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  1.  
    Originally Posted by Dyzalot View Post

    They speculated that prices would rise in the future.

    You're out of your element Donny

    Yes, they bet that oil prices would rise and they locked in their costs. They are NOT however considered speculators, they are hedgers. They actually take delivery of oil, they only hedge what they use, and as hedgers they play by a COMPLETELY different set of margin rules.

    Had they bought futures on twice the oil that they'd use they'd be speculators.

    Nobody is blaming hedgers for the price spikes. Speculators have no cap on how many oil contracts they buy.

    EDIT: Dyz is right about speculators. Speculators slow futures markets down, not the other way around. The futures markets were created for hedging. The ONLY reason speculators are allowed is because the volume adds liquidity and LOWERS volatility. The people crying to get rid of speculators are fucking retarded.
    Edited By: JAAAAA!!!! Mar 2nd, 2012 at 04:20 AM
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  2.  
    Originally Posted by saxman View Post

    Can someone smarter than me (its not that hard) please explain why your gas prices are suddenly stabilizing with the rest of the developed world?

    The USA has for as long as i can remember been a net importer of oil - you have always used billions more than you produce. You buy your oil on the open market like every other nation yet your gas prices have always been 1/2 of what everyone else's prices have been. Does anyone have an explanation for this? And it really has nothing to do with the value of the USD because the spread is not significant enough to explain that.

    When we went to Toronto, I started jerking off when I saw gas prices. Then I found out about that whole liter thing


    Canadians, tricking Americans since they "let us take" Maine
    Edited By: dolphin13 Mar 2nd, 2012 at 04:20 AM
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  3.  
    Originally Posted by Goldenad View Post

    now thats just rude :-/



    yeah i mean this is the main argument for not including stuff like the price of gas in the inflation rate. some goods have incredible price fluctuations. the price of gas dropped nearly 80% in less than a year in 2008-2009. im not saying its right or wrong, just the traditional argument for excluding them.

    too bad its not an argument, just a statement without in basis fact or reason.
    Edited By: phish42O Mar 2nd, 2012 at 04:18 AM
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  4.  
    Originally Posted by phish42O View Post

    there hasnt been a fucking swing. the graph does not go down. it only goes up.

    You didn't see gold go down like 6 percent yesterday??
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  5.  
    Originally Posted by saxman View Post

    Can someone smarter than me (its not that hard) please explain why your gas prices are suddenly stabilizing with the rest of the developed world?

    The USA has for as long as i can remember been a net importer of oil - you have always used billions more than you produce. You buy your oil on the open market like every other nation yet your gas prices have always been 1/2 of what everyone else's prices have been. Does anyone have an explanation for this? And it really has nothing to do with the value of the USD because the spread is not significant enough to explain that.


    not sure but i've heard its because we subsidize it, not exactly sure how but thats what ive heard.
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  6.  
    Originally Posted by Dyzalot View Post

    Our gas taxes have been lower than most of the world.

    this may be true to an extent - our tax on gases includes HST, federal excise tax and provincial road tax which amounts to about 25% of the cost per litre - this is how we pay for roads, bridges and infrastructure. Not sure about the rest of the world tho.
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  7.  
    Originally Posted by JAAAAA!!!! View Post

    You're out of your element Donny

    Yes, they bet that oil prices would rise and they locked in their costs. They are NOT however considered speculators, they are hedgers. They actually take delivery of oil, they only hedge what they use, and as hedgers they play by a COMPLETELY different set of margin rules.

    Had they bought futures on twice the oil that they'd use they'd be speculators.

    Nobody is blaming hedgers for the price spikes. Speculators have no cap on how many oil contracts they buy.

    Pretty sure they were speculators since they don't use oil, they use fuel.

     

    Airlines know this very well. For years, airlines have tried to hedge their risks by speculating in oil markets; indeed, one source of profitability for Southwest Airlines has been their astute speculation in oil markets.

    http://www.independent.org/newsroom/article.asp?id=2267
     3
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  8.  
    Originally Posted by tekiller View Post

    not sure but i've heard its because we subsidize it, not exactly sure how but thats what ive heard.

    i wasn't sure about the subsidies but that was my first suspicion
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  9. Hey everybody. Im a speculator because I filled my gas tank today, cuz I know prices are going up tomorrow!!!!
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  10.  
    Originally Posted by Dyzalot View Post

    Pretty sure they were speculators since they don't use oil, they use fuel.



    http://www.independent.org/newsroom/article.asp?id=2267

    Splitting hairs much? I wonder why they buy oil futures since they use "fuel." God I've always hated people that can't admit they're wrong. Do they speculate in lean hogs too? Did they just pick contracts out of a hat and happen to decide on oil?

