq. Wake up!

"are you living under a rock?"

Mike, you are losing focus. That article is only a *few days* old. It cites, of course, unnamed "sources". It cites other *recent* articles. I of course don't put nearly as much stock in that as you do, and I doubt the pit traders do either.

We were discussing the doubling of crude prices over the last *year*. Stay focused.

jakenewton May 30th, 2008 1:04 pm
"planning an attack on Iran in August,"

I would require some substance for this. You aren't privy to any special inmormation about this, nor are the pit traders. You can speculate about it if you want, as can they. There is little media discussion of this. When I hear it from some pit traders or in some other way, I'll grant that it's a factor.

Otherwise, I had meant to cover this with my question, what has changed over there in the last year?

Jake, are you living under a rock?
Read this -
http://www.commondreams.org/archive/2008/05/27/9220/

again

"This item also provides an antidote to jakenewton."

It's hard for me to see why you say this because, by explaining all the non-war aspects of price, it very much helps make my case. Thank you for that, I urge everyone else to click on the link you kindly privided.

The article has the following topic headings:

Supply and demand
Decline of older fields
Declining net energy and energy density
New mega-projects
OPEC spare capacity
Peak exports

Nowhere does the word "war" appear in the article, and there are only two sentences dedicated to "political unrest" in countries like Iraq.

Thanks fagain or your help karlof1!

BTW, the previous thesis I was challenging wasn't this, it was ending the current war, which won't happen simply by withdrawing US troops.

I hope that the people will keep it up- cutting WAY back on driving is a very good thing on many fronts.

Why Oil Costs Over $120 a Barrel It will be interesting to see what Weissman writes on this topic. This item also provides an antidote to jakenewton. It contains great charts and excellent analysis. There is also the probelm of the accelerating decline in net exports.

Someone above pointed out the need to end oil addiction and is 100% correct.

"planning an attack on Iran in August,"

I would require some substance for this. You aren't privy to any special inmormation about this, nor are the pit traders. You can speculate about it if you want, as can they. There is little media discussion of this. When I hear it from some pit traders or in some other way, I'll grant that it's a factor.

Otherwise, I had meant to cover this with my question, what has changed over there in the last year?

Jake, I never saw your answer to this post -

MikeBinSC May 30th, 2008 1:56 am
Jake, as you know, it is impossible to predict with any degree of certainty what would be the price of oil today if the "Little Hitler" in the White House had not run his "Blitzkrieg" on Iraq, but I believe we can make a few safe assumptions.

1. Oil production in Iraq, a country known to be sitting over an enormous amount of the world's known oil reserves, would be at greatly increased production rates, rather than producing less oil than they were before the illegal invasion and occupation of that country. It would howerver, be being sold in Euros and not in dollars. That extra supply would have greatly eased the inventory shortages and helped to keep prices down.

2. Without the "Idiot-in-Chief" planning an attack on Iran in August, stemming directly from his "Crime Against Humanity" in Iraq, further threatening to disurpt the free flow of oil from the region, there would be much less speculation on oil prices rising in the near future.

Those are just a couple of points, and there are others, but these should be obvious to even the most casual observer.

"Threats against Iran causing uncertainty "

Speculation about an attack on Iran began considerably longer than a year ago. In fact, some of the vanguard for that was right on this forum. Is any pit trader citing this specifically?

"Demand recently has dropped by 2%"

Sorry, if you could be more precise: Are you saying worldwide demand for oil has dropped? Or US consumption of gas? The markets for crude oil and wholsale gasoline are quite different.

"Jake, are you an idiot or what? "

Classy.

"Demand recently has dropped by 2%"

"Consumption" may have dropped. "Demand" in the market includes concern over future market conditions, which includes *supply* concerns, which you fail to mention in the statement above.

"Where in economics does this ever happen except in a manipulated market?"

Explain the recent "manipulations" that have taken place in the market over the last year, that are any different from the years before.

RE: jakenewton May 30th, 2008 10:47 am
"when the heads of the 5 major oil companies testified before Congress within the past two weeks they attributed 40% of the increase to just speculation, and claimed the price of a barrel SHOULD be around $50-60 range."

What did they say about the war? And please answer this question: What has changed in the mid east conflict in the last year to cause oil to double in the same period?

Well I didn't see the whole testimony & I'm not sure if any congress critter had the common sense to ask the pertinent question. Please refer to my previous post for the answer, but here it is again since the troll seems a bit mentally challenged today...Threats against Iran causing uncertainty & speculation based on fears of a diminished supply drive price in an upward direction.

Jake, are you an idiot or what? Demand recently has dropped by 2%, but the price keeps going up. Where in economics does this ever happen except in a manipulated market? One reason demand dropped was because people started driving less. If you make it impossible for people to fill their tank at will they will drive even less, and speculation won't be as rampant. Eventually the demand/supply curve will adjust to a more realistic economic model, and speculators will go elsewhere, further lowering price (but not supply). Supply could be increased by bumping up refining from the 81% capacity it is currently being manipulated to run at.

