THOSE DAMNED OIL SPECULATORS

Over on the Big Picture blog I ran across this link:
http://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.html

And my response in the comment section:


When most people think of "speculators" they thing of rich traders and hedge funds buying up supplies and sitting on them while the price rises. But supply is not constrained. According to the author supply is not constrained. Well, supply is constrained. It is constrained by the fact that everyone in the supply chain speculates. Does the gas station where you fill up wait until he sells his tanks down to raise the price? No. As soon as he senses that prices are on the rise he raised HIS price? Why? Because he has to pay a higher price for the next truckload that he buys. And is he in a hurry to sell what he already has? No. Why would he be in a hurry to sell it? The price is going UP. So when everyone in the price and supply chain expects the price to rise the pric goes up rapidly.
And if the price of oil is higher than it should be then demand will fall off. But if the large heinous speculators want to buy it then the big oil suppliers would supply those speculators with all the oil they wanted. Why not? If the oil companies can't sell the oil to the refiners then they would sell it to the speculators. And what happens then when the speculators have all they need and there is still no actual demand? Then the price collapses. And the speculators sell at a loss. This is why the large speculators are so intent on getting things right. And there are not only speculators that buy UP the price but speculators that short the energy markets and expect to make money when the price goes down. Is anyone out there attacking the oil short specualtors? I think not. For the same reason your Congressman did not complain when speculators were running up the price of housing or running up the price of stocks. When speculators buy they push up the price and when they sell they push down the price. Net result is ZERO.
There is a reason that speculators THINK the price will go up. That is what needs attention. Not that speculators are speculating!
gh
And then I find this chart. (thanks Big Picture)

Can we conclude that corn farmers speculate???

gh