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  1. #1

    Default Oil Prices Plunge: Why it's NOT Good for the Economy

    According to some on this board, decreasing oil prices are good for the "little guy." Maybe you can explain where all the speculators have gone that were artificially driving it up to $100/barrel.

    http://finance.yahoo.com/blogs/daily...165621142.html


  2. #2

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    Burnee doesn't understand, and doesn't want to understand. He is more comfortable living life as a victim.

  3. #3

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    Falling oil prices are not causing the world economy to retract.

  4. #4

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    Quote Originally Posted by GopherJake View Post
    Falling oil prices are not causing the world economy to retract.
    Oil prices don't really "cause" much of anything, except changing behavior. They are a reflection of the global economy, strength of the dollar, what the market sees for future supply, etc. JG's point is that you can't just blame speculators when prices rise.

  5. #5

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    Quote Originally Posted by GopherJake View Post
    Falling oil prices are not causing the world economy to retract.
    No. Socialist policies are doing that. Correct for 10 points Jake.

  6. #6

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    Quote Originally Posted by Section2 View Post
    Oil prices don't really "cause" much of anything, except changing behavior. They are a reflection of the global economy, strength of the dollar, what the market sees for future supply, etc. JG's point is that you can't just blame speculators when prices rise.
    The title of the thread is:

    Oil Prices Plunge: Why it's NOT Good for the Economy


  7. #7

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    Quote Originally Posted by GopherJake View Post
    Falling oil prices are not causing the world economy to retract.
    Correct. They are a reflection of what's happening to the world economy. Supply and demand is what's causing them to move, not speculation. When oil prices are heading down, it means that economic activity is getting weaker, which is usually a bad thing...

  8. #8

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    Quote Originally Posted by GopherJake View Post
    The title of the thread is:

    Oil Prices Plunge: Why it's NOT Good for the Economy
    Right, Burnee argues that low oil prices are good for the economy, because that means EEs can spend all of their money on other products besides oil, and that is good for the economy. Money spent on oil companies is bad for the economy. That's his logic, not mine, it isn't correct.
    But when prices collapse like this, it's either because supply has exploded higher, or demand is collapsing. Supply is not rising. So if demand is collapsing because global growth is slowing sharply, that's not good for EEs or the economy.

    I don't really know what your word choice 'retract' is supposed to mean.

  9. #9

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    Quote Originally Posted by John Galt View Post
    Correct. They are a reflection of what's happening to the world economy. Supply and demand is what's causing them to move, not speculation. When oil prices are heading down, it means that economic activity is getting weaker, which is usually a bad thing...
    Agree (though I don't pretend to understand "speculation" and whether markets can be manipulated by it or not). My point is that the title of the thread could have been chosen more carefully as it certainly can be interpreted to indicate causation. That's all.

  10. #10

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    Quote Originally Posted by GopherJake View Post
    Agree (though I don't pretend to understand "speculation" and whether markets can be manipulated by it or not). My point is that the title of the thread could have been chosen more carefully as it certainly can be interpreted to indicate causation. That's all.
    That is near dpdoll level attention to minor detail........

  11. #11

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    Quote Originally Posted by GopherJake View Post
    Agree (though I don't pretend to understand "speculation" and whether markets can be manipulated by it or not). My point is that the title of the thread could have been chosen more carefully as it certainly can be interpreted to indicate causation. That's all.
    agree, it should say why it's not a good sign for the economy.

    in the sense that you mean, markets cannot be manipulated. Especially a market as huge as oil. If US speculators were artifiially behind the price rise, you would expect non us oil to trade substantially cheaper. It is not. It has traded much higher than US oil for the last couple years.

    But in the correct sense, yes, speculators have an effect on price. they are trying to predict the future price of oil. they speculate on it. That's how a market price is determined.

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    Quote Originally Posted by Section2 View Post
    Right, Burnee argues that low oil prices are good for the economy, because that means EEs can spend all of their money on other products besides oil, and that is good for the economy. Money spent on oil companies is bad for the economy. That's his logic, not mine, it isn't correct.
    But when prices collapse like this, it's either because supply has exploded higher, or demand is collapsing. Supply is not rising. So if demand is collapsing because global growth is slowing sharply, that's not good for EEs or the economy.
    If oil prices fall for some reason other than a retracting economy, it would quite likely be "good for the little guy."

    Quote Originally Posted by Section2 View Post
    I don't really know what your word choice 'retract' is supposed to mean.
    http://dictionary.reference.com/browse/retract?s=t

  13. #13

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    Quote Originally Posted by GopherJake View Post
    If oil prices fall for some reason other than a retracting economy, it would quite likely be "good for the little guy."
    Economists use "contract" not "retract". Yes, if a rise in supply was behind the price drop, as I stated is the alternative, then that would be good for everyone. That's what's happening with natural gas. That's not what's happening with oil.

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    Quote Originally Posted by Section2 View Post
    Economists use "contract" not "retract".
    They both mean shrink, but yes, I should have used contract. BGA, who has the most DPO points, me or S2?

    Quote Originally Posted by Section2 View Post
    Yes, if a rise in supply was behind the price drop, as I stated is the alternative, then that would be good for everyone. That's what's happening with natural gas. That's not what's happening with oil.
    Didn't say it was.

  15. #15

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    As I stated in a previous thread, we'd all love to live in a world where GDP was 6% with oil at $30/barrel. Unfortunately, this is impossible at current production levels, supply is way too tight. Look no further than all of the companies that focus on deep sea drilling and how they can charge day rates of $300,000+. When oil starts dropping now, it's mainly related to demand.

  16. #16

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    Quote Originally Posted by GopherJake View Post
    They both mean shrink, but yes, I should have used contract. BGA, who has the most DPO points, me or S2?
    retract doesn't mean shrink. I wasn't being a dopey, I genuinely was not sure what you meant. I thought you meant contract, but was clarifying.

  17. #17

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    Quote Originally Posted by GopherJake View Post
    They both mean shrink, but yes, I should have used contract. BGA, who has the most DPO points, me or S2?
    Didn't say it was.
    That's a funny question. Do you want that figured pro-rata to post quantity?

    Neither of you can meet the dpdoll anal retentive test.

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