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Speculators by oil futures. Basically, they say 'I will buy oil from you at X price on this date." Sounds harmless, right? Well, what they *actually* do is this:
A barrel of oil is worth $90 right now. I bet it is going to be worth $95 in 10 minutes. So, I'll buy a future's contract for oil for $95 to be concluded in 4 hours.
The market then catches wind that someone is willing to pay $5 more per barrel, and everyone raises their prices.
Who wins? The speculator who bought oil at $95 a barrel when, by those few hours later, it is selling at $97 a barrel. Who loses? The consumer.
It's borderline illegal!
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∙ 13y ago
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Price effect is a combination of income effect and substitution effect?
Yes, Price effect = substitution effect + income effect
What is decomposition of price and income effect?
Price effect in quantitative term, is the changed in quantity demanded of a good due to changes in its price,ceteris paribus. The price effect, however, is a net effect of two sub-effects: Income effect and substutuion effect. Thus, decomposition of price effect means the analysis by which the the price effect is into its two components viz. substitution effect and income effect
International oil prices are determind by?
Oil prices everywhere are determined by supply and demand through a market exchange like the NYMEX. It is done similar to how stock prices are done. When the supply is high relative to demand, people bid lower for a barrel of oil, when the demand is high relative to supply people bid higher for a barrel of oil. Speculators can also play in this game bidding up the cost of a barrel of oil. Interestingly enough, far too many people blame the oil companies when prices are high. While this can be partially true, since oil companies can withhold supply from the market, it generally does not hold true because there are many many different places where oil can be retreived. The supply of oil to the market can also be determined by the price. Oil companies will only supply so much oil at a given price before they will not supply any more unless the price is bid higher. Where the bid price equals what the oil companies are willing to supply you have an equilibrum price.
Speculators help or hinder economic growth?
Speculators are individuals who risk their savings trying to gain from the difference between the current and the future price of a good or service. In doing so, they themselves influence the current price, because to buy or sell at current prices necessarily increases/decreases the current demand for that good or service.Thus, through their actions, skillful speculators contribute to more correct pricing of goods and services. Those unskilled do the opposite, but will eventually go out of business if they continue to make wrong predictions.
What is the price of a barrel of oil?
As of September 1, 2012 the price of a barrel of oil is $96.48. To see the current price of a barrel of oil see the related link below, which gives the current price of oil.
Profiting With Gas And Oil Futures?
New information constantly flows into the futures markets for oil and natural gas. The nature of the information influences the relative prices of a barrel of oil or one million BTUs (MMBtu) of natural gas. Sometimes changes in these prices can be both sudden and severe. When news of the OPEC oil embargo in 1973 hit the oil futures market, the price of a barrel of oil rocketed upward to over $40 for the first time. Later in 1979 and 1980 the price of a barrel of oil went over $70. Speculators seeking to make a profit in the oil and natural gas futures markets need a strong stomach and a hard head. This is not an occupation for the weak-willed. A oil and gas futures trader needs to be aware of a multiplicity of factors, including how much he is leveraged compared to other traders. Futures traders borrow money from futures exchanges to magnify the effects of even small moves in oil and gas prices. Using leverage to take advantage of volatility is often the only way a trader can make enough profits to cover his costs. Turning a profit in the rough and violent oil and natural gas futures markets is not just about making money. The speculator plays a vital role by purchasing and selling oil and gas futures contracts. The oil companies sell barrels of raw crude oil to oil speculators at a predetermined price. The speculator is paid to assume the risk that the price of oil will be lower or higher than the price the oil was sold for. The speculator then resells the oil to a refinery company. Again, the price the oil company is paid does not change, but the price of the oil while it is held by the speculator changes considerably. Trading oil and gas futures contracts is all about managing risk. Speculators are paid to assume risks on behalf of others. Most speculators probably have never seen a barrel of oil in their lives. Consumers, executives and workers all benefit from the oil and gas futures markets.
What Indian tribe discovered oil on their reservation?
Oil. When oil was found on Indian lands, speculators bought up even more Indian land.
How has oil demand changed within the last five years?
If you live in the United States it is next to impossible to know for sure. Oil producers in America create false markets in order to maximize their profits. Texas Oil has been doing this for years as a way to not only get rich, but to control the country. They dictate everything from what kind of products can be consumed (e.g.-vehicles), to how we produce our electricity, to who our president is. Typically, in economics, when demand goes down so does price. Not so with oil. The national media would have us believe that "speculators" forecast the cost of crude oil. Sadly, speculators do have a big say in the cost, even sadder is the fact that the speculators are the oil producers themselves. So any picture of oil "demand" that may be painted is obviously not an accurate picture. It's just a picture that Texas Oil would want you to see. GO RANGERS!!
Many stock speculators in the 1920's put up as little as ten percent of the price of stock when they?
Bought on margin.
Exxon Valdez oil spill effect on stock price?
If the BP oil spill is any indicator the price of exxon took a 60% short term hit. And, of course it eventually completely recovered.
Does the president control gasoline prices?
No. Gas prices are set at a market rate. Today there are people who are buying up the oil and holding on to it. They think there will be a war with Iran ( one of the biggest producers of oil) and Israel/ US. The price of the oil sets what the oil costs at the pump. Actually, there is not a shortage of oil at this time but the speculators are generating a false shortage by holding on to it. Thus, the price goes up at the pump. The oil companies also have been working for the last 30 years to get the prices of gas as high as they could. They set 5.00 a gallon as a goal.
Price effect is a combination of income effect and substitution effect?
Yes, Price effect = substitution effect + income effect
What is decomposition of price and income effect?
Price effect in quantitative term, is the changed in quantity demanded of a good due to changes in its price,ceteris paribus. The price effect, however, is a net effect of two sub-effects: Income effect and substutuion effect. Thus, decomposition of price effect means the analysis by which the the price effect is into its two components viz. substitution effect and income effect
International oil prices are determind by?
Oil prices everywhere are determined by supply and demand through a market exchange like the NYMEX. It is done similar to how stock prices are done. When the supply is high relative to demand, people bid lower for a barrel of oil, when the demand is high relative to supply people bid higher for a barrel of oil. Speculators can also play in this game bidding up the cost of a barrel of oil. Interestingly enough, far too many people blame the oil companies when prices are high. While this can be partially true, since oil companies can withhold supply from the market, it generally does not hold true because there are many many different places where oil can be retreived. The supply of oil to the market can also be determined by the price. Oil companies will only supply so much oil at a given price before they will not supply any more unless the price is bid higher. Where the bid price equals what the oil companies are willing to supply you have an equilibrum price.
is oil etf, main price controller for international crude prices?
It is mostly the main cause of the international crude prices. There is also a factor with the current trading conditions that are currently happening. For example, bad weather can affect the price, an oil shut down can also effect the price.
Speculators help or hinder economic growth?
Speculators are individuals who risk their savings trying to gain from the difference between the current and the future price of a good or service. In doing so, they themselves influence the current price, because to buy or sell at current prices necessarily increases/decreases the current demand for that good or service.Thus, through their actions, skillful speculators contribute to more correct pricing of goods and services. Those unskilled do the opposite, but will eventually go out of business if they continue to make wrong predictions.
Does oil spills helps to increase the oil price?
Yes it does affect the oil price
