360. WHEN INDEX SPECULATORS SELL...
As noted in #357, Michael Masters sparked a whirlwind of debate by pointing out the role of long-only index speculators in pumping commodity prices.
With oil prices as high as they are, this topic is still hot, so let's look at a specific example where index speculators liquidated a large position, and see what effect it had on the market. It occurred in 2006, and I learned about it from this article by Mack Frankfurter:
In addition to the issue of index funds accumulating long positions and thereby imputing an upward bias to commodities, there is another opportunity for market manipulation with respect to the construction and rebalancing of prominent commodity benchmarks such as the Goldman Sachs Commodity Index (GSCI).I find this extremely interesting. Institutional investors were forced to liquidate their unleaded gasoline futures due to a change in the composition of the GSCI, and gasoline dropped 82 cents in a month.
As reported by the New York Times on September 30, 2006 Goldman Sachs significantly readjusted in August of that year the GSCI's gasoline weighting. Index products tracking the GSCI, and representing an estimated $60 billion in institutional investor funds, were forced to rebalance their portfolios resulting in an unwinding of positions. Originally, unleaded gasoline made up 8.75 percent of the GSCI as of 6/30/2006 , but this was changed to just 2.3 percent, representing a sell-off of more than $6 billion in futures contracts.
As a result, gasoline fell 82 cent in the wholesale market over a four-week period, an unprecedented move; and crude oil, which in July 2006 traded over $79 per barrel for August delivery—at the time an all-time record—subsequently fell to around $56 by January 2007.
Many at the time argued that these moves were due to fundamentals, but… it should also be noted that the U.S. was in the midst of mid-term elections with Republicans facing a major fight to retain control over both Houses. According to a Gallup poll at the time, 42% of respondents thought that the Bush administration “deliberately manipulated the price of gasoline so that it would decrease before the elections.”
While the notion of a president single-handedly having the power to muscle a global market is highly questionable, the downturn in prices was welcome news for the then ruling party. Subsequently, Goldman Sachs sold its index business to Standard & Poor's including the GSCI commodity index family.
Unsurprisingly, the visibility of the GSCI brought Goldman Sachs unwelcome attention, especially given the coincidence of its former chairman's appointment as Secretary of Treasury, and an unscheduled GSCI rebalancing that forced a dramatic sell-off in the gasoline and crude oil futures market.
The New York Times article Frankfurter refers to is online here: Change in Goldman Index Played Role in Gasoline Price Drop.
Goldman Sachs, which runs the largest commodity index, the G.S.C.I., said in early August that it was reducing the index’s weighting in gasoline futures significantly. The announcement did not make big headlines, but it has reverberated through the markets in the weeks since and some other investors who had been betting that gasoline would rise followed suit on their weightings.This information strengthens my view that institutions/individuals investing in commodities through index products should be strictly regulated.
“They started unwinding their positions, and those other longs also rushed to the door at the same time,” said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation.
by JD
posted by JD @ 4:52 AM
33 comments
33 Comments:
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Thank you! JD
It is interesting to note the power that these funds and investors have on commodity prices. Especially the leverage that they can wield, by putting up so little money (capital) and having effect on price. Look at this old article by none other than Matt Simmons, about 10 years ago when shorts were dominant in the market place and the effect they had on suppressing oil price. Today the opposite is occurring it seems.
http://www.simmonsco-intl.com/files/012798.pdf
Unfortunately the financial side of the discussion lately has moved a little beyond my comprehension, although I have to say that it seems illogical that the fundamental supply and demand issues don't swing wildly on a day to day basis as the price of oil seems to do lately. The fact that oil spiked as hard as it did last week seems to make it implicit that speculators are having a profound impact on prices. i.e. (we were fine tuesday, wedenesday we hit peak oil, thurday it went public and then on friday the market responded). although like i said, this has gotten a little above my head.
JD...great blog...Yves Smith has had a few posts that attacks this topic.
The links are: here, here, and here (among others).
