And Enron was not speculating? On Dec 8, 2007 8:26 PM, Robert Munn <[EMAIL PROTECTED]> wrote: > Did we both read the same article? The title of the article is "OPEC not > losing sleep over high oil price". The article does not specifically suggest > that speculators are driving up the price, it quotes the head of OPEC as > saying that: > > "The market is controlled by speculators. They are considering oil as a > financial asset," said OPEC Secretary-General Abdullah al-Badri on > Wednesday. > And he isn't exactly a neutral observer in this story. OPEC can claim all > they want that speculation is controlling the price of oil. If there was 20% > more oil being pumped, or if demand were 20% lower, the price of crude would > fall through the floor as countries and companies struggled to compete on > price and move their inventory. As things stand now, they don't have to > compete on price, every barrel of oil being pumped is being sold. Supply and > demand. Speculation in the market is largely about securing oil for the > future in the face of ever-growing demand and the possibility of supply > disruption. But supply disruption only matters because current supply is so > tight up against demand that there is no room for error in the system. > > This is exactly the same sort of mess that California went through in 2001 > with the power outages. The utility system was broken up and re-organized in > an attempt to create competition and lower demand, but the idiots who > designed the new market failed to put in place guarantees that there would > always be some excess generating capacity in the market. Pretty soon, some > clever bastards at places like Enron figured out this loophole and proceeded > to game the system by taking plants offline for "maintenance" during peak > demand periods so they could reap the windfall profits of the spot market, > which is the only uncapped pricing market in the California system. > > OPEC is essentially doing the same thing- keeping supply tight up against > demand and riding the price of oil right into the sky. > On Dec 8, 2007 12:21 PM, Dana wrote: > > > right. There's nothing there about China or the evil minions of OPEC. The > > gist seems to be that it is speculation that is driving the price up. > > > > >
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