    Even in your quote "hedge their risks"

    Joker
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  11.  
    Originally Posted by Dyzalot View Post

    Then what is "inflation"? Are we talking about an increase in the money supply or an increase in prices? If it is the increase in prices then how is it not an indicator of where prices are when you look at prices?

    maybe i don't look at it the same way you do - i can remember my dad pulling into a gas station and putting $2 worth in the tank and that got him through most of the week. But he was only making a few bucks an hour. Today, i put $40 in the tank and it gets me through the week but i make $40/hour for the sake of argument.

    Maybe if i didn't make so much money, i wouldn't have to pay so much at the pump. How far does your dollar go in relative terms. Is that your argument? My dad never owned a home, never had cable t.v., internet access and cell phones either. It sounds like a chicken / egg thing to me.
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  12.  
    Originally Posted by dolphin13 View Post

    You didn't see gold go down like 6 percent yesterday??

    gold... can you eat it? one day = short short short short term. everything is volatile short term. inflation is not measured short term. at its smallest interval it is measured monthly. milk prices, although slightly volatile on a monthly basis are not volatile on a yearly basis.

    and you know this and much more than me so stop trolling me . . . or at least troll harder, flank me.
    Edited By: phish42O Mar 2nd, 2012 at 04:33 AM
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  13.  
    Originally Posted by JAAAAA!!!! View Post

    Splitting hairs much? I wonder why they buy oil futures since they use "fuel." God I've always hated people that can't admit they're wrong. Do they speculate in lean hogs too? Did they just pick contracts out of a hat and happen to decide on oil?

    Even in your quote "hedge their risks"

    Joker

    Just because you are "hedging your risk" does not mean you aren't speculating.
     3
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  14.  
    Originally Posted by saxman View Post

    maybe i don't look at it the same way you do - i can remember my dad pulling into a gas station and putting $2 worth in the tank and that got him through most of the week. But he was only making a few bucks an hour. Today, i put $40 in the tank and it gets me through the week but i make $40/hour for the sake of argument.

    Maybe if i didn't make so much money, i wouldn't have to pay so much at the pump. How far does your dollar go in relative terms. Is that your argument? My dad never owned a home, never had cable t.v., internet access and cell phones either. It sounds like a chicken / egg thing to me.

    You nailed it without realizing it. The problem is when the prices rise faster than the wages.
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  15.  
    Originally Posted by saxman View Post

    maybe i don't look at it the same way you do - i can remember my dad pulling into a gas station and putting $2 worth in the tank and that got him through most of the week. But he was only making a few bucks an hour. Today, i put $40 in the tank and it gets me through the week but i make $40/hour for the sake of argument.

    Maybe if i didn't make so much money, i wouldn't have to pay so much at the pump. How far does your dollar go in relative terms. Is that your argument? My dad never owned a home, never had cable t.v., internet access and cell phones either. It sounds like a chicken / egg thing to me.

    What you are describing is inflation in the labor market and in the consumer market. Yes they can equal out for those who are working but that doesn't do much good to someone living off of savings or a fixed income.
     3
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  16.  
    Originally Posted by Dyzalot View Post

    Just because you are "hedging your risk" does not mean you aren't speculating.

    hedging means covering your bets - speculating means betting on something going up or down when you have nothing invested in the game.
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  17.  
    Originally Posted by JAAAAA!!!! View Post

    You nailed it without realizing it. The problem is when the prices rise faster than the wages.

    No. When prices rise at all it hurts savers and helps debtors regardless of wages.

     
    Originally Posted by saxman View Post

    hedging means covering your bets - speculating means betting on something going up or down when you have nothing invested in the game.

    Semantics.
     3
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  18. Hedging involves taking an offsetting position in a derivative in order to balance any gains and losses to the underlying asset. Hedging attempts to eliminate the volatility associated with the price of an asset by taking offsetting positions contrary to what the investor currently has. The main purpose of speculation, on the other hand, is to profit from betting on the direction in which an asset will be moving.