In defense of speculators: They may think that production shortages are coming in, say, six months, and start buying huge amounts of oil. This will drive up the price in the short-term, trigger more conservation/demand destruction, and then as the production falls off, they sell their oil back into the market, which cushions the price spike.
In other words, it may be fair to blame current price spikes on speculators, but there may be price spikes prevented by "speculation" that you'll never see.
Mark that is a good point. However, in the near-mid term, this causes a gross-misallocation of resources.
I'm a relative newb to this blog, so im not sure if JD has covered this in detail, but the Independent ran this article the other day addressing this problem.
Dr. Pike goes into more detail here.
Speculators caught short by crude price
http://us.ft.com/ftgateway/superpage.ft?news_id=fto060920081809394015&page=1
the speculators were actually not the longs. the speculators were SHORT! they got caught speculating that the oil price would go down and when it didn't the oil price rocketing higher. jd was wrong.
"when index speculators sell"
you mean when they have to sell all at once the price goes down a lot? kind of like when they have to buy all at once the oil price goes up $10 in a day like the other day?
peak oil debunked is a great blog but what's it gets outside of peak oil and gets into climate warming and economics it fails miserably.
Nobody here seems to have ever had any experience actually trading commodities. This is pretty obvious.
The idea that the market will keep going up if the long positions outnumber the short positions is the sort of baloney that one can expect from greenhorns who have never traded a dime's worth of commodities. The long positions outnumbered the short positions in Nickel before it fell 50 percent. And in oil, the short positions have until recently outnumbered the long positions but the prices have more than doubled in a year and a half. Boone Pickens' fund lost $560 million shorting oil earlier this year. He then reversed his bet.
And all this talk of leverage - try leveraging at 10 times your money in a margin account and trade oil for a day and see what happens. If you don't lose all your hair in a couple of weeks - come back to this site and report.
Since no one is actually going to test their hair brained speculation theories, I suggest reading the following article:
http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=381586&story_id=11453090
Just a thought one the declining inventories in the OECD and the US.
1. Weak demand has made refining margins go in the toilet. The US doesn't need $140 crude b/c there aren't buyers for it.
2. Refiners are ordering less oil b/c credit costs are spiking and the high cost of the raw commodity are really expensive on any companies balance sheet that actually purchases the stuff.
Total US oil supply (including the SPR) from the most recent EIA report was down about 3%. However, in Q1, US demand dropped from 20.7 Mbpd to 19.8mbpd or about 5%. That means on a days supplied, we now have more oil on hand than last year.
mxq: "However, in the near-mid term, this causes a gross-misallocation of resources."
Depends on who you are talking to. Ask a speculator, and there is no problem at all: this is ultimately the source of their profit.
'jd was wrong': they got caught speculating that the oil price would go down and when it didn't the oil price rocketing higher.
So you say the market was full of shorts. Curiously enough, the price of oil was going down. How'd that happen?
Then some nitwit at Morgan Stanley -- positions unknown -- freaked out, and so followed the rest of the speculators. This is classic stuff:
http://en.wikipedia.org/wiki/Alarm_signal#False_alarm_calls
Also google up "charlie foxtrot".
As for "commonsenseisuncommon"'s implicit argument that it's all the oil companies fault for failing to invest (thus creating the high prices), the government for failing to drill (thus creating the high prices), the regulators fault for failing to allow more refineries to be built (hence the price increases), and that we are witnessing a grand display of the fundamentals (cue the choir!) ... basically anything but the speculators themselves. I mean, that Economist article even had some speculators saying that speculators aren't at fault. Case closed. Or something.
(More seriously: that article is effectively another unquestioned mouth-piece of the speculative industry. Every last argument given there is straight from Morgan Stanley, Goldman Sachs and others in their little 'false alarm' calls to other market participants. At this point the Iranian Oil Minister could burp during a speech and the price would spike $25. Fundamentals? Feh. A pox on their computers.)
commonsenseisuncommon,
would you happen to have data that breaks out swap dealers' positions and includes the ICE WTI?
