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Topic: Ironic: Airlines Call For Curb On Oil Speculation
Username: Enilria
Posted 2008-06-16 18:11:44 and read 4415 times.

Here's the ironic part. Airlines are among the largest oil speculators as a result of buying hedges. Ironically, the massive move toward hedging by airlines may be a part of what is causing this bubble in oil prices.

You might say "airline fuel purchases are a tiny percentage of total oil consumption and couldn't influence prices" and that is certainly true, but airline hedging is a substantial percentage of oil option speculation. The oil option market is tiny compared to the oil spot market. Airlines didn't even use fuel hedging until the 90s and now almost every airline in the world is doing it. Every one of them is out there competing against themselves to buy massive oil price call positions. What is the effect of all this new demand for oil option calls? Higher prices for oil options. Further airlines only buy protection against increases and the higher prices go, the more desperately they purchase more protection against higher prices. They don't balance the market by purchasing puts or selling calls or puts. It's interesting to wonder whether this massive influx of call purchasers has put the oil option market out of balance. Just the U.S., carriers probably have a current portfolio of calls covering $50+ billion in future fuel purchases and that is just in the U.S. Just the net appreciated value of WN's current call position is near $2 billion so their position alone is probably around $8+ billion in fuel purchases. Perhaps the airlines need to think about their own role in the oil options market...The spot market just follows the option market and the airlines are potentially becoming the market makers.


http://www.reuters.com/article/marke...pageNumber=2&virtualBrandChannel=0

Most carriers are churning through cash reserves to help pay for fuel, which is their highest expense, and some experts predict possible bankruptcies next year involving the biggest airlines if prices do not retreat.

Airline shares rose on Tuesday, with crude prices easing off Friday's close.

The top U.S. oil market regulator and officials from leading futures exchanges will also testify at Tuesday's joint Senate hearing.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: LAXintl
Posted 2008-06-16 18:25:37 and read 4385 times.

Well from an ICAO document I have its says the entire global airline industry consumes 4% of petroleum production, really a small fraction and how much of that is US carriers that cry the loudest?

Anyhow, I cant see global oil speculation going away, as oil is the most basic form of commodities which can only function under futures contracts as its not something you go out and purchase and have delivered to you in 5 minutes. At the very least there is a several week lag between you placing a contract, and the oil being delivered across the globe.

Actually be funny -- if there was basically a spot tankers trolling the world ready to sell oil to the highest bidder? Can you imagine the resultant pricing chaos then? So at the end of the day, even with speculation being a central core of commodities market there is greater stability in pricing as everyone's green is considered equal at the time of contract.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Enilria
Posted 2008-06-16 19:04:07 and read 4317 times.



Quoting LAXintl (Reply 1):
Well from an ICAO document I have its says the entire global airline industry consumes 4% of petroleum production,

But to my point, what is the percentage of oil option trading by airlines? If it's 4% of production, I'm going to bet it is 30+% of option trading.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: SYfan100
Posted 2008-06-16 19:38:11 and read 4237 times.

Well I think this speculation has really hurt this country more then what some people have thought. As there were more homes once again lost last month all across the United States do to foreclose.
It's all man made with the winners being the big dogs on Wall Street. All the losers end up paying more at the pump and or they lose there homes.
Wall Street it's funny and it isn't funny one bit at all. Every day people are being hurt bye all the speculation that is going on that trading floor.
Yes the speculation should be curbed. Wall Street needs to do it or there needs to be a big shake up on those Trading Floors with throwing everyone of those people in jail.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Commavia
Posted 2008-06-16 19:49:54 and read 4210 times.

I think the airlines are just playing the political game. Anything helps, and I think the ATA recognizes that they have to get what they can given the political realities in Washington right now.

Namely, with Dems running Congress, and going after "Evil Greedy Big Oil" and "Oil Speculators" as public enemies #1 and 2, this is an easy political play that can play right into the Democrats' cause célèbre of the week.

Of course, if they really wanted to face the actual economic reality - they would press Washington to do what it should have done decades ago: namely, let us start drilling in the lake of oil we're sitting on top of in America right now.

But, alas, we can't, and with Dems in power, we won't be anytime soon, so there is no need for the airlines to stick their neck out and waste any of the little political capital they have on trying to get greater supply into the market - which is what the market ultimately needs.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: LAXintl
Posted 2008-06-16 20:29:07 and read 4155 times.



