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Originally posted by neo96
Yeah it is a serious question that is simply answered
The World is dictating the price of oil the US Government is dictating the price at the pump just like in every country every single one pays a different price at the pump.
Originally posted by mastahunta
The government dictates the price?
OK Neo... do ever even think about what you write any more?
why do you prove it?
Originally posted by mastahunta
Simply put, gas prices rising in the U.S -
They are rising because the marketeers are free to speculate and manipulate
the prices of Gas and any commodity. We pay until it hurts so some people
can take our financial pain and profit from it.
Originally posted by Sagittarian69
reply to post by mastahunta
I need educated here. How does speculation affect the price of gas and other commodities? They "think" that sometime in the future the price will be higher so, it gets higher? Help a brother out here. Anyone?
I have a little understanding of the commodities market and cannot see how this works.
How does oil speculation raise gas prices?/
An oil future is simply a contract between a buyer and seller, where the buyer agrees to purchase a certain amount of a commodity -- in this case oil -- at a fixed price [source: CFTC]. Futures offer a way for a purchaser to bet on whether a commodity will increase in price down the road. Once locked into a contract, a futures buyer would receive a barrel of oil for the price dictated in the future contract, even if the market price was higher when the barrel was actually delivered.
As in all cases, Wall Street heard the word "bet" and flocked to futures, taking the market to strange new places on the fringe of legality. In the 19th and early 20th centuries it bet on grain. In the 21st century it was oil. Despite U.S. petroleum reserves being at an eight-year high, the price of oil rose dramatically beginning in 2006. While demand rose, supply kept pace. Yet, prices still skyrocketed. This means that the laws of supply and demand no longer applied in the oil markets. Instead, an artificial market developed.
Strong demand, tight supplies and a volatile marketplace have attracted the interest of investors – the last main contributor to high prices.
“The speculator has seized upon this opportunity,” said Schork. “They have recognized there is something fundamentally flawed in this market.”
Since 2003, the number of oil contracts exchanged on the NYMEX has more than doubled, said Schork.
Money flowing into oil – and commodities in general – has been especially sharp over the last 6 months as investors look for good returns amid falling stock prices and an inflation hedge against a falling dollar.
That’s helped push oil prices to nearly $130 a barrel and gasoline to an average of nearly $3.80 a gallon – smashing previous records even when adjusting for inflation.
The large purchases of crude oil futures contracts by speculators have, in effect, created an additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.