Phillip Davis had an interesting take on it back in September:
The Oil Scam Driving Crude Over $80
There's even a Peak Oil advocate claiming that this is the sort of behavior one would expect to see in a past-peak market. Puh-leeze...
"
So you say the market was full of shorts. Curiously enough, the price of oil was going down. How'd that happen?"
I don't follow you.
"At this point the Iranian Oil Minister could burp during a speech and the price would spike $25. Fundamentals?"
I would almost feel more comfortable with a geological reality of peak oil than this market insanity. Geology isn't known for it's impulsiveness and whims and panic and greed. I am glad the markets have stepped in to further muck up the issue of peak oil, hopefully the profit mongers can create a situation where market aether poses a worse usable resource crisis than a peak and decline scenario ever could have.
I have a soft spot for irony.
It's clearly evident that the market is no longer "working". As much as the price increases, oil still struggles to grow production. That's the main reason of panic. And panic is in the driver's seat right now, not because people lost their grip but because there is the sense of entering in unknown territory. People don't know anymore the "real" value of oil. So people speculate. And they speculate wildly. Until the "market" responds by some known and safe response, like for instance, a big supply boost, then people may calm down for a while.
Until then, though, its mayhem in the markets. Unknowns in unknowns. Fog of war. Peak Oilers are right claiming that this ought to happen in a "post peak oil", though I still doubt we reached that yet. But oil is becoming scarce in many minds right now, and that's enough to skyrocket prices.
Econogeek-
1. Weak demand has made refining margins go in the toilet. The US doesn't need $140 crude b/c there aren't buyers for it.
2. Refiners are ordering less oil b/c credit costs are spiking and the high cost of the raw commodity are really expensive on any companies balance sheet that actually purchases the stuff.
I mentioned this being a problem in an earlier post when I used the term "artificial supply shortage."
You really just illustrated how we are in the early stages of just that.
The price now is getting really prohibitive, so the refiners are buying less oil which is causing inventories to fall and the price to further increase.
There is no real shortage of oil, there is a shortage of people BUYING oil which is running down inventories.
And what happens when inventories decrease? The price increases, causing further pullbacks in purchases.
At some future point this will lead to a REAL oil shortage because our suppliers will, in response, stop producing because we are buying less. This will FURTHER increase prices to even FURTHER artificially high levels but at that point there will be a an actual supply/demand fundamental at play- the producers will just stop pumping because no one will want to buy oil at $200.00 a barrel.
Those who really believe that the price of the commodity will reach those heights and beyond should think about what oil at those prices really means.
Also, some nitwit made a comment about oil at these prices "not generating new supply."
I don't know what people who think this way are smoking but, 1. there is new oil supply to meet the heightened demand- JD proved that with a post which showed oil supply relative to demand a few posts ago. 2. Oil has gone from around $70.00/barrel to nearly double that since September of '07. I don't know what world the people who write the junk that gets posted on Bloomberg are living in, but I understand oil production to take a few years to come online from discovery to production (Brazil is saying that their recent discoveries will be producing in what, 3 or 4 years?).
New supply takes time to come online. And these higher prices are actually hindering new supplies that already should have come online in Russia and its former republics.
Demand for crude is falling in the U.S., and the rate of the decline is increasing.
I suspect in the next two years the real results of conseravtion and alternative fuels will start showing up -- meaning even larger declines are ahead.
How will crude prices go up when demand keeps going down?
I dunno.
Much more info can be found about peak oil.
"Demand for crude is falling in the U.S"
the US ain't the only economy on the block.
and FYI for jd, when one side is heavily piled onto one side of a trade it only takes a few on the other side to move the market and cause a short spike like what we got the other day with oil.
you can have too many buyers or too many short.
BP says world crude demand rose 3.1percent in 2004, then 1.4 percent in 2005, then 0.7 percent in 2006. Since then we have had more price hikes (check out world statistical review, on the BP website).
