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Fat fingers and the price of oil


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2012 Sep 23, 4:01pm   2,982 views  11 comments

by uomo_senza_nome   ➕follow (0)   💰tip   ignore  

http://www.econbrowser.com/archives/2012/09/fat_fingers_and.html

Those who doubt that oil prices are determined solely by fundamentals would naturally ask, what aspect of the supply or demand for oil could have possibly changed in the course of less than a minute last Monday? The obvious and correct answer is, there was no change in either the supply or the demand for physical oil over the course of that minute. The minute-by-minute price of a NYMEX contract is determined by how many people are wanting to buy that financial contract and at what price, not by how much gasoline motorists burned in their cars that minute. But since changes in the price of crude oil are the key determinant of the price consumers pay for gasoline, doesn't that establish pretty clearly that the whims or fat fingers of financial traders are ultimately determining the price we all pay at the pump?

Oil prices dropped more than $3 in less than a minute late in the trading day on Monday, just as trading volume spiked. The move also dragged down prices of gold, copper and even the euro. "Traders were looking like deer in the headlights," said Peter Donovan, a floor trader at Vantage Trading on the New York Mercantile Exchange. "I called four different desks, and they all said, 'we don't know.' " The move came at about 1:54 p.m. EDT. West Texas Intermediate crude for October delivery plummeted to $94.83 a barrel on the Nymex, from more than $98. Some...

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1   Tenpoundbass   2012 Sep 25, 4:03am  

I always just pump 3 to 4 gallons any more at the pump.
Anymore than that you justify these bastards profits.
Profits are measured by the hour in energy. All of the idiots dropping $70-$90 in the tank on any given day, makes it all worth while and possible.

If everyone at the pump were to just pump enough to get where they are going for a few trips, and not just to keep a full tank. A lot of wealth in profits would simply vanish over night, and this whole ugly affair would be behind us.

"What's in your Wallet?"

2   FortWayne   2012 Sep 25, 6:56am  

Your gas mileage will increase slightly too if you don't have a full tank, less fuel to haul.

But yeah, it's all driven by speculative trading and market manipulation. I can't wait till I can drive a solar powered vehicle and not pay these people a dime.

3   leo707   2012 Sep 28, 3:29am  

FortWayne says

Your gas mileage will increase slightly too if you don't have a full tank, less fuel to haul.

Yeah, but I almost never let my tank get bellow half. I always want to know that I can get in and go in the event of an emergency.

4   zzyzzx   2012 Sep 28, 4:59am  

leo707 says

Yeah, but I almost never let my tank get bellow half. I always want to know that I can get in and go in the event of an emergency.

I assume that this is what you do in case of earthquakes or riots? How often does that happen?

5   leo707   2012 Sep 28, 5:09am  

zzyzzx says

I assume that this is what you do in case of earthquakes or riots?

Or, zombies...

I live in Oakland, CA we have riots several times a year, the occasional earthquake, and on a weekly basis I suspect the zombie apocalypse may be beginning.

Seriously though, for me the extra 1/2 tank of gas is like carrying a spare tire. I also carry other emergency gear in my car: bottled water, MREs, flares, etc.

6   zzyzzx   2012 Sep 28, 9:11am  

leo707 says

Seriously though, for me the extra 1/2 tank of gas is like carrying a spare tire. I also carry other emergency gear in my car: bottled water, MREs, flares, etc.

And an assault rifle, correct?

7   leo707   2012 Sep 28, 9:25am  

zzyzzx says

And an assault rifle, correct?

That is not something that I would never want to leave in my car "unattended".

But, hmmmm...maybe I should add a cleaning kit and a thousand round can of .223s, and perhaps a few boxes of .357 and 9mm...hmmmm...

8   Dan8267   2012 Sep 28, 9:33am  

The problem: Speculation and zero-sum games affect real-world prices of essential goods.

The solution: Capital gains that start at 100% and lower to 0% over the course of 8 1/3 years.

This eliminates the profit motive of short-term, zero-sum speculation while encouraging long-term investment. It also eliminates all the waste associated with day trading and microtrading. Think about how much more real wealth we could create by redirecting resources allocated to zero-sum gains into improving infrastructure.

9   KILLERJANE   2012 Sep 28, 10:15am  

I use an electric bike for a lot of local errands. It is a far superior way for me to get around. It's funny to me when I go to pick up groceries and realize that I used to haul around my heavy car just to get the milk and butter. It just seems odd to get in a big car for some little items. The bike feels better too, breezy.

10   American in Japan   2012 Sep 29, 6:19pm  

>I use an electric bike for a lot of local errands. It is a far superior way for me to get around. It's funny to me when I go to pick up groceries and realize that I used to haul around my heavy car just to get the milk and butter. It just seems odd to get in a big car for some little items. The bike feels better too, breezy.

This is what most people do in Tokyo.

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