Comments on: If you want to stop speculators you first have to identify them http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/ Conservative Party Member of Parliament for Wokingham Fri, 12 Mar 2010 18:11:02 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Gordy http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-22413 Gordy Wed, 16 Jul 2008 14:54:42 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-22413 In today's age where these speculators have forced high prices, governments run cowardly with thier tail between their legs, the best practice for any person feeling the inevitable pain and pinch of day to day living, should do as many are beginning to do - "BORROW" the gas wherever and whenever you can. Yes that's right, however, no worse than the oil companies and banks with their record profits. What is your return from your money they borrowed to make the profits.. 2%, maybe 3% of your bank savings... yes, if you don't touch it, but keep in mind, they made billions! Since the price increases, I have been forced to put a locking cap on my vehicle fuel tank. I have had my tank emptied 3 times, and yet my neighbourhood has not seen any crime and is quite well to do. So you tell me, who's the real theif? Maybe if it runs rampant enough, cities, states, and federal government may get a clue... aim to borrow from them first! In today’s age where these speculators have forced high prices, governments run cowardly with thier tail between their legs, the best practice for any person feeling the inevitable pain and pinch of day to day living, should do as many are beginning to do – “BORROW” the gas wherever and whenever you can. Yes that’s right, however, no worse than the oil companies and banks with their record profits. What is your return from your money they borrowed to make the profits.. 2%, maybe 3% of your bank savings… yes, if you don’t touch it, but keep in mind, they made billions!
Since the price increases, I have been forced to put a locking cap on my vehicle fuel tank. I have had my tank emptied 3 times, and yet my neighbourhood has not seen any crime and is quite well to do. So you tell me, who’s the real theif? Maybe if it runs rampant enough, cities, states, and federal government may get a clue… aim to borrow from them first!

]]> By: Adrian Peirson http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21750 Adrian Peirson Wed, 25 Jun 2008 22:49:59 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21750 Another reason is that Prices are rising because the value of our money is going down, Printing more money devalues it hence adding to the inflationary process. Public Borrowing too adds further to inflation because Interest must be paid on Public Borrowing. Include Speculation and you can see that the Majority of the Price rises are avoidable. http://www.youtube.com/watch?v=GLnryKeQ16A Another reason is that Prices are rising because the value of our money is going down, Printing more money devalues it hence adding to the inflationary process.
Public Borrowing too adds further to inflation because Interest must be paid on Public Borrowing.
Include Speculation and you can see that the Majority of the Price rises are avoidable.

http://www.youtube.com/watch?v=GLnryKeQ16A

]]> By: F0ul http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21736 F0ul Wed, 25 Jun 2008 14:30:55 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21736 two points need to be made. Firstly, the oil speculators are mainly found in the oil futures market - The best link in the mainstream press is possibly this one - http://business.timesonline.co.uk/tol/business/columnists/article4207213.ece The article confirms that most futures deals are done using a deposit, rather than the whole amount. This allows traders to just gamble - knowing that they will be earning the rest of the cost when the future matures. - Its the oil equivalent to the 125% negative equity mortgage! Secondly, many of the biggest markets for oil in the world have a subsided price for their citizens. China recently increased their price on the street and the price of oil futures dropped! If our government wants the price of oil to come down (which they don't because the extra duty has been a god send) they would be best talking to India and China about removing this subsidy! two points need to be made.

Firstly, the oil speculators are mainly found in the oil futures market – The best link in the mainstream press is possibly this one –
http://business.timesonline.co.uk/tol/business/columnists/article4207213.ece

The article confirms that most futures deals are done using a deposit, rather than the whole amount. This allows traders to just gamble – knowing that they will be earning the rest of the cost when the future matures. – Its the oil equivalent to the 125% negative equity mortgage!

Secondly, many of the biggest markets for oil in the world have a subsided price for their citizens. China recently increased their price on the street and the price of oil futures dropped!

If our government wants the price of oil to come down (which they don’t because the extra duty has been a god send) they would be best talking to India and China about removing this subsidy!