I suspect Peak Demand was hit in 2007, and 2008 will be the first year of crude demand declines. IEA figs make no sense. They muist be on crack.
Global oil demand fell by 11 percent after the 1979-1980 price spike.
So today, we have hit Peak Demand well before we hit Peak Oil. World oil and condensate production is still rising, even with Iran, Iraq, Mexico, Venezuela, Nigeria, Russia and Libya throttled by thug regimes. This is "Thug Oil," not Peak Oil.
Aram, very nice condensation of a preverse dynamic:
"The price now is getting really prohibitive, so the refiners are buying less oil which is causing inventories to fall and the price to further increase."
Going one step further, this might enhance the relative strength of those refiners owned/controlled by integrated oilcos since these latter can cross-subsidize between up and downstream operations.
Here's the current legislative update:
"Nonetheless, several proposals to rein in speculation on commodities markets are circulating in Washington. Representative Bart Stupak (D-Mich.) says he plans to introduce legislation to target speculation through swaps, foreign exchanges, and over-the-counter trades. Last month, Senate Majority Leader Harry Reid (D-Nev.), Senator Jeff Bingaman (D-N.M.), and others unveiled the Consumer-First Energy Act, which would mandate higher cash collateral for energy futures trading and ban traders of U.S. crude oil from routing their transactions through offshore markets. And Representative John Larson (D-Conn.) is expected to propose legislation that would go a step further, effectively banning over-the-counter energy futures trading by those who don't take physical delivery of the commodity."
Link
"Under scrutiny from lawmakers now are two rules that allow institutional investors to funnel billions of dollars into the crude futures market, far beyond the speculation limits imposed on trading on the New York Mercantile Exchange, owned by Nymex Holdings Inc. (NMX).
Maria Cantwell, D-Wa., Byron Dorgan, D-N.D., and Joseph Lieberman, I-Conn., are authoring legislation very similar to Stupak's Prevent Unfair Manipulation of Prices, or PUMP, Act. Among the proposals, one would subject Nymex's main competitor ICE Futures Europe, a unit of IntercontinentalExchange (ICE), to the same oversight as its New York counterpart. ICE offers contracts to trade crude in the U.S. but has been granted exemptions from the same rules governing the Nymex because it's considered a foreign operator.
The U.S. Commodity Futures Trading Commission, which last week unveiled plans to beef up its own oversight of the markets and disclosed a broad crude-oil investigation, already plans to require more information from dealers of swaps, and obtain details on investment funds using them to track the returns of commodity indexes."
Link
hey anon, that was the most ridiculous rationale I've seen in ages. How about signing up for all of us to see who's so dumb as to proclaim that:
There is no real shortage of oil, there is a shortage of people BUYING oil which is running down inventories.
And what happens when inventories decrease? The price increases, causing further pullbacks in purchases.
You take people in the high oil business as dumber than you, you moron. This idiotic rationale would imply that prices would skyrocket to the moon for the single reason that "people are too stupid to realise they are in a circular process".
Had you taken a simple Econ 101 class you'd see in your first day the error of your post.
It's so darn simple that you SHOULD NOT TRY TO COMPLICATE IT UNLESS YOU ARE A MORONIC TROLL:
If there are no buyers, then the price of oil shall fall to reach those buyers.
If there are too many buyers, then the price of oil shall rise to cut the marginal buyers
And, yes, oil demand is STILL 1 mbd higher than oil supply, so price has OBVIOUSLY to go up.
So, go fucking smoke your shit somewhere else, you dumbfuck.
So today, we have hit Peak Demand well before we hit Peak Oil.
It doesn't matter. What matters is the overlapping figures. If demand is stagnating is because it is still 1 mbd HIGHER than supply. And supply has been in stagnation since 2005. It will require a steep upward supply figure to calm things down, and to balance the charts.
Until that happens, we'll continue to have the oil markets trying to market out the 1mbd of shortage by price.
hmm, don't know what happened, when I posted my comment, I'm sure that "aram" had "anonymous" in its title. wth?
