Posted by IndianaRed on November 08, 2008 at 09:29:29 from (174.152.191.225):
In Reply to: gasoline price posted by poor on November 07, 2008 at 17:42:48:
Well let's see. OPEC announced this week that they we cutting production, again, due to lower demand. That was reported widely in the news this week, didn't you hear?
American gasoline reserves were higher than expected due to the slowing economy. Less economic activity means less stuff being moved around. That, too, was widely reported in the news, didn't you hear?
I work for a small shipping/courier company. We can definately tell you when the economy is good and bad. Our daily runs are down 50% from a year ago. Less economic activity means printers printing less, fabricators fabricating less, supply companies supplying less.
Very simple economics. It is supply and demand, stop believing the conspiracy theories. Yes, the speculators have some influence, but they are a necessary part of the equation. If they start bidding a commodity up, that is an indicator that supplies are low and demand is rising. The smart people, and those with a few dollars to spare, (unlike me), find that to be a really good time to buy into that market. Some of those people are fund managers, the guys that handle mutual funds for retirees, unions for teachers, police, and fireman, and people who invest for their retirement. Without speculation they would not have as good of an understanding as to what it happening, and what it likely to happen. Thus, the need for speculators.
As someone who drives over 200,000 miles a year, I am more sensitive than most to high fuel prices, but I don't bellyache about speculators. I get informed, and that helps me to understand what's going on, and that makes it a little easier to bear.
And if you are one that takes pleasure in "rich" pepole's pain, the speculators that bought futures at $149/barrel are taking it in the shorts now. That should give you some comfort.
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