Latin prius is the neuter singular of the comparative form (prior, prior, prius) of an adjective with only comparative and superlative (the superlative being primus, prima, primum), consequently, like all 3rd declension words, the plural in Latin was priora (cf. Latin declension).
A lot of people think that but I'm not so sure it's realistic. First, I think that could be a pretty fundamental restriction that may not even be practical. Many businesses buy fuel far ahead of their needs for logistical rather than financial reasons - would they be prevented from doing that? How would you define what is speculative? Also, many people disagree with it as in principle (an arbitrary market limitation), not simply due to profit motivations.
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Originally Posted by coldseat
I'm not an economist, so I may be wrong on this, but I think we're talking about two different things. You're talking about hedgers and I'm talking about speculators. While they both work within the commodities markets, they have a different reason for doing so. Hedgers are trying to buy oil to try and predict future cost for there business. This makes since. Speculators are just in it to make profit and are currently manipulating the market beyond what is reasonable and it's effecting regular people. Part of the problem I think is the Fed and the historically low interest that have been on going for some time now. It allows speculators to borrow more money to buy up oil without as much risk or cost to them.
But honestly, I don't know the ends and outs of it. Maybe somebody else with more knowledge can chime in.
You are both somewhat on the right path. I'm no economist either but try to fill in some details.
The main reason for a commodities market is so that sellers can hook up with buyers who actually have use for the commodity. Futures contracts are used to reduce volatility. An simplified example of this would be an airline hedging their fuel costs over the next year to lock in a price, which would help them set ticket prices.
The other player in the market is a speculator. They are important because they help keep the market liquid so that buyers and sellers don't have to wait around for each other. The problem comes in when the speculators have enough money to buy up all of the available commodity and sit on it long enough to drive the price sky high. They have done this with everything from food to oil.
In order to protect the markets from this type of manipulation Roosevelt passed a law called the Commodity Exchange Act in 1936. That was great and the markets worked well about 50 years. Then in 1991 the Commodity Futures Trading Commission started issuing exemptions to their buddies at some of the large investment banks like Goldman Sachs which allowed them to buy as much as they want. Now Wall St. gets to screw with the prices of everything from corn to oil to cotton. It has been estimated that over 80% of the activity in the markets is now speculation. That's not good.
TL;DR - Like everything else, regulation helped keep the market stable for a long time but eventually Wall St. rigged the game in such a way that it gets to keep all the money while we get screwed.
I'm not an economist, so I may be wrong on this, but I think we're talking about two different things. You're talking about hedgers and I'm talking about speculators. While they both work within the commodities markets, they have a different reason for doing so. Hedgers are trying to buy oil to try and predict future cost for there business. This makes since. Speculators are just in it to make profit and are currently manipulating the market beyond what is reasonable and it's effecting regular people. Part of the problem I think is the Fed and the historically low interest that have been on going for some time now. It allows speculators to borrow more money to buy up oil without as much risk or cost to them.
But honestly, I don't know the ends and outs of it. Maybe somebody else with more knowledge can chime in.
Yeah, I see your point. I was thinking more in terms of hedging.
Gas isn't going to hit $5 a gallon and if you guys are so sure it is then go dump your money in oil or gas futures like this article would like. Every time we start hearing these crazy high gas price predictions it usually means that oil is coming up on a short term high and Wall St. is looking for investors to put money into oil so they can get out before it starts going back down.
If gas hits $5 a gallon:
1) The economy is going to not only fall back into a depression but it will be much worse then time around and the infrastructure of our entire nation will come into question.
2) Their would be a political storm that we can't even imagine and quite a lot of civil unrest.
3) Obama would literally flood the market with US reserves because even if the republicans stooped so low that they tried to increase oil prices to insane levels (I wouldn't put it past them) that it will result with lower demand making it constantly harder for them to increase prices. Plus Obama would answer with US reserves.
4) For gas prices to even consider climbing that high, Iran would have to go to a full out war. If gas prices got that high because of a conflict with Iran then the entire world would have interest in ending the conflict because of high energy prices.
5) The higher the price of oil gets the more countries produce to cash in. Yes, OPEC tries to control the amount of oil on the market with quotas but the truth is those quotas are bogus. Also the higher oil goes the more drilling sites become available because it becomes cost effective which again, supplies more and helps prices stabilize and decrease.
Remember in 2008 when everyone was forecasting $5-$7 gas? What happened? The masses jumped into the oil party and enjoyed a quick 20% run up when the bottom fell out and oil went down 200% in a matter of days. Guess who got out and who didn't?
Notice how you started seeing all kinds of gold investing commercials start showing up on TV a couple years ago? Everyone wanted to go buy gold, gold stocks, gold futures, problem was it was sitting at all time high levels and when the masses move in the big money moves out and Joe Blow makes Wall St. even richer.
Again, this countries economy can't sustain itself with gas at $4 a gallon. We tried once before and the bottom fell out when the economy was in a lot better shape than it is now. Once the US economy goes down then it pulls China's economy down with it and that trickles throughout the world which in turn lowers the gas prices because of lower consumption.
The sad thing is Iran doesn't need nuclear weapons to bring us to our knees, they just need to rattle the cages enough to make oil go through the roof bringing higher profits to themselves while killing the US economy. How does the US respond? We send a dozen super carriers across the world at 5000 gallons per mile and fly around jets burning jet fuel at insane rates.
Great great post. I said roughly the same thing last year when people were making the same predictions. The economy can only sustain about 4.50 per gallon. It won't peak much higher than that.
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"Ya know the good ole days they weren't always good and tomorrow ain't as bad as it seems."--- the great poet and philosopher Billy Joel.
I seem to recall some rumor that we are not allowed to build newer, modern refineries. Anyone know the truth of the matter so I can be lazy?
Don't know about that, but the time the U.S. built a functioning refinery in the U.S. was 1976!
That's ridiculous.
I also believe in the post above that stated that the "Wall Street" boys buy up the majority of the futures, Which in turn controls prices. Makes all the sense in the world. Those greedy Aholes are getting filthy rich, while we are getting screwed. The really sad part is that there isn't a damn thing we can do about it.
All the politicians' pockets are lined.
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