WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
problem w/ your theory is that oil price spikes have happened under both parties' watch...There is no outrage because a democrat is president and the media is nothing more than a DNC mouth piece.
correct... and those financial derivatives (hedges) are traded publicly... there are not people who sit in dark rooms passing money around the table to their benefit. The prices for oil and the hedges against their movement are traded on public markets (at least indirectly through corporations or investment funds). You could buy a piece of that action if you wanted to... problem is that most retirement funds (which is where the majority of individual Americans have investments) do not allow much exposure to high risk transactions such as currency and fuel hedging.I'm not buying it. Oil is produced all over the world and is consumed all over the world. It's traded in financial markets all over the world. The current price represents the world's perceived value, right now, for a barrel of oil. It's higher than you think it should be, but it's still relatively cheap.
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The core of the argument is that there is a limited amount of oil in the world and the demand for it is growing faster than the supply.
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Sure you have a large amount of that oil that is controlled by a cartel that does not respond to market forces but is relatively free to price the product outside of the realm of market forces.... but they do not control all of the oil in the world. They hold nearly 80% of global petroleum reserves but only about 45% of production.
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The most significant part of non-OPEC controlled oil is US production. While global prices will impact the prices of domestically produced oil, no other country or organization can influence the rate of production in the US. The laws of supply and demand clearly would allow more domestic production to help offset supply disruptions elsewhere as well as to help moderate prices.
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But the single largest factor that is affecting global oil prices right now is the strength of the US dollar relative to other global currencies, esp. those of countries that are competing to buy larger percentages of global oil.
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Given that US lawmakers have not made the tough choices to cut the budget and are continuing w/ business as usual, the US dollar will continue to shrink in value relative to other currencies and the price of oil will increase.