]]> By: William B. http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21723 William B. Wed, 25 Jun 2008 02:44:25 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21723 As a humble retired lawyer I know precisely nothing about the technicalities of dealing in stocks and shares. What I do know is trading in stocks and shares is an established business on which many pension funds are dependent and in which individuals can make or lose a fortune from the decisions they take. It seems to me that the very nature of the business means everyone involved is a speculator in that nothing is guaranteed, the players have to use judgment when placing their bets then keep their fingers crossed. There is nothing more objectionable about players betting on the movement of oil prices than betting on the movement of a horse around Epsom. As a humble retired lawyer I know precisely nothing about the technicalities of dealing in stocks and shares. What I do know is trading in stocks and shares is an established business on which many pension funds are dependent and in which individuals can make or lose a fortune from the decisions they take.

It seems to me that the very nature of the business means everyone involved is a speculator in that nothing is guaranteed, the players have to use judgment when placing their bets then keep their fingers crossed. There is nothing more objectionable about players betting on the movement of oil prices than betting on the movement of a horse around Epsom.

]]> By: John http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21718 John Tue, 24 Jun 2008 18:57:31 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21718 As Derek states, this government aren't interested in cutting the cost of anything. The Labour benches, void of MPs during the Cost of Living Debate today demonstrates their arrogance on the subject. As Derek states, this government aren’t interested in cutting the cost of anything. The Labour benches, void of MPs during the Cost of Living Debate today demonstrates their arrogance on the subject.

]]> By: Acorn http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21717 Acorn Tue, 24 Jun 2008 18:02:47 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21717 I have just watched the best speech you have ever made - cost of living debate - and without notes!!! I have doubts about these nasty oil speculators. Say, today, about 82 million barrels of crude will have been sold into the world market. At 135 dollars a barrel, on average, that comes to about 11 billion dollars worth. In order to speculate on a price rise in the next three months say, your Hedge Fund, or whatever vehicle you are using for "futures" investment, would have to have access to a considerable pile of credit at current "margin" trading terms. Frankly, I don't see speculators affecting the price that much - what say you? In my day job, I get to talk to a lot of people in the energy business. Those people have one refrain, they don't know where this government is going. We have a situation where the UKs nine principle refineries are not prepared to invest large quantities of money, to correct the imbalance in product output because the risk is too high. Refineries have more gasoline (petrol) and heavy fuel oil than the UK requires. They have a shortage of aviation fuel and diesel fuel and are importing it. This has been caused by the the electricity industry's change from heavy fuel oil to natural gas for generation; but, most of all by the governments ad-hoc tax and duty legislation. If I owned a refinery in the UK, I would not be investing large amounts of money to change the product mix, I would not trust this government to give me a stable fiscal base to get my required return on capital employed. Redwood fans may be interested in a some background reading from UKPIA. Crude supply is not the problem, refining is. http://www.ukpia.com/publications.aspx Reply: Thanks for your comments. The main problem is growth in demand, but there could also be some speculative/investment money helping push up prices. I have just watched the best speech you have ever made – cost of living debate – and without notes!!!

I have doubts about these nasty oil speculators. Say, today, about 82 million barrels of crude will have been sold into the world market. At 135 dollars a barrel, on average, that comes to about 11 billion dollars worth. In order to speculate on a price rise in the next three months say, your Hedge Fund, or whatever vehicle you are using for “futures” investment, would have to have access to a considerable pile of credit at current “margin” trading terms. Frankly, I don’t see speculators affecting the price that much – what say you?

In my day job, I get to talk to a lot of people in the energy business. Those people have one refrain, they don’t know where this government is going. We have a situation where the UKs nine principle refineries are not prepared to invest large quantities of money, to correct the imbalance in product output because the risk is too high.

Refineries have more gasoline (petrol) and heavy fuel oil than the UK requires. They have a shortage of aviation fuel and diesel fuel and are importing it. This has been caused by the the electricity industry’s change from heavy fuel oil to natural gas for generation; but, most of all by the governments ad-hoc tax and duty legislation.

If I owned a refinery in the UK, I would not be investing large amounts of money to change the product mix, I would not trust this government to give me a stable fiscal base to get my required return on capital employed.

Redwood fans may be interested in a some background reading from UKPIA. Crude supply is not the problem, refining is.

http://www.ukpia.com/publications.aspx

Reply: Thanks for your comments. The main problem is growth in demand, but there could also be some speculative/investment money helping push up prices.