Another way to drive speculators from the market would be, as mentioned by a previous poster, to make the margin to buy oil futures 60-80% instead of 10-20%. If people had to actually invest their own funds instead of borrowed money they wouldn't be as likely to assume the risk.

Saber rattling at Iran creates fear in the market, driving price up substantially for fear supply won't be able to meet demand. Cheney & Bush, both oil men, know this and play this card for all it's worth. Even if they never attack Iran the effect is the same because it creates uncertainty in the market causing price increases. At the same time production costs have only risen modestly, creating a 'windfall' profit for the Bushie cronies. The whole damned thing is manipulated even down to Bush's refusal to stop socking away 70,000 barrels a day into the Strategic Petroleum Reserve, and the Saudis cutting production by 800,000 barrels per day since last year & threatening to cut another 85,000 barrels per day. Bush's explanation the Saudis refused to increase production (during his recent trip there) was total BS. The Bush's & Saudi royal family are sleeping together in the same bed & both gain enormously by keeping prices high.

"when the heads of the 5 major oil companies testified before Congress within the past two weeks they attributed 40% of the increase to just speculation, and claimed the price of a barrel SHOULD be around $50-60 range."

BTW, a recent poll was published in the local paper saying that most oil CEOs expect oil to drop below $100 "soon", but this is contrary to what industry analysts say.

And if by "end the war" people really mean "end the US occupation", I doubt if the war will end.

"when the heads of the 5 major oil companies testified before Congress within the past two weeks they attributed 40% of the increase to just speculation, and claimed the price of a barrel SHOULD be around $50-60 range."

What did they say about the war? And please answer this question: What has changed in the mid east conflict in the last year to cause oil to double in the same period?

RE: jakenewton May 29th, 2008 2:14 pm
"End the war in Iraq and stop threatening war against Iran. Do these two things and watch the price of oil drop to $60 per barrel."

An extremely tenuous assertion.

Not tenuous at all, Jake, in fact when the heads of the 5 major oil companies testified before Congress within the past two weeks they attributed 40% of the increase to just speculation, and claimed the price of a barrel SHOULD be around $50-60 range.

"RETURN TO ODD & EVEN DAYS FOR GASOLINE PURCHASES."

How exactly does this reduce demand?

Here's a way to IMMEDIATELY lower the steadily increasing rise in the spot price of oil and back the speculators out of the equation:

RETURN TO ODD & EVEN DAYS FOR GASOLINE PURCHASES.

This substantially reduces demand thereby increasing available supply, and lowering price...duh!

fresh1 May 29th, 2008 11:36 pm

Thanks very much for the courtesy of your answer. Now I know what some have been referring to.

MikeBinSC May 30th, 2008 3:05 am

Excellet point.

"I feel the future will be great as I am just a few days away from leaving america forever for Canada where the price of gas is higher but the price or healthcare is free. What is better? I can always drive less but can never guarantee good health. Enjoy yourself worrying about good health, poor air, and another illegal war, trillions in debt."

Good luck. I hope it turns out the way you expect.

Matti:
15 minutes ago, about 7:45 am my time oil jumped to 133$ on a supply problem. Guess where the story is out of, India.
Recycle:
I wish they would offer a real alternative, I am looking at a 250cc bike today that gets about 60 MPG

"The War in Iraq has an affect on oil price for various reasons."

I agree, but how much? WHat is the war premium on a barrel of oil today?

"Since the bulk of the price run-up has been in the last year why is it difficult to assign this to the US threats against Iran?"

Because they went into Iraq in 2003, not last year. What has changed in the last year? This statement helps to make my point.

Can you answer hootowl? Are you Namaste's boy or something?

"America is not serious re improving car efficiency."

Efficiency will help but don't confuse it with frugality.

Matti-I agree with your take-oil is a finite resource and instead of lamenting the current price, we really ought to be focusing on alternatives. Mine happen to be my bike and my feet, lucky me. Neighbor had a child trailer that I pedal with to get my groceries. Biking and walking (and the occasional run) keep me healthy and fit (fewer dr appointments, meds, colds, etc.) No fitness club memberships. Use the Earth Gym and break the addiction to oil.

Matti
I would agree if oil price was based on supply and demand but it is not. It is speculation based on future demand and supply. The fact the number of refineries has dropped making supply less and with a smaller cushion it can't ward off a spike in price if there is even the smallest disruption in the flow some place in the world.
Also who is telling you that oil is running out? Has there been a shortage at the pumps? That is not shortage of oil, that is supply from refineries. Is it not just a FEW NAMES mentioned in each report. Sounds like the lock step neos have won you over and you have given up.
I do agree web sites like this are a venting hole for frustrated people in America. I, and others have told Americans to get off their asses and do something in several postings, but with no luck.

I feel the future will be great as I am just a few days away from leaving america forever for Canada where the price of gas is higher but the price or healthcare is free. What is better? I can always drive less but can never guarantee good health. Enjoy yourself worrying about good health, poor air, and another illegal war, trillions in debt.