Quoting SYfan100 (Reply 3):
Yes the speculation should be curbed. Wall Street needs to do it or there needs to be a big shake up on those Trading Floors with throwing everyone of those people in jail.

OK so you feel speculating should be illegal.

However then tell me then how do we in our economy, or society in general determine the price of oil, wheat of matter of fact that house down the street?

Who and how do we arbitrarily set such prices? And how do we react in a global market when our pricing is way off what other nations and markets pay, or the supply/demand equilibrium is totally distorted due to some potential commodity overage or shortage result of our fixed pricing?

Just curious.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: FreequentFlier
Posted 2008-06-16 21:11:38 and read 4092 times.



Quoting Commavia (Reply 4):
I think the airlines are just playing the political game. Anything helps, and I think the ATA recognizes that they have to get what they can given the political realities in Washington right now.

Namely, with Dems running Congress, and going after "Evil Greedy Big Oil" and "Oil Speculators" as public enemies #1 and 2, this is an easy political play that can play right into the Democrats' cause célèbre of the week.

Of course, if they really wanted to face the actual economic reality - they would press Washington to do what it should have done decades ago: namely, let us start drilling in the lake of oil we're sitting on top of in America right now.

But, alas, we can't, and with Dems in power, we won't be anytime soon, so there is no need for the airlines to stick their neck out and waste any of the little political capital they have on trying to get greater supply into the market - which is what the market ultimately needs.

Eventually as the idiots take control over Washington, rationing will be back once the speculation fever dies down and it turns out there really wasn't much speculation to begin with. Nonetheless, we won't actually...you know, do anything about it since our energy policy will be dictated by Greenpeace and not people who actually produce energy. It'll be like Jimmy Carter's second term and people will be reminded (yet again) why they hated liberals in the first place. Looking forward to it...
 Yeah sure

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Asiaflyer
Posted 2008-06-16 22:20:22 and read 4037 times.



Quoting LAXintl (Reply 5):
However then tell me then how do we in our economy, or society in general determine the price of oil, wheat of matter of fact that house down the street?

Who and how do we arbitrarily set such prices? And how do we react in a global market when our pricing is way off what other nations and markets pay, or the supply/demand equilibrium is totally distorted due to some potential commodity overage or shortage result of our fixed pricing?

 checkmark   checkmark 

It is apparently not fun with free market prices when it goes the wrong way!!

To blame speculation or even curb speculation will not help much either.
It has been a fundamental change between demand and supply over last 5 years, as especially many asian countries are increasing their consumption.
Chinas oil consuption rose by 16.5% in Q1 -08 compared to Q1 -07.
Still the consumption per capita in China is small comparing to Europe and North America.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculat
Username: Baroque
Posted 2008-06-16 23:06:23 and read 3991 times.



Quoting Asiaflyer (Reply 7):
It has been a fundamental change between demand and supply over last 5 years, as especially many asian countries are increasing their consumption.

True. These are the data from BP 2008

Big version: Width: 840 Height: 497 File size: 69kb


Not a simple relationship, but basically what Asiaflyer writes.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Burkhard
Posted 2008-06-17 04:17:33 and read 3874 times.



Quoting SYfan100 (Reply 3):
Yes the speculation should be curbed. Wall Street needs to do it or there needs to be a big shake up on those Trading Floors with throwing everyone of those people in jail.

This starts to touch the real problems we are in currently.

Most of what happens around the globe is not controlled by any politician, king, oil minister, Greenpeace - all of them, including the president of the United States, are minor insects in the big game which is played at Wall Street with a few gamblers who move around trillions as if they played Monopoly - and affect the life of billions of people, making millions of them homeless, killing millions of them.

There is no control of what these people do. The self understanding of the United States has come down to be the executive of these gamblers, sending troops and bombing away everybody who does not serve them.

That is how the world is seeing the US currently, and the world economy. That is, what makes airlines and other economy struggle. That is why more and more people world wide no longer buy American, no longer set their foot into America, sell their $$$.

This is the source and reason of the terrorism. Terrorism doesn't come from itself, it has political reasons, and it took decades of things getting worse and worse and control concentrated more and more in a corner of New York ...

Your above proposal is the first efficient measure against terrorism, against airline agony, against millions loosing their homes and jobs.

