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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Cogito who wrote (71344)	6/10/2008 5:31:10 AM
From: Bearcatbob	Respond to of 543359

"Bob - But couldn't prices in the futures contracts be at least partially inflated due to speculation? - Allen" Lower future prices would mean people think the price will go down - as in a bursting bubble. Contango would mean the bet is they will go up. Goldman Sachs sure seems to be on the up side. I personally think the world cannot afford the current price level and both demand and price will fall some.

To: Cogito who wrote (71344)	6/10/2008 3:07:06 PM
From: Lane3	Read Replies (2) \| Respond to of 543359

But couldn't prices in the futures contracts be at least partially inflated due to speculation? Allen, it occurred to me that part of the problem might be definitional. I had lunch today with a friend who considered everything about the futures market to be speculation. I thought that the normal transactions involving, say, farmers and canners, would not be speculation but that the activity of hedge funds, who have no involvement in the industry, would be speculation. I don't know what either you or Bob has in mind when you think of speculation but perhaps definitional differences may account for some of your disconnect. I find it incomprehensible that some part of the price of oil wouldn't be speculation, however you define it.