America is not serious re improving car efficiency. A 1941 ad in Nat'l Geographic cited 600 mile range for the "New Nash 600". A 20 gallon gas tank ie 30 mpg and 2/3 of a century ago! It had a low compression L-head engine, no radial tires, no fuel injection nor on-board computers, plus a large frontal area and room for 5 adults.

We should all be commuting today in high tech safe light weight cars with DI diesel power at 60 mpg or more.
This could have stalled off oil shortages til we could develop plug-ins from a more efficient grid via nuclear (ultimately fusion).

But the costs of empire preclude America's ability to mount another Manhattan Project to achieve energy independence.

Instead Detroit pushes gas hog SUV's and pickups few people really need.

And our leadership rattles sabers at Iran and Russia.

Mike Peters said:

"You all sound to me like a bunch of cocaine addicts trying to figure out how to stay high. Pathetic.

I only ride a bike. Yes it's hard. And I'm 50 and up-hills but you get stronger after a few years.

i didn't heat my home last winter and it did not kill me.

A "gas station" is a dirty place I never go."

THAT is walking the talk, good man keep showing us how by doing.

Also, stop wasting time arguing on the Internets about "why" prices are going crazy for oil.

It's a FINITE resource, what in the hell did you think was going to happen?

No matter who you are, it is almost certain that your Great-Great Grandmamma was born and lived without oil and likely electricity as we know them, as did all your Ancestors before that.

So get over it already!

Some people act like civilization MUST end because the oil is running short and getting expensive.

Remember the burning of the Library of Alexandria and the final sacking of Rome and get some friggin' Perspective already.

As long as everybody stays "chill" this could all work out fine.

Hell, it may even be FUN.

Or we could freak out.

Time to decide.

-matti.

Silly Jakenewton those who fan the flames of speculation of course, like bankers, the Fed chair, derivative traders, currency speculators,and others who cream multilmillion dollar a year incomes from the global pool of money without doing a lick of work, even intellectual work. Or as put more succinctly by a 19th century anarchist, "hang the lawyers with the guts of the bankers."

I think you're on the right track -MikeBin- but if you look a bit further down the line I think you'll see what we need are sustainable societIES, plural.

One of the energy problems we have in the U.S. is the sheer size of our continent-spanning Nation-State.

If for example, Connecticut need survive on things grown and made in Connecticut, with additional "luxuries" imported at slow speed from reasonable distance, then even 17th or 18th century pre-fossil fuel and pre-electric technologies would be sufficient- as history has shown.

The problem with rock oil is that we burnt so much of it up doing silly things like "family road-trips" and living in working in hellish places like Houston.

The problem with the People in the U.S. is so many have fallen into TV induced Dreams of the Tomorrow of Yesterday, and the Forever of Now, that they are woefully unprepared to do ANYTHING new and woefully ignorant of the lessons of the past that might help them in doing so.

For your next vacation, "Americans" forget Vegas, forget Hawaii, find some Amish, find some Mennonites, find some crazed backwoods hunters, find SOMEBODY who has some Idea of how to live outside of our technologic cocoon,

and LEARN.

-matti.

Since the bulk of the price run-up has been in the last year why is it difficult to assign this to the US threats against Iran?

Mikepeters, shouldn't you be riding a horse instead? It takes energy to forge the steel for your bike and petroleum to make the tires, seat, grips and cables.

Relax man, we all know that we need to cut down our consumption of everything, including oil, but not everyone can move to bikes right now.

What we need is a plan to move us to a sustainable society in a short amount of time.

Everyone should check out this link -
www.storyofstuff.com

Jake, as you know, it is impossible to predict with any degree of certainty what would be the price of oil today if the "Little Hitler" in the White House had not run his "Blitzkrieg" on Iraq, but I believe we can make a few safe assumptions.

1. Oil production in Iraq, a country known to be sitting over an enormous amount of the world's known oil reserves, would be at greatly increased production rates, rather than producing less oil than they were before the illegal invasion and occupation of that country. It would howerver, be being sold in Euros and not in dollars. That extra supply would have greatly eased the inventory shortages and helped to keep prices down.

2. Without the "Idiot-in-Chief" planning an attack on Iran in August, stemming directly from his "Crime Against Humanity" in Iraq, further threatening to disurpt the free flow of oil from the region, there would be much less speculation on oil prices rising in the near future.

Those are just a couple of points, and there are others, but these should be obvious to even the most casual observer.

The main point is that humanity should diversified its dependency of Oil. Both for economical and enviromental reasons.

The War in Iraq has an affect on oil price for various reasons.

1. The cost of the war to the American tax payer is between 1.2 to 3 trillion $$$.

imagine what might have happened if some of that money (Even a small percentage) would have been diverted to develop alternative energy sources?

2. You invade a country that was, at a time, the second largest Oil producer, and create chaos in that country. Wouldn't you say that it might have some affect on oil price?

---

Again, the main point is the need to move out of the idea that Oil is the single source of energy for our cars.
It's not economical, not sustainable, and not environmentally friendly.