[Subjectivist]

I think forward markets are good, they add liquidity and predictability, both are beneficial. I don't mind the gamblers (as long as they are playing with their own chips)

What I don't know is at what level the position limits should be set. Should they be somewhere around the same number of deliverable contracts? 10 time as many? 100? 1,000?

Great question, but it is like the argument about fractional reserve banking. Some people think banks should only be able to lend a small amount of the money deposited in their institutions, others think it should be virtually unlimited.

I think forward markets should be closely tied to physical markets, maybe say twice as many contracts as physical contract, but some insist it should be effectively unlimited.

[Pops]

Producers don't sell future contracts. They sell oil. Speculators sell futures contracts . . . to each other.

LoL, now you're just being silly.

http://www.wsj.com/articles/oil-compani ... 1427397947

[Pops]

The argument isn't that oil price is controlled by speculators, but that volatility is magnified by too much unregulated speculation to everyone's disadvantage but the speculators. I'm surprised you continue to take up for speculators who add nothing except volatility and distortion. I see your argument totally centered on a fear that any chink in the story of PO=2005 means the whole idea collapses.

Don't worry, PO is alive and well.

[Pops]

Oil Companies Reap Large Gains After Cashing In Hedging Bets
What does that prove, Pops?

What do you mean? You said oil producers don't hedge and I showed you they do.
You said futures contracts don't affect price and I showed that right now production is propped up by profits from contracts sold last year. If not for those contracts you might argue that LTO would have dropped faster and farther than it has and if you can say that now you can say it about the flip side of the coin.

Why is this issue so important? Because it really does point to an on-going oil production plateau

That is right. It's hard to get a scarcity premium if supply is abundant. It is hard to bid up the price if everyone has lots to sell. Speculation reinforces the point, it doesn't take away.

[ennui2]

What do you mean? You said oil producers don't hedge and I showed you they do. You said futures contracts don't affect price and I showed that right now production is propped up by profits from contracts sold last year.

See, Pstarr? I'm not the only one who concedes that the price spike in 2008 was amplified by speculation. You're going to have to just face the issue directly instead of resorting to ad homs like you did with me.

[Pops]

Estimates vary but typically industry sources concur that
90-95% of all crude oil and oil products are sold under term
contracts. ...
The balance, 5-10%, is sold on the spot market. ...

Typically, spot sales are surpluses or amounts that a
producer has not committed to sell on a term basis or
amounts that do not “fit” scheduled sales. Buyers may also
have under- or over-estimated their consumption and may
have oil surpluses to sell or shortages to cover. ...

A variety of derivatives instruments are available that allow
people to lock in or hedge a price for oil deliveries in the
future. These include forwards, futures, options and swaps.

Platts
Forwards are contracts for actual oil
Futures can be or not
swaps are not

[Tanada]

The thing uppermost in my thoughts on the topic are, how will my local, State and Federal governments react when Peak becomes undeniable?

Back in 2008 there was a surprising chain of events that unfolded when prices went sky high. The county I was living in laid off 65 percent of the Sheriff Deputy officers to save money on patrolling squad cars. The county seat only laid off about 20 percent of their officers, but street repairs almost stopped and they went through and eliminated stoplight signals at many intersections returning them to the four way stop signs of the 1950's.

What will the reaction be this time?

[KingM]

Are people still going to be posting to this thread in another decade, when oil prices are somewhere between $50 and $100?

The collapse is coming! Any day now . . .

[ennui2]

A site like this that only has about a half-dozen regular posters constitutes as a ghost-town already. Frankly, the main reason I came back here is boredom, because current-events don't really justify a very high doom-o-meter. For AGW, yes, but not peak-oil proper. I don't feel I'm learning much here that I can't learn elsewhere. Most of the people come here to bond over fringe ideology and joust with the few dissenters. It's all about "isn't this (country|politican|political party|ideology|demographic group|economic-system) terrible?" Basically an eternal whine-fest.

[ROCKMAN]

It still makes me grin when I see the title of this post. To think how many folks don't really understand that they've been dealing with the important aspects of PO for over 30 years. It's as if so many folks really think they are waiting for something different to happen then what they've been experiencing for decades: high prices, low prices, drilling booms/busts, oil wars, political instability in oil exporting countries, wasted tax payer monies, high/low unemployment, etc. etc.

[Pops]

I'm just here for the ad homs...

Yeah, gets tiring.

[Keith_McClary]

A site like this that only has about a half-dozen regular posters constitutes as a ghost-town already. Frankly, the main reason I came back here is boredom, because current-events don't really justify a very high doom-o-meter. For AGW, yes, but not peak-oil proper. I don't feel I'm learning much here that I can't learn elsewhere. Most of the people come here to bond over fringe ideology and joust with the few dissenters. It's all about "isn't this (country|politican|political party|ideology|demographic group|economic-system) terrible?" Basically an eternal whine-fest.

You are a true believer in a couple of fringe ideologies, but otherwise totally go with the accepted wisdom (= official gubmint line) and dismiss any contrary thoughts as "tinfoil".

Is that a fair description of your world view?

[KingM]

Are people still going to be posting to this thread in another decade, when oil prices are somewhere between $50 and $100?

The collapse is coming! Any day now . . .

You the same guy/gal who predicted $147? Congrats.

Nope, not me. I've been around for a decade. My doom-o-meter has reached as high as about a five. Right now, it's about a 2 or 3. In the long run, I think industrial civilization is screwed, but that could be generations from now.