So, ok, aram, now I know who's smoking real shit.
Luis Diaz-
So you want to get nasty an offensive about it all? Alright. You do that. You get as nasty and offensive as you like. Enjoy you 9-euro gasoline.
You take people in the high oil business as dumber than you, you moron.
I don't, actually.
Over and over you accuse the OPEC nations of lying and treachery and take everything they say as incorrect as if you know more than they do.
If you believe I have done the same, please illustrate where. Oh, and be sure to show me why I'm incorrect.
If there are no buyers, then the price of oil shall fall to reach those buyers. If there are too many buyers, then the price of oil shall rise to cut the marginal buyers
Not in this environment. At least, not according to the fundamentals of supply and demand.
Recently gasoline inventories skyrocketed to the highest level since the early 90s. And that in a period of softening demand.
What was the result? Gas prices went up.
So where was your "Econ 101" thinking then?
Oh, and at the same time oil inventories were rising, and on no fundamentals we crossed and then blew through $100.00/barrel.
But let's not let facts get in the way of your "Econ 101" thinking.
And, yes, oil demand is STILL 1 mbd higher than oil supply, so price has OBVIOUSLY to go up.
Based on what?
The IEA disagrees with your assessment.
If demand is stagnating is because it is still 1 mbd HIGHER than supply. And supply has been in stagnation since 2005. It will require a steep upward supply figure to calm things down, and to balance the charts.
I know that you believe that repeating a wrong statement over and over again will somehow make it true. Perhaps repeating the truth over and over again will change your mind.
Go read JDs post about actual supply and demand from the IEA.
SUPPLY HAS NOT STAGNATED SINCE 2005.
THIS IS A LIE.
Supply has RISEN along with demand. Perhaps not in lock-step, but it has increased.
I am curious, where are you getting your 1 million barrel per/day shortfall number? Is this coming from the Matt Simmons or Boone Pickens websites?
aram-
So you want to get nasty an offensive about it all?
That's what you get when you call me "some nitwit" while regurgitating idiocies, dumbfuck.
Enjoy you 9-euro gasoline.
It's 1.5 euro, actually.
Over and over you accuse the OPEC nations of lying and treachery and take everything they say as incorrect as if you know more than they do.
WTF? Where did I say that, aram? And then you go ahead and accuse me of being a liar? WTF? Have you been staring too long at the mirror?
If you believe I have done the same, please illustrate where. Oh, and be sure to show me why I'm incorrect.
Read your comment again, where you said that price was too high, therefore refineries won't buy, therefore price will be higher. That's moronic circular behaviour. Got it?
Recently gasoline inventories skyrocketed to the highest level since the early 90s. And that in a period of softening demand.
What was the result? Gas prices went up.
Go see the fucking charts again. Gas prices skyrocketed because inventories weren't able to keep up that "steep rise" you claim. And there wasn't a "steep" rise, but only a buying frenzy. Perhaps refineries understood that oil was "cheap" in march and then bought it and refined it like hell. If you check the charts, US gas stock is BELOW average, DESPITE the gas record prices. Now what, aram? Econ 101 doesn't work in a nitpicking bullshiting way, okay? It works in an intelligent world where people have prospects and make guesses on the future.
Based on what?
(...)
Go read JDs post about actual supply and demand from the IEA.
I'm sorry, I like JD's blog and all, but I don't take his word like he's some kind of an authority.
The IEA disagrees with your assessment.
Oh, yeah? Let's see. Here's a chart for you. It's from IEA. Can you read? It says 87mbd world oil supply, 88mbd world oil demand. Who's lying now, dipshit? Or you just can't make subtractions?
Source. Not your usual peak oiler.
SUPPLY HAS NOT STAGNATED SINCE 2005.
THIS IS A LIE.
Supply has RISEN along with demand. Perhaps not in lock-step, but it has increased.