It would be enough, though, to tax every trade of shares, papers, options etc with the same taxes that honorable work is taxed with.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Baroque
Posted 2008-06-17 05:21:19 and read 3826 times.



Quoting Baroque (Reply 8):
True. These are the data from BP 2008

Big version: Width: 840 Height: 497 File size: 69kb

Looks as if it knows if you change a graph. Hope this is better.

Big version: Width: 840 Height: 497 File size: 74kb
World oil Prod/Cons & Price 1972-2007

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: FFlyer
Posted 2008-06-17 05:20:24 and read 3825 times.



Quoting Commavia (Reply 4):
Of course, if they really wanted to face the actual economic reality - they would press Washington to do what it should have done decades ago: namely, let us start drilling in the lake of oil we're sitting on top of in America right now.

You seem to believe in this quite a lot since you repeat it every now and then. However, the amount of oil e.g. in Alaska only equals what the US consumes in 8 days...

Quoting Burkhard (Reply 9):
That is how the world is seeing the US currently, and the world economy. That is, what makes airlines and other economy struggle. That is why more and more people world wide no longer buy American, no longer set their foot into America, sell their $$$.

The US exports is on the all-time highest level, as is the tourism to the US. Private pockets, individual or corporate, don't think about the politics when making purchasing decisions; it's all about the cost and value.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: MaverickM11
Posted 2008-06-17 05:23:41 and read 3824 times.

This is pretty embarrassing, as an airline employee.

Quoting Commavia (Reply 4):
I think the airlines are just playing the political game

They could start by flying Nancy Pelosi to Mogadishu and leaving her there Silly

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Commavia
Posted 2008-06-17 17:24:22 and read 3579 times.

Just more confirmation, at least in my mind, that this was nothing more than political pandering:

Here

Quoting FFlyer (Reply 11):
the amount of oil e.g. in Alaska only equals what the US consumes in 8 days...

According to some estimates.

By other estimates, ANWR alone - not counting other native lands - could hold as much as 4.3 billion barrels of economically-recoverable oil or more. (See here.) At present daily oil consumption, 4.3 billion barrels would probably last, conservatively, for around 5-6 months, assuming that 100% of the oil went into the U.S. supply, which of course it wouldn't.

And, of course, that doesn't count the billions, upon billions, upon billions of tons of coal that we are presently sitting on top of that could be turned into gas through the liquification/gasification processes that scientists are now working on. At today's oil prices, it has now become largely economic viable, and with the gas reserves we have in this country (the U.S. being called the "Saudi Arabia of coal"), we could probably supply enough gas for our own domestic needs for decades, if not centuries.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: AvObserver
Posted 2008-06-17 19:29:09 and read 3485 times.



Quoting MaverickM11 (Reply 12):
They could start by flying Nancy Pelosi to Mogadishu and leaving her there

Preferably with a cannibal tribe if they could find one. Then again, it might be cruel to THEM to give them that vile woman as food.

Quoting FFlyer (Reply 11):
However, the amount of oil e.g. in Alaska only equals what the US consumes in 8 days...

As Commavia points out, other sources dispute that estimate which is often trotted out by the very environmental groups that don't want us to drill there. Why should we trust sources that have long helped undermine progress at becoming energy independent? Why should we let the fanatical enviro-extremists dictate U.S. energy policy to save a relatively small number of caribou and tundra scrubbrush? NUTS to that! We'll never know how much is truly there until we do drill and the sooner, the better. The Sierra Club, NRDC, Earthfirst and their ilk had better get the Hell out of the way because Americans are beginning to wake up and are beginning to blame these groups for their no-compromise activism that says NO to most any sort of drilling of U.S. reserves. When we see little eco-green nations like Norway and Sweden responsibly drill off of their coasts, we can only ask why WE aren't doing it. It CAN be done with minimal environmental damage but the eco-loonies won't accept that and have too many Dems in their hip-pocket. This must change if we want to avert national bankruptcy before alternative fuel sources can be brought online. We must put those crazies on the run and do whatever it takes to shore up our energy needs NOW and not wait ANOTHER 34 years like we did since our first energy wake up call in 1973-1974.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Commavia
Posted 2008-06-17 20:01:14 and read 3461 times.

What this industry - and this country - needs desperately is one of two things: either less demand or more supply. With prices where they are today, the falling demand is happening naturally and the market is taking care of itself, and that is good.

