Re:Why Gas Is So Expensive Today (Hint: It’s Not Libya)
by natrius on Saturday March 12, 2011 @02:26AM
(#2316285)
And if those speculators are right, people will be praising them for having the foresight to save oil for such a situation, which will lower prices compared to the speculation-free scenario.
Speculation could probably have negative effects on markets in theory, but it's so hard to take such claims seriously since they're rarely based on sound economics.
Re:Why Gas Is So Expensive Today (Hint: It’s Not Libya)
by im3w1l on Saturday March 12, 2011 @02:37PM
(#2317296)
Speculation has had negative effects in practice: The tulip crisis. Sometimes speculation can turn into a pyramid game.
I'm not saying that this is always, or even often the case, but it is sometimes the case.
Re:Why Gas Is So Expensive Today (Hint: It’s Not Libya)
by RickHull on Saturday March 12, 2011 @03:34PM
(#2317433)
> Speculation has had negative effects in practice: The tulip crisis
Guess who got hurt in the tulip crisis?
...
The speculators. Their harm tends to be self-contained.
Re:Why Gas Is So Expensive Today (Hint: It’s Not Libya)
by Eliezer on Saturday March 12, 2011 @01:06PM
(#2317124)
So somebody is paying nontrivial amounts to store oil that they think will be worth more tomorrow than today. If they're right, they win. If they're wrong, they lose money. If what they believe is true, they help us all and make a profit. If what they believe is wrong, they hinder us all and make money.
Where is the private incentive that is actually at odds with the public one?
It's so full that they're building more capacity to store more oil. The situation is the same in other parts of the world.
BTW, this is common knowledge for those who follow the commodities markets. Oil prices are high because of perceived risk of potential supply contraction due to instability in the middle east. It's a risk trade, i.e. speculation.