The real increase was in the first months in 2008 which blew the records. Demand has increased higher, so that the cushion we had in 2005 does no longer exist. To insist that oil is "growing" since 2005 is laughable. Oil hit the pause button since 2005 only to hit it again on 2008. In a practical sense, yeah, oil supply has stagnated. Let's see if it stagnates again, or if the recent growth is for real. I hope it is for real. We are still not ready for peak oil.
Luis Diaz-
That's what you get when you call me "some nitwit" while regurgitating idiocies, dumbfuck.
I wasn't referring to you.
That was someone who was quoted in a Bloomberg article speaking about how "higher prices" hadn't generated any new supply, which is incorrect for starters and also new supply just doesn't show up because someone wiggles their fingers. It takes time.
You can refer to my views as idiocies all you like; you have yet to actually prove anything I've stated to be wrong and you have yet to prove your own views.
Read your comment again, where you said that price was too high, therefore refineries won't buy, therefore price will be higher. That's moronic circular behaviour. Got it?
You missed a whole section about prices going up while demand is down.
I understand why though, because you don't believe that demand is down.
Well, it's ok- you can believe whatever you want.
The fact is demand for gasoline in the US is down while the price of oil to be refined into gasoline has reached a point where it is very prohibitive for refiners to buy it. If you reviewed the oil inventory report yesterday you saw that inputs to refineries are down while at the same time gasoline inventories rose. That is illustrative of the fact that demand is down. And refiners are not buying the oil because of the lack of demand and the prohibitive price. That leads to lower inventories, which leads to higher prices. But inventories are only low because demand is lower and prices are prohibitive. It's an "artificial" shortage.
I'd love to link you to a Bloomberg article from this morning that is no longer listed which spoke about just what I am talking about, since you seem to be so dismissive of the whole concept because you don't like me.
Go see the fucking charts again. Gas prices skyrocketed because inventories weren't able to keep up that "steep rise" you claim.
???
Gas prices never had their seasonal drop- they only went up from their highs of last summer!
Did you miss all those stories through the first quarter about gasoline inventories reaching their highest level since the early 90s?
And there wasn't a "steep" rise, but only a buying frenzy. Perhaps refineries understood that oil was "cheap" in march and then bought it and refined it like hell.
Ok, I must be wrong- going from the low inventories of the end of last year's summer "driving season" and the lows of the winter switch to focus on heating oil to, what, 12 weeks straight of inventory gains for gasoline to stockpiles that were the highest since the early 90s? I call that a big increase.
Obviously we differ on what we call a big increase.
I'm sorry, I'm not the expert you are. I didn't take your version of "Econ 101."
If you check the charts, US gas stock is BELOW average, DESPITE the gas record prices.
Yes, I am aware of that. I wasn't talking about now, I was talking about the first quarter. You know what I was talking about and the point I was trying to make; I don't understand why you're acting as though I said something I didn't.
It doesn't matter.
The point still is that you are acting as though the traditional rules of the marketplace and economics are in play. They aren't. You are hung up on your misinterprutation of what I said about the recent gasoline inventory gains- demand was down and supply was WAY up. What did you learn was supposed to happen in "Econ 101" when supply is high and demand is low?
Prices are supposed to go down.
Has that happened?
NO.
Prices have only increased since last year's summer driving season.
The whole complex is out of balance.
I'm sorry, I like JD's blog and all, but I don't take his word like he's some kind of an authority.
It wasn't JD's word, it was the word of the International Energy Agency.
Experts who you think are stupid or who are lying.
Oh, yeah? Let's see. Here's a chart for you. It's from IEA. Can you read? It says 87mbd world oil supply, 88mbd world oil demand. Who's lying now, dipshit? Or you just can't make subtractions?
Yeah, it's an ESTIMATED BAR CHART.
You do understand what an ESTIMATE is, right? A bar chart based on earlier ESTIMATES of what supply and demand would be, ESTIMATES which are constantly subject to change.
Actually read the IEA's monthly oil market reports (THE WHOLE REPORT)as opposed to just looking at the older ESTIMATED bar charts. Which don't actually say what you think they say.