But ultimately, unless something gives, we are going to see this industry shrink dramatically, as there is simply no way that this industry can support itself at $130/barrel oil. Just no way. As CEO after CEO has said - there is nothing about this industry built for fuel at these prices.

What we need is more fuel.

Quoting AvObserver (Reply 14):
Why should we let the fanatical enviro-extremists dictate U.S. energy policy to save a relatively small number of caribou and tundra scrubbrush?

Oh no no, let's not get anyone confused - this drilling will impact not a "relatively small" number of caribou, but zero - zero - wildlife. The reason? This drilling is proposed for the ANWR Coastal Plain. Just for those still keeping score - that's not the beautiful, pristine wildlife habitat with mountains, streams, trees, bur rather a lifeless peatbog over 200 miles away and over a mountain range from that beautiful area with the caribou and butterflies and treehuggers.

This peatbog has no wildlife save mosquitos during a small period in the summer. For the rest of the year, it is uninhabitable by life - because of its extreme cold - anyway.

And, even if there were caribou there, we'd probably be helping them, not hurting them. Studies have shown that the heat from the insulated gas pipelines may actually have aided in the [i]growth[i] in the caribou population in existing drilling areas to date. And that's with 40-year-old technology that is far, far more intrusive than the state-of-the-art stuff we have now.

http://www.anwr.org/gallery/pages/48-Coastal_Plain_summer.htm

http://www.anwr.org/gallery/pages/17-Caribou_no_impact.htm

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculat
Username: FreequentFlier
Posted 2008-06-17 20:53:49 and read 3400 times.



Quoting Commavia (Reply 15):
Oh no no, let's not get anyone confused - this drilling will impact not a "relatively small" number of caribou, but zero - zero - wildlife. The reason? This drilling is proposed for the ANWR Coastal Plain. Just for those still keeping score - that's not the beautiful, pristine wildlife habitat with mountains, streams, trees, bur rather a lifeless peatbog over 200 miles away and over a mountain range from that beautiful area with the caribou and butterflies and treehuggers.

This peatbog has no wildlife save mosquitos during a small period in the summer. For the rest of the year, it is uninhabitable by life - because of its extreme cold - anyway.

And, even if there were caribou there, we'd probably be helping them, not hurting them. Studies have shown that the heat from the insulated gas pipelines may actually have aided in the [i]growth[i] in the caribou population in existing drilling areas to date. And that's with 40-year-old technology that is far, far more intrusive than the state-of-the-art stuff we have now.

Another point that is not mentioned very often is that oil companies are now able to afford pretty much any sort of environmental demand that is placed on them (and even most non-environmental). In other words, if the oil companies had to agree to build 600 schools in the state of Alaska and kiss the ring of all of its politicians, it would STILL do it, because oil is that lucrative now.

There is simply no logical reason to oppose offshore drilling off America's coasts right now unless your GOAL is higher gas prices. (and don't think for a second that there aren't some liberal politicians who don't desire high gas prices due to their dislike of suburbs or who knows what...Obama inadvertently admitted as much on CNBC recently when he accidently slipped that he had only wished prices had gone up "more gradually") But it seems, even with this Congress' 15% approval ratings, ideology is still ruling the day. Pretty soon the only change you'll believe in is the change you wish you had after filling up your tank or buying groceries.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Wjcandee
Posted 2008-06-17 22:18:23 and read 3344 times.

There's about a 40% speculation premium right now; price is well-divorced from supply and demand, and you can tell how the market swings on the stupidest little details that there's a lot of stupid money just betting the direction of the market without any relationship to the underlying commodity.

This is how biotech stocks and, later, Internet stocks, behaved during their bubble period. Remember when we were told that there was "new model" where companies didn't need to actually MAKE MONEY in order to have their stock be worth billions? Riiiiiight. Then the bubble burst.

One way to affect the speculation premium is just to tax it. No need for a windfall profits tax on the oil companies: they're riding the wave just like everyone else, and it won't make any difference as to prices, because they don't SET prices. There are tankers and tankers filled with Oil sitting off the coast of Iran with nowhere to go right now, because the market is very well-supplied.

However, taxing "windfall profits" in the oil speculation market -- or even threatening to do so -- might be enough to start to let some air out of the balloon. You could even just tax upside speculative profits, and not downside. Make some other commodity the latest rage. Remember Gold? That might be an idea.