]]> By: mikestallard http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21713 mikestallard Tue, 24 Jun 2008 15:35:02 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21713 One thing bothers me. Everyone understands that China and India are demanding "our" oil. But why is the price rising so fast and so suddenly? We are told that Iraq is now more or less pacified. There do not seem to be many suddenly urgent problems either in the rest of the world - Iran has been going nuclear for some time now. So why is there this huge, sudden increase in the price? Could it be that people who need to save money are putting it into something safe (not housing, not specie, but oil and food?) It is so refreshing to hear a politician resisting the urge to interfere! For that I can speak for all of us and say that we are both surprised and grateful! One thing bothers me.
Everyone understands that China and India are demanding “our” oil.
But why is the price rising so fast and so suddenly?
We are told that Iraq is now more or less pacified. There do not seem to be many suddenly urgent problems either in the rest of the world – Iran has been going nuclear for some time now.
So why is there this huge, sudden increase in the price?
Could it be that people who need to save money are putting it into something safe (not housing, not specie, but oil and food?)

It is so refreshing to hear a politician resisting the urge to interfere! For that I can speak for all of us and say that we are both surprised and grateful!

]]> By: Derek http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21711 Derek Tue, 24 Jun 2008 12:53:02 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21711 More a case of stop it I like it by the government. I can't belive anyone thinks the government is really interested in cutting the price of something, that in doing so will reduce the amount of their own, desperately needed, tax revenue. All a lot of hot air, how unusual. More a case of stop it I like it by the government. I can’t belive anyone thinks the government is really interested in cutting the price of something, that in doing so will reduce the amount of their own, desperately needed, tax revenue. All a lot of hot air, how unusual.

]]> By: Richard http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21709 Richard Tue, 24 Jun 2008 12:42:07 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21709 And lest we forget, the government "take" from oil is manifold. Under labour we've seen an increase in tax on the Oil producers, the refiners, the transport companies, Garages and at the pump. While nearly 70% of the cost of a litre of petrol is direct tax (fuel duty) almost 90% of the total cost comes from indirect taxes levied at every other stage of the production process. And lest we forget, the government “take” from oil is manifold. Under labour we’ve seen an increase in tax on the Oil producers, the refiners, the transport companies, Garages and at the pump. While nearly 70% of the cost of a litre of petrol is direct tax (fuel duty) almost 90% of the total cost comes from indirect taxes levied at every other stage of the production process.

]]> By: APL http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21708 APL Tue, 24 Jun 2008 11:41:41 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21708 JR: "It is best to leave well alone when so many people have directly or indirectly, knowingly or unwittingly become oil speculators." Well said Mr Redwood. I would qualify that:- it is best to leave well alone. Why is the government never called a speculator when it drives up the price of fuel for its own benefit? I suppose it isn't realy speculation which involves a element of risk, what the goverment does is form a cartel of one and fix the price of fuel for its own benefit. Imagine if BA and Easy Jet got together and decided a flight to Frankfurt would cost £1000? Can you imagine the outcry, the competition commission would be on to them PDQ. The price of petrol would be 75% lower if the government wasn't fixing the price at an artificially high level. Oh and one other question, why does the government think speculation in the oil market is bad, but speculation (which it has encouraged) in the housing market is good? The fact of the matter is, if the government hadn't debased and destroyed the value of the currency using its 'twin weapons of mass destruction', inflation and tax, over the last sixty years speculation would be on a much reduced scale. Where was the cash that is now flowing into oil speculation a year ago? It was in property and real estate, that bubble has now burst and sensible people are trying to maintain the value of their investments. The source of the speculative bubbles we see at the moment are not the speculators, they are just reacting in a rational manner to the climate set by the real culprets, government. JR: “It is best to leave well alone when so many people have directly or indirectly, knowingly or unwittingly become oil speculators.”

Well said Mr Redwood. I would qualify that:- it is best to leave well alone.

Why is the government never called a speculator when it drives up the price of fuel for its own benefit? I suppose it isn’t realy speculation which involves a element of risk, what the goverment does is form a cartel of one and fix the price of fuel for its own benefit.

Imagine if BA and Easy Jet got together and decided a flight to Frankfurt would cost £1000? Can you imagine the outcry, the competition commission would be on to them PDQ.

The price of petrol would be 75% lower if the government wasn’t fixing the price at an artificially high level.

Oh and one other question, why does the government think speculation in the oil market is bad, but speculation (which it has encouraged) in the housing market is good?

