Right on! Walter always get to the heart of economic matters and with language and analogies that we can easily understand. A great econ teacher.

"While corn is different from oil, both obey the laws of supply and demand, just as humans are very different from bricks but both obey the laws of gravity."

Are you crazy, Walter?

There's a world of difference between oil and corn. The supply of oil is controlled by monopolistic OPEC. They set the supply volume to maximize their intake. Corn is not so controlled. There is a fair amount of competition in corn production/supply.

The only thing that the futures market does is cause the next year's expected price to be upon us today. If oil is expected by futures investors to be, say, $170 next year, their action of purchasing oil futures brings the price today to at or near $170.

Futures for oil or any other monopoly controlled product should be outlawed. And margin requirements for all futures should be 50% or more. It's criminal to allow trading pieces of paper with the words "contract" and "Futures" written thereon with no money down. And you don't even need to take delivery of the product on the contract's delivery date if you can sell the contract to a sucker.

Amen. You hit it right on the head, and Williams is up in the night.

According to the Wall Street Journal, 70% of all oil bought this year has been bought by companies that don't use oil in their products (read: financial services companies).

The frenzy of companies wanting to buy oil is causing artificial demand - demand that isn't real. Most of those companies want to BUY oil but they have no intention of USING the oil they buy - they just want to buy it and resell it at a profit.

So the reason oil is so overpriced is because the speculators and hedge funds are making the market THINK that demand for oil is high. The truth is worldwide demand is actually down - WAY down.....7% in the U.S. and 4% worldwide.

Two possible solutions: 1 - require all oil buyers to take delivery of their oil. That would get the hedge funds and profiteers out of it and limit sales to only those companies that will actually use the oil. 2 - require all potential bidders to show proof that they have need to buy crude in order to produce a product.

Only in America are we arrogant enough to believe that our congress can pass a law and futures trading will go away. It will go away, but only to some other country. If much of it hasn't already. All it will do is hurt Americans involved in futures trading - won't slow the trading down a bit. If we could just take the freedom to go somewhere away from those nasty futures traders life would be as it should.

So Casey, how long have you been an oil speculator?

Wait, strike that. Your incorrect statements proves you're no oil speculator.

All oil trades are done in New York City. Even London Brent trades in New York. As such, all trades have to be done in compliance with U.S. laws. It's just like the stock market - anyone anywhere in the world can buy U.S. stocks, but they are subject to U.S. laws.

So yes, outlawing futures trading WOULD make a difference.

To wrz and To wrz: Your arguments do not change the truth of Mr. Williams statements. You must not have been in attendance the day your Econ 101 prof. talked about supply and demand.

Just keep saying to yourself, "the less there is of something, real or precived, the more it costs". And I recognize that more oil is at best a short term solution.

But if you think congress is going to fix this problem, I have property I would like to sell to you. I was here when the first oil embargo was imposed, I was her when Pres. Carter called for energy self sufficiency. I drove a 1963 Pontiac with a large block V-8 engine in 1975 that got better gas mileage and ran cleaner than the 2005 Ford Ranger I drive at work now.

So, please someone tell me what congress has done to really solve this or any energy problem. Republicans haven't and neither have the democrats.

I stand corrected - however, my basic point is this - speculators can be chased from the US and they will go. Congress can not stop speculation, but it can regulate it out of here and off to somewhere else. My guess is congress is not as stupid as they act. They don't want that to happen so they won't beat up on speculators the way they are talking. Speculation does fill a useful purpose - just as profit does. Neither are as evil as government's solution to excess speculation or profits. And as long as people are free to go elsewhere they will. Freedom to do that is the fly in the ointment of the left.

Using corn to make gas is dumb. It raises the price of gas and food and taxes. (the government has to subsidize it). It doesn't create much energy, it takes almost as much energy to make as it produces.

Wind turbines do work. We would be better off investing in them instead.

Bill,

While I was failing Econ 101, sounds like you were failing Reading Comprehension 101. Apparently you missed my first post where I mentioned that worldwide oil demand is down 4% this year.

So let's see: Supply is unchanged, demand is down. Since you did so well in Econ 101, tell me what that should do to prices? That's right, they should go down. But that's not what's happening, is it?

Prices are going against the fundamentals of supply & demand because speculators are creating an artificial sense of demand - they're all jostling around, waving fistfuls of cash at oil companies which makes it SEEM like there's high demand when there really isn't.

I work in the energy business, Bill, so please stop lecturing me like you know what you're talking about. I can assure you that speculators ARE to blame for at least a good portion of the over-the-top prices we're paying for oil. The fact that Congress won't do anything about it is politically motivated, not economically.

To wrz | 11:15 a.m.: "Two possible solutions: 1 - require all oil buyers to take delivery of their oil. That would get the hedge funds and profiteers out of it and limit sales to only those companies that will actually use the oil. 2 - require all potential bidders to show proof that they have need to buy crude in order to produce a product."

You are spot on, my friend. Unfortunately it won't happen. Someone is in someone else's pocket.

Normally, I wouldn't care what the futures market does. But when the commodity is a non-renewable, scarce resource vital to the existence of our economy such as oil, natural gas, etc., and when the product is controlled by a monopoly, I get concerned that the conditions of a free market are absent.

To: To wrz @ 3:03 p.m.

Again, you're spot on.

OPEC is artificially controlling supply of a finite resource and the speculators know it. So they go into the market waving cash at suppliers. No, they wave little or no cash. Ten percent down is all they need (I think I swa). If the speculator would have to put up substantial cash (margin) and take delivery of the product they buy this whole oil price gouging debacle would disappear.

The markets have gone bizzerk!

IT never ceases to amaze me how liberals reject reality and substitute there own fantasy world.