All that a high oil price does in the US is cause all sorts of wealth movement out of this country and into the hands of countries that aren't aligned with our interests, like Russia, Iran, etc. Lets them buy stuff to aim at us. While there are lots of folks who might like that, it also doesn't help lots of other folks, like emerging economies in Africa, South America and Asia.

So, I say, "Prick away at that bubble, by any means possible."

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Baroque
Posted 2008-06-18 00:27:28 and read 3299 times.



Quoting Wjcandee (Reply 17):
There's about a 40% speculation premium right now; price is well-divorced from supply and demand, and you can tell how the market swings on the stupidest little details that there's a lot of stupid money just betting the direction of the market without any relationship to the underlying commodity.

Care to show us the data Wjcandee. Happy to believe real data. Check with the graphs I posted in
http://www.airliners.net/aviation-fo...ms/non_aviation/read.main/1919210/
reply 124.

Happy to know where those number are wrong.

FWIW I think 5-6 months might be wrong for additional N Slope oil, I am much more optimistic, I think it might last oh 18 months.

Coal. Where is the money?

Investment costs per daily barrel for oil are probably about $30,000 to 50,000 for the more expensive fields now. So to produce a million barrels a day requires about 30 to 50 billion $ of investment.

Back in about 1980, coal to oil was estimated at about $100,000 per daily barrel. Allow something like a 50% improvement in process costs and you are still looking at about $200,000 times a million or 200 billion to produce a million barrels of oil a day. Doable, but only if you were able to spend the sorts of amounts that now go on the military.

How much petroleum to produce, the vaunted independence would require at least 5 million b/d so there goes about a trillion dollars.

How long? Not within 10 years. And in many areas there would be problems of having sufficient water - I know that sounds funny with the current floods! But water requirements are huge.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Fanfan
Posted 2008-06-18 03:08:17 and read 3214 times.

If you don't think the speculation issue is real, then take a look here at a presentation by ATA's chief economist given on Monday this week.


Use this link: http://www.ttra.com/PDF/Heimlich.pdf

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Apodino
Posted 2008-06-18 03:51:23 and read 3189 times.

Bill O'Reilly did a piece on this last night on the Factor. Love him or hate him, O'Reilly actually embraced a liberal point of view on this, calling for a crackdown on speculation, and blaming speculation, OPEC, and lack of Oil Companies as the big reasons we are paying so much. He pointed out that the speculators who bid up the price of oil never actually pay a dime for it, since they are just paper contracts.

The most interesting thing about the report was when he interviewed Karl Rove about it. Naturally, Karl Rove defended Dubya's buddies at big oil, opposing regulating speculators. Here is the interesting part of the interview. Rove said that regulating speculators would hurt the airlines because then they wouldn't be able to hedge their fuel costs. I laughed at that. The only airline hedging a good portion of their fuel is Southwest. And if it is not in their best interest, why are all the airlines position on this the same as O'Reilly? If hedging was something that airlines did in great amounts, there wouldn't be nearly as much red ink as they are facing now.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Burkhard
Posted 2008-06-18 05:13:45 and read 3140 times.



Quoting Fanfan (Reply 19):
Use this link: http://www.ttra.com/PDF/Heimlich.pdf

A very good document. Page 39 shows the brutal truth, since this is one of the few charts with only a small zero suppression.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Baroque
Posted 2008-06-18 05:24:54 and read 3122 times.



Quoting Fanfan (Reply 19):
If you don't think the speculation issue is real, then take a look here at a presentation by ATA's chief economist given on Monday this week.


Use this link: http://www.ttra.com/PDF/Heimlich.pdf

Great document, although not that sure it shows speculation is a major factor, just that it is a popular occupation. Presumably it would not be popular if it was not profitable, but more a demonstration that oil is a market in which they can and do operate.

It does make a good case that surface transport is a major factor, much more clear than speculation. Also look at the falls in commercial stocks. We know that has an effect.

Do you have anything for the crick in neck caused by reading it sideways until I saved it and rotated pages?  Big grin

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Burkhard
Posted 2008-06-18 06:35:00 and read 3070 times.



Quoting Baroque (Reply 22):
Do you have anything for the crick in neck caused by reading it sideways until I saved it and rotated pages?

Dont you lie before your computer?

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Dispatchguy
Posted 2008-06-18 07:35:04 and read 2998 times.