    Read more: http://www.investopedia.com/ask/answ...#ixzz1nvmDCeRq
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  19.  
    Originally Posted by dolphin13 View Post

    Hedging involves taking an offsetting position in a derivative in order to balance any gains and losses to the underlying asset. Hedging attempts to eliminate the volatility associated with the price of an asset by taking offsetting positions contrary to what the investor currently has. The main purpose of speculation, on the other hand, is to profit from betting on the direction in which an asset will be moving.

    Read more: http://www.investopedia.com/ask/answ...#ixzz1nvmDCeRq

    Did Southwest not profit by betting on which direction the market would go?
     3
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  20.  
    Originally Posted by Dyzalot View Post

    Semantics.

    it's not semantics at all tho - yesterday i purchased $1mm of rod in USD. In order to secure our position on the cost, we purchase a contract in USD exchange to protect our cost.

    On the other hand, a speculator might be buying USD without having an investment to protect. He is simply betting on whether the price rises or falls to benefit from his USD contract. That is his only objective.
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  21. Gasoline Prices Are Not Rising, the Dollar Is Falling

    Unfortunately, the talking heads that are trying to explain the reasons for high oil prices are missing one tiny detail. Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more.

    What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point.
    As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl. All this means is that the market value of a barrel of WTI is 105.88 times the market value of “the dollar”. It is also true that WTI is trading at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different in each case is the value of the monetary unit (euros, yen, and British pounds, respectively) being used to calculate the ratio that expresses the price.

    In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.

    During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Plotted as a graph, the line representing the price of a barrel of oil in terms of gold has crossed the horizontal line representing the long-term average price (Au0.0732/bbl) 29 times.
    At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon.

    http://www.forbes.com/sites/louiswoo...ar-is-falling/
    Edited By: ParanoidAndroid Mar 2nd, 2012 at 04:57 AM
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  22.  
    Originally Posted by phish42O View Post

    gold... can you eat it? one day = short short short short term. everything is volatile short term. inflation is not measured short term. at its smallest interval it is measured monthly. milk prices, although slightly volatile on a monthly basis are not volatile on a yearly basis.

    and you know this and much more than me so stop trolling me . . . or at least troll harder, flank me.


    Troll you?? Lol

    You said the commodities line points straight up and doesn't go down. Silver was just short of 50 like a year ago and gold was over 1,900. Now its 35 and 1,700. Don't get butthurt and accuse me of trolling when I bring up facts

     
    Originally Posted by ParanoidAndroid View Post

    Gasoline Prices Are Not Rising, the Dollar Is Falling

    Unfortunately, the talking heads that are trying to explain the reasons for high oil prices are missing one tiny detail. Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more.

    What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point.
    As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl. All this means is that the market value of a barrel of WTI is 105.88 times the market value of “the dollar”. It is also true that WTI is trading at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different in each case is the value of the monetary unit (euros, yen, and British pounds, respectively) being used to calculate the ratio that expresses the price.

    In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.

    During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Plotted as a graph, the line representing the price of a barrel of oil in terms of gold has crossed the horizontal line representing the long-term average price (Au0.0732/bbl) 29 times.
    At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon.

    http://http://www.forbes.com/sites/louiswoodhill/2012/02/22/gasoline-prices-are-not-rising-the-dollar-is-falling/


    Jesus Christ. I love gold MORE than the next guy but some of these gold bug arguments, including some stuff from my beloved Peter Schiff are fucking retarded.
    Edited By: dolphin13 Mar 2nd, 2012 at 04:45 AM
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  23.  
    Originally Posted by Dyzalot View Post

    Just because you are "hedging your risk" does not mean you aren't speculating.


    You're the dumbest smart guy alive. If they are buying oil contracts to protect their fuel costs they are HEDGING. It's the definition of hedging. Of course if you do anything in any market by the Websters definition you are speculating (again, you're just splitting hairs to be obnoxious). When you speculate in futures because you have to buy fuel you are hedging.

    The fact you're completely missing is that when Southwest wins on their oil futures they lose on fuel prices. H E D G E R S

    Speculators buy oil futures, they go up, they don't have to buy more expensive fuel, and it's all profit.
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  24.  
    Originally Posted by saxman View Post

    maybe i don't look at it the same way you do - i can remember my dad pulling into a gas station and putting $2 worth in the tank and that got him through most of the week. But he was only making a few bucks an hour. Today, i put $40 in the tank and it gets me through the week but i make $40/hour for the sake of argument.