The fact of the matter is, if the government hadn’t debased and destroyed the value of the currency using its ‘twin weapons of mass destruction’, inflation and tax, over the last sixty years speculation would be on a much reduced scale.

Where was the cash that is now flowing into oil speculation a year ago? It was in property and real estate, that bubble has now burst and sensible people are trying to maintain the value of their investments.

The source of the speculative bubbles we see at the moment are not the speculators, they are just reacting in a rational manner to the climate set by the real culprets, government.

]]> By: Martin http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21707 Martin Tue, 24 Jun 2008 10:57:51 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21707 Totally agree John.....If nothing else the situation has made Joe Public realise at last, the appalling amount of tax levied on petrol. Martin Totally agree John…..If nothing else the situation has made Joe Public realise at last, the appalling amount of tax levied on petrol. Martin

]]> By: Mark Wadsworth http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21705 Mark Wadsworth Tue, 24 Jun 2008 10:44:24 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21705 Exactly. We won't know for sure that oil and food price rises were a speculative bubble until the bubble pops, if ever. So right now, it's too early to say. And, to those people who are sure that 'evil' speculators have doubled the price of oil (which is quite possible...), if they are so confident, then why don't they just sell oil or food futures, and make a mint when the bubble bursts? Do they have the courage of their convictions? Why did Al Gore buy a beachfront property? Continued page 94. Exactly. We won’t know for sure that oil and food price rises were a speculative bubble until the bubble pops, if ever. So right now, it’s too early to say.

And, to those people who are sure that ‘evil’ speculators have doubled the price of oil (which is quite possible…), if they are so confident, then why don’t they just sell oil or food futures, and make a mint when the bubble bursts? Do they have the courage of their convictions? Why did Al Gore buy a beachfront property? Continued page 94.

]]> By: Derek W. Buxton http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21704 Derek W. Buxton Tue, 24 Jun 2008 10:36:53 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21704 There was a programme on Channel 4 last evening where the presenter made a similar mistake. Talking of the high food prices he spoke to a "speculator" who boasted of making lots of money on corn futures, saying that they could only go up. Well up to a point, one good harvest or when the profits are enough, he will take the profit and then prices will collapse. Mind you if they go south first he takes the loss. Incidently, it was a really poor programme, more like the BBC than the "fearless" Channel 4. There was a programme on Channel 4 last evening where the presenter made a similar mistake. Talking of the high food prices he spoke to a “speculator” who boasted of making lots of money on corn futures, saying that they could only go up. Well up to a point, one good harvest or when the profits are enough, he will take the profit and then prices will collapse. Mind you if they go south first he takes the loss.

Incidently, it was a really poor programme, more like the BBC than the “fearless” Channel 4.

]]> By: Neil Craig http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21703 Neil Craig Tue, 24 Jun 2008 10:29:16 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21703 Speculation only happens if there is something to speculate about, otherwise they would just be buying dear & then having to sell cheap which doesn't work. My guess is that they are speculating that Bush, or McCain if he gets in &/or the Israelis are going to attack Iran, at which point Iran will not only turn off its own taps but close the Gulf to tankers. The fact that western refinery capacity is running at virtually 100%, in fact there is a shortage of capacity for Saudi heavy oil, also makes the system subject to hard knocks. This is because, for the last couple of decades "environmentalists" have prevented building more. Speculation only happens if there is something to speculate about, otherwise they would just be buying dear & then having to sell cheap which doesn’t work. My guess is that they are speculating that Bush, or McCain if he gets in &/or the Israelis are going to attack Iran, at which point Iran will not only turn off its own taps but close the Gulf to tankers.

The fact that western refinery capacity is running at virtually 100%, in fact there is a shortage of capacity for Saudi heavy oil, also makes the system subject to hard knocks. This is because, for the last couple of decades “environmentalists” have prevented building more.

]]> By: Kit http://www.johnredwoodsdiary.com/2008/06/24/if-you-want-to-stop-speculators-you-first-have-to-identify-them/#comment-21701 Kit Tue, 24 Jun 2008 08:57:56 +0000 http://www.johnredwoodsdiary.com/?p=1148#comment-21701 Coyote Blog is worth reading on this issue: <a href="http://www.coyoteblog.com/coyote_blog/2008/06/so-where-are-th.html" rel="nofollow">So Where Are They Storing All the Oil?</a> Coyote Blog is worth reading on this issue: So Where Are They Storing All the Oil?

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