Re: Greedy Oil Companies, the numbers!

I understand your opinion and I agree it would be better if the market was
more free, but I've never seen any real concern the the up/down limits are
propping up or depressing the "true" price of oil. The market is more
resiliant than most anything else we depend on. There has always been a
strain of "there's a catastrophe around the corner" for long before anyone
even imagined a stock market. The Savings and Loan crisis didn't ruin the
country, the internet boom/bust didn't ruin the country, Y2K didn't even
make a hiccup, and 9/11 didn't ruin the country. The limit hasn't prevented
crude oil from increasing from $12 to $93. Like I said before, the price of
the commodity can get as high or as low as the buyers and sellers think it
should go. The very modest effect these up/down limits have is only to make
big changes happen over a few hours or over a few days.

I used to be one of those people that saw the 4 horsemen of the apocalypse
from Revelation in most acts of Congress and half of the new technology.
I'm sure they will arrive one day but I also know the people predicting them
have predicted them about 10 million times and eventually that is a record
that should reduce their influence.

Here's a quote from the horse's mouth;
http://www.nymex.com/CL_spec.aspx
Maximum Daily Price Fluctuation $10.00 per barrel ($10,000 per contract)
for all months. If any contract is traded, bid, or offered at the limit for
five minutes, trading is halted for five minutes. When trading resumes, the
limit is expanded by $10.00 per barrel in either direction. If another halt
were triggered, the market would continue to be expanded by $10.00 per
barrel in either direction after each successive five-minute trading halt.
There will be no maximum price fluctuation limits during any one trading
session.

--

Scott

Barak Obama is the Paris Hilton of politics.
John McCain is the John Kerry of Republican politics.

"Night Rogue" <spam@xxxxxxxxxx> wrote in message
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"tscottme" <blahblah@xxxxxxxx> wrote in message
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Yes, it's an artificial restraint but it's more like a governor on an
engine
it's not a fence. The price of oil can reach upto or down to any level
the
market decides, the up/down limits don't prevent the price from getting
where the market it wants it to be. The limits are not a strict range,
as
in the price of oil must trade between 30 and 90, the limits only dictate
that today the price of oil can't tade on this one exchange more than x
above or x below today's price. It could rise or fall by x every day
until
the price of oil on one exchange was a million dollars per barrel or once
cent per barrel. This happens routinely in various farm commodities and
the
market price does adjust even though up/down limits are activated for a
few
days in a row.

I wouldn't suggest we start using up/down limits in commodity markets but
we
have them and they are not keeping any commodity stuck in some narrow
range.

--

Scott

Barak Obama is the Paris Hilton of politics.

"Night Rogue" <spam@xxxxxxxxxx> wrote in message
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"tscottme" <blahblah@xxxxxxxx> wrote in message
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The price of the commodities can go as high or as low as suppliers and
buyers agree. All the limits do is make everyone take a break in case
of
a
panic. Limits aren't usually a factor and when they come into play
they
simply cause the big price change to happen over a few days rather
than
in
one big jump.

Imagine tomorrow we discover that there's a cheap and easy way to use
seawater as a motor fuel and oil is no longer necessary as a fuel.
The
price of oil would adjust accordingly but it wouldn't be able to move
from
$85/bbl to $5/bbl in one day. It would move down to the new much
lower
level over as many days as it takes, dropping the by limit each day.
The
limits don't keep the price in any one range. They keep the price
from
moving in one day by more than the limit amount. If the price drops
or
increases by the limits 20 days in a row the price will just get more
and
more cheap or expensive. Think of the bank. They allow you to write
a
check and empty your account any time you want. If you use the ATM
they
only allow you withdraw a maximum amount per transaction and possibly
a
daily limit. If you were intent on taking out all of your money
through
the
ATM you just might have to do it over a few days.


--

Scott

Barak Obama is the Paris Hilton of politics.

"Night Rogue" <spam@xxxxxxxxxx> wrote in message
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Which means the government pretty much.
Because they set a certain range per a day called a limit up or a
limit
down...


It's still an artificial restraint imposed by the government.


I understand how it works, but the point is that as long as government
interferes with the market like making quick fixes like they did recently,
you have a stock market that is a house of cards, and not a true market
price.





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