Quoting FreequentFlier (Reply 6):
It'll be like Jimmy Carter's second term and people will be reminded (yet again) why they hated liberals in the first place. Looking forward to it...

A McCain vote = Bushies 3rd Term
An O-Boy vote = Carter's 2nd Term

So, why in the hell would one vote, if he wanted some ACTUAL change, and not a rehash of failed previous policies?

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Baroque
Posted 2008-06-18 07:45:45 and read 2974 times.



Quoting Burkhard (Reply 23):
Quoting Baroque (Reply 22):
Do you have anything for the crick in neck caused by reading it sideways until I saved it and rotated pages?

Dont you lie before your computer?

It came up in portrait and I had to save it to Acrobat to rotate it. But at times a good lie down would be great!

Quoting Burkhard (Reply 21):
A very good document. Page 39 shows the brutal truth, since this is one of the few charts with only a small zero suppression.

Just looked at p39 again and zero suppression of what? The Euro prices have remained more stable but I rather wonder if that page has some sort of a problem with converting Euros to USD?? I find it difficult to believe that the current price for Jet fuel in Europe is USD 102 - ish. The difference is suspiciously similar to the USD to Euro exchange rate. Please tell me that is not the cause of the difference!!  hissyfit  Europe 102, US 158 - that is very close????

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Baroque
Posted 2008-06-20 07:41:22 and read 2869 times.



Quoting Baroque (Reply 25):
I find it difficult to believe that the current price for Jet fuel in Europe is USD 102 - ish. The difference is suspiciously similar to the USD to Euro exchange rate. Please tell me that is not the cause of the difference!! Europe 102, US 158 - that is very close????

Does the ensuing silence tell us that the Europe 102 was actually Euros being compared with USD? If that is the case, you do wonder about a few other points in the Heimlich document.

http://www.ttra.com/PDF/Heimlich.pdf

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: EXAAUADL
Posted 2008-06-20 08:15:07 and read 2836 times.



Quoting Enilria (Thread starter):
Here's the ironic part. Airlines are among the largest oil speculators as a result of buying hedges

airline actually take delivery of oil, as oppossed to say a hedge fund

Quoting LAXintl (Reply 5):
OK so you feel speculating should be illegal.

problem is that I think it was in the year 2000, that oil futures specualtion was opened up to investors who werent actual users of oil

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: StarGoldLHR
Posted 2008-06-21 07:18:03 and read 2725 times.



Quoting SYfan100 (Reply 3):
Yes the speculation should be curbed. Wall Street needs to do it or there needs to be a big shake up on those Trading Floors with throwing everyone of those people in jail.

Why ?

Any business has it's aims at reaching the highest price for it's product whilsts maximising profit at the end of the day if buyers are waiting why reduce the price ?

Sadly speculators see winter coming and realise that demand is going up not down.
$200 is coming, maybe next year we will be back to $150 and breathing a sigh of relief !

Start planning for it now.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: LAXintl
Posted 2008-06-24 03:36:31 and read 2564 times.

Here is a bit of interesting news --- oil futures trading on NYMEX is at a 14month low !

So much about all this brew ha ha about speculators.  Yeah sure

Quote:
Nymex Crude Open Interest Shrinks as Speculators Exit

June 23 (Bloomberg) -- The number of outstanding crude oil futures contracts in New York fell to the lowest in almost 14 months last week as commercial traders and institutional investors exited the oil market.

Open interest dropped 6.7 percent to 1.31 million on the New York Mercantile Exchange in the week ended June 19, according to data from the exchange. That's the lowest since April 23, 2007. Open interest declined last week for both the commercial and non- commercial categories, according to data from the Commodity Futures Trading Commission.

''Professional speculators and hedge funds are reducing their positions because the higher volatility brings them closer to their value-at-risk limits,'' said Olivier Jakob, managing director of Petromatrix GmbH in Zug, Switzerland.

Open interest has been sliding for months after the number of outstanding crude futures reached a record 1.58 million on July 16, 2007. The decline has come as crude prices have risen to records, reaching an all-time high of $139.89 on June 16.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aJwgP5n5vfEE

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: FlyPNS1
Posted 2008-06-24 05:05:20 and read 2504 times.



Quoting LAXintl (Reply 29):
Here is a bit of interesting news --- oil futures trading on NYMEX is at a 14month low !