    Maybe if i didn't make so much money, i wouldn't have to pay so much at the pump. How far does your dollar go in relative terms. Is that your argument? My dad never owned a home, never had cable t.v., internet access and cell phones either. It sounds like a chicken / egg thing to me.


    the problem sax is that wages don't increase nearly as quickly as inflation, in the trucking business for example back in the 80's you could get 20 cents a mile starting out with a company through their training. nowadays starting out you get 25 cents a mile. when if wages matched inflation it would be double or triple that. but it would also reverberate throughout the economy cuz all the other wages that haven't increased.

    why i complain about the fed reserve a lot, its just not realistic for wages to keep up when the fed keeps interest rates so low and pumps out as many dollars as they do. people compare what the federal reserve is doing now to what it has been doing not to what they should have been doing for years. in all likelihood just shifting the problem from one thing to another.

    question i would have for bernanke is what will the fed do if hyperinflation does set in when people realize how much money has been pumped into the economy. what will he do? he says inflation isn't really a concern at the moment but what if. the economy is going to be larthargic for years (if not crap out again) and when it does recover.

    a dollar bubble?
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  25.  
    Originally Posted by dolphin13 View Post

    Troll you?? Lol

    You said the commodities line points straight up and doesn't go down. Silver was just short of 50 like a year ago and gold was over 1,900. Now its 35 and 1,700. Don't get butthurt and accuse me of trolling when I bring up facts




    Jesus Christ. I love gold MORE than the next guy but some of these gold bug arguments, including some stuff from my beloved Peter Schiff are fucking retarded.

    Most commodity prices do literally go straight up. You are doing it wrong if you're looking at a day, week, month, or even year.
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  26. killer, i think the confusion maybe that you're mixing up cause and effect in your specific industry with fed policy regarding inflation objectives and economic growth.

    The fed policy on interest rates is to maintain low rates to encourage investment because inflation is relatively low (separate argument). This in theory promotes economic growth although companies are still not investing as much as they would like, which has caused the economy to remain stagnant. It's been called a liquidity trap by those on the left.

    The wages in the trucking industry is a totally different argument / discussion because there are a lot of different factors that may influence your wages / profits. For example, i know that there has been a huge influx of east indian drivers in my area who work very long hours for lower wages. This is a huge benefit to the companies that employ them but has a negative impact on other drivers in the industry. Major trucking companies have also been adding a fuel surcharge to people like me that purchase services for many years but i am often told by owner / operators that in a lot of cases, those fuel surcharges do not get passed on to the drivers / operators. It's a fucked up world.
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  27.  
    Originally Posted by saxman View Post

    not being sarcastic at all - commodities that are traded on the open market are subject to wild swings in prices due to supply / demand, sensitivities to world political unrest and sensitivity to traders.


     
    Originally Posted by phish42O View Post

    there hasnt been a fucking swing. the graph does not go down. it only goes up.

    Sorry jaaaa, that doesn't seem to be what phish was saying
    Edited By: dolphin13 Mar 2nd, 2012 at 05:03 AM
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  28.  
    Originally Posted by dolphin13 View Post

    Sorry jaaaa, that doesn't seem to be what phish was saying

    i think Jaaa is talking about the long term trend versus short term trend. In the short term, volatile markets make them difficult to predict in terms of developing an inflation index (cyclical). Over the long term, commodities rise because of scarcity or technological issues, substitution factors, etc.
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  29.  
    Originally Posted by saxman View Post

    The fed policy on interest rates is to maintain low rates to encourage investment because inflation is relatively low (separate argument). This in theory promotes economic growth although companies are still not investing as much as they would like, which has caused the economy to remain stagnant. It's been called a liquidity trap by those on the left..

    Another reason other than the so called "liquidity trap" as to why business isn't investing in the future is because they have finally realized that the interest rate is not a reliable indicator anymore of how much consumers are saving in order to buy in the future. When the interest rate is allowed to be determined by the market it goes down when people are saving a lot which sends a signal to business that people want more things in the future. When interest rates are higher it is a signal to the market that savings is low and there won't be much consuming saved for the future. The fed has fucked this whole market up by keeping interest rates low even though savings is low and that is why we have these bubbles and malinvestment.
    Edited By: Dyzalot Mar 2nd, 2012 at 05:17 AM
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  30. so much sarcasm itt
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