Average Supply, 2004: 83.4 BPD
Average Supply, 2005: 84.6 BPD
Average Supply, 2006: 85.4 BPD
Average Supply, 2007: 85.6 BPD
Average Supply, 1Q08: 87.3 BPD
Your whole argument is blown about "stagnant" supply from 2005.
Those are the IEA's numbers, not mine, not JDs, not anyone elses. Far from "stagnating" since 2005, supply growth slowed in 2007 but as you have said has picked up as of the first quarter.
Just one quick point...
If speculators are not driving this train, how come that same group refuses to allow/desire for greater transparency in the market?
I'm all for free markets, but economic thinking suggests that markets work most efficiently when information about all transactions and participants roles are clear. I don't know if any rules regarding trading need to be changed, but we need to have disclosure so that we can at least determine how much of the run up is clever financial instruments and how much of it is based on fundamentals
Oh, yippee, yeah, Lieberman, it's time to introduce something similar to this.
Lieberman bills would curb energy speculation
Please get this through, before Myra Maefong's prediction comes true.
Inflation has yet to hit the vital water market
'"Water is a valuable natural resource and the demand for it is not elastic," said Sean Brodrick, a natural resources analyst for MoneyandMarkets.com. "As prices rise, consumption does not decrease" so investors should see steady price acceleration as demand climbs, he said in a recent report.'
Anyone wishing to profit off of water shortages is a grade-A scumbag in my book, and the desire to raise U.S. rates in a year where at least half the country is suffering from too much water is probably blatant gouging, though I understand that energy prices are driving water rates, and that water is highly subsidized.
As some have said, if you chase the speculators out of oil, they'll jump somewhere else. Now why would they jump somewhere else if it's just supply and demand?
And speaking of suffering from too much water...
Midwest floods may send gas up 15%
The rising price would be due to the corn price, rising due to floods. We have the curious phenomenon of it being dry in my part of the county while experiencing flooding in other parts of the county (to be fair, the county is bordered by the Mississippi River.)
We have definitely seen crop damage due to an overabundance of that scarce water.
I'm sure glad the legislators are on the case of "excess speculation", whatever the heck that is.
I mean, they did so well with ethanol mandates, the fuel supply problem is virtually solved. If only the farmers would stop growing food, dang it.
Now they just need to set fixed fuel prices and that will fix the price problem. Then they can bomb Iran.
aram
"You can refer to my views as idiocies all you like; you have yet to actually prove anything I've stated to be wrong and you have yet to prove your own views."
I have nothing to prove you. Believe in santa claus if you feel like it. I will not stop calling that idiocy.
"That was someone who was quoted in a Bloomberg article speaking about how "higher prices" hadn't generated any new supply, which is incorrect for starters and also new supply just doesn't show up because someone wiggles their fingers. It takes time."
See the troll inside you? It keeps coming. You've just said that the nimwit who wasn't me said an idiocy about supply hadn't been generated, and then you go ahead and defend that "it takes time". D'OH!
Tell me, after you agreed that new meaningful supply hasn't arrived because it "takes time", how do you feel being a "nimwit"?
"I understand why though, because you don't believe that demand is down.
Well, it's ok- you can believe whatever you want."
Now, you are blind or smth? Didn't you see the chart from the IEA? Demand is a whooping 88mbd, 1 mbd more than supply. It isn't about belief, you dolt. It's about facts. Why should I even try to prove you wrong if when I do, you just dismiss my evidence and go on with your dogma?
"You do understand what an ESTIMATE is, right? A bar chart based on earlier ESTIMATES of what supply and demand would be, ESTIMATES which are constantly subject to change."
You idiot! When JD posted his reference a month ago he was also referring to the same chart! It was also an estimate, by your own accounts! Are you trolling me?
"Your whole argument is blown about "stagnant" supply from 2005. "
Yeah, you just blowed my point away.
Or, probably NOT, as this chart confirms my point exactly.
So troll off already.
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