This is no surprise. The price has been run up and now all the speculators are getting out because the downside risk (i.e. the bubble bursts and oil plunges) is now just as high (or even higher) as the upside risk.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: 787KQ
Posted 2008-06-24 07:09:12 and read 2434 times.



Quoting Enilria (Thread starter):
Here's the ironic part. Airlines are among the largest oil speculators as a result of buying hedges. Ironically, the massive move toward hedging by airlines may be a part of what is causing this bubble in oil prices.

Buying a hedge is not considered speculative. It reduces risk.
BUYING A HEDGE IS NOT CONSIDERED SPECULATIVE. IT REDUCES RISK.
Buying a hedge is not considered speculative. It reduces risk.
BUYING A HEDGE IS NOT CONSIDERED SPECULATIVE. IT REDUCES RISK.
Buying a hedge is not considered speculative. It reduces risk.
BUYING A HEDGE IS NOT CONSIDERED SPECULATIVE. IT REDUCES RISK.
Buying a hedge is not considered speculative. It reduces risk.
BUYING A HEDGE IS NOT CONSIDERED SPECULATIVE. IT REDUCES RISK.

The purchase of hedges by them, an airline's cost is affected by oil prices, and other industries that actually use oil or for which the price of oil is important is not speculative.

So it is not ironic.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Bahadir
Posted 2008-06-24 07:20:25 and read 2421 times.



Quoting Wjcandee (Reply 17):
All that a high oil price does in the US is cause all sorts of wealth movement out of this country and into the hands of countries that aren't aligned with our interests, like Russia, Iran, etc. Lets them buy stuff to aim at us. While there are lots of folks who might like that, it also doesn't help lots of other folks, like emerging economies in Africa, South America and Asia.

So, I say, "Prick away at that bubble, by any means possible."

This is off topic but this shows one more time how americans are getting their information like the case with the iraq war. everybody was so sure that saddam had wmds. now 5 years later this turns to be wrong. now, the oil producing countries are enemies, but how come no one mentions canada? and iran is the country that you blame the oil crisis on, yet we don't buy single drop of oil from iran..

this is another way to drive american public, fool them so that we can attack iran too.. CANADA is the by far the highest exporter of oil to USA. Independence from foreign oil starts with declaring them the next state... how come people miss that ?

/end sarcasm

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculat
Username: BuyantUkhaa
Posted 2008-06-24 09:17:20 and read 2378 times.



Quoting FreequentFlier (Reply 6):
It'll be like Jimmy Carter's second term and people will be reminded (yet again) why they hated liberals in the first place.



Quoting FreequentFlier (Reply 16):
and don't think for a second that there aren't some liberal politicians who don't desire high gas prices due to their dislike of suburbs or who knows what.



Quoting Apodino (Reply 20):
a liberal point of view on this, calling for a crackdown on speculation

What on earth do you americans mean with "liberal"? Seems that to you liberalism = socialism?  confused 

I think that to most people, economic liberalism actually stands for more free market, not less.

http://en.wikipedia.org/wiki/Liberalism
http://en.wikipedia.org/wiki/Economic_liberalism

Just for the record, in Europe (and many other places), the main political "flavours" are conservative, socialist and liberal. That's three different groups, not two. I don't see how you can mix up the two latter groups.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Tdscanuck
Posted 2008-06-24 22:18:24 and read 2266 times.



Quoting BuyantUkhaa (Reply 33):
What on earth do you americans mean with "liberal"? Seems that to you liberalism = socialism?

In the US, today, liberalism = socialism/communism. It's used as a slur by the "conservatives" (who aren't actually conservative, but that's a different issue).

Economic liberalism is, theoretically, associated with conservatism in the US.

Tom.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: FreequentFlier
Posted 2008-06-24 22:29:03 and read 2256 times.



Quoting Tdscanuck (Reply 34):
In the US, today, liberalism = socialism/communism. It's used as a slur by the "conservatives" (who aren't actually conservative, but that's a different issue).

Economic liberalism is, theoretically, associated with conservatism in the US.

Correct, my apologies for the confusion. Liberalism is associated with "collectivism" or socialism in the US. Conservatism is generally associated with "free market" ideology or capitalism in the US.

Democrats believe the US is better served as a true direct democracy with a strong central government where tax revenues are democratically distributed to the states via the federal government. Republicans believe the US is better served as a republic with a weak central government where power is delegated to the individual states to determine how they would prefer to distribute their own state tax revenues rather than having the federal government do it for them (the notion of "states rights" or "federalism"). It's no secret what I'd prefer but I think this is a pretty nonpartisan way of explaining the two sides.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: Baroque
Posted 2008-06-24 23:48:36 and read 2236 times.



Quoting BuyantUkhaa (Reply 33):
That's three different groups, not two. I don't see how you can mix up the two latter groups.

It is what happens when there is only black and white. Even just having rods in the optics gives you grey, so it has to be comprehension rather than the primary sensor system BU.  angel 

Next project: Discover why the insult has replaced the argument in politics.  bitelip 

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: DocLightning
Posted 2008-06-25 13:40:38 and read 2155 times.



Quoting AvObserver (Reply 14):
As Commavia points out, other sources dispute that estimate which is often trotted out by the very environmental groups that don't want us to drill there. Why should we trust sources that have long helped undermine progress at becoming energy independent?

Oh no. Environmentalists don't want to stop energy independence at all. Quite the contrary. They want us to become energy independent by using sources of energy that don't involve dumping vast amounts of fossilized carbon into the atmosphere.

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculation
Username: FreequentFlier
Posted 2008-06-25 16:14:10 and read 2111 times.



Quoting DocLightning (Reply 37):
Oh no. Environmentalists don't want to stop energy independence at all. Quite the contrary. They want us to become energy independent by using sources of energy that don't involve dumping vast amounts of fossilized carbon into the atmosphere.

And they've worked wonders, haven't they?  Yeah sure

Boeing's solar and wind powered airplanes are right around the corner.  banghead 

Topic: RE: Ironic: Airlines Call For Curb On Oil Speculat
Username: Cloudy
Posted 2008-06-26 09:53:53 and read 2033 times.

I generally hate conspiracy theories - but I'll speculate a bit and throw one out there........

The big US oil companies and the nastier environmental groups(Sierra Club, Greenpeace, etc.) are in cahoots. They both want to make oil as expensive as it possibly can be. The oil companies also want to maintain the competitive status quo in the US marketplace - they don't want any new areas to be open to production because those areas may give a competitor an opening. Neither do they want any new refineries, for the same reason. So what do they do? They bankroll the environmental groups behind the scenes, and ask them to oppose any expansion of US drilling or refining operations. To distract the public, they make a show of opposing each other. It may be in the long term interests of the industry as a whole to open more US fields - but executives nowadays tend to think of only one thing - the company's earning statements for the year and quarter. All else be darned.....

There are problems with this theory, but I view it as more plausible then the "cartel" theory. The US oil companies cannot control prices by collusion, simply because together all US companies only control 6% of the worlds current oil production. The rest is controlled by state monopolies in oil producing countries. The fact that most oil production is controlled by state-supported corporation may partly account for why production has not
kept pace with demand.

Quoting BuyantUkhaa (Reply 33):
I think that to most people, economic liberalism actually stands for more free market, not less.

To US conservatives, the word "Liberal" is a very good descriptions of leftists who favor growth in government.......especially those who want even more taxpayer money to go to the artificially dependent classes that keep voting left. They are "Liberal" in spending other peoples money, giving it to people(and beauracracies) who have not earned it and so have little motivation to manage it properly. As government gets more control of the economy, people get poorer and more dependent on government. As people get poorer, they get angrier and vote in liberals who enlarge the government even more.

There are very few TRUE economic conservatives in government, though there are plenty of economists(arguably, a majority) and pundits who take that position. In Washington, "extreme conservative" means you basically want to keep government spending only a few percent above inflation.A "moderate conservative" is basically a less extreme liberal. If you want to be well liked in Washington, and still look conservative, you have to basically oppose greater spending in the abstract but take care not to be seen opposing to many specific programs. If you are actually SERIOUS and CONSISTENT in opposing the growth of government, you are a pariah in Washington. This isn't because people in power are any more evil then the rest of us....it is just that the system is basically rigged in favor of more spending. Everyone has their favorite program, so every program you oppose or cut simply pisses more people off. The more people you piss off, the less power you have. Those that get others people's money tend to have more influence than those who provide this money, simply because the anti-spending lobby simply does not have the time or resources to oppose every program that needs to be opposed. Those who get the money, however, have their livelihoods at stake and so each program has a ready constituency lobbying for it. In other words, taxpayers are too abstract and diverse as a group to defend themselves.


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