4 ms·
Shouldn't intelligent speculators drive down the price swings? If there are going to be price swings, shouldn't speculators make money by issuing futures and op
by baltcode 11y ago
Shouldn't intelligent speculators drive down the price swings? If there are going to be price swings, shouldn't speculators make money by issuing futures and options, thereby decreasing the eventual swings?
- msandford 11y agoThe big oil companies do a fair amount of this I'm sure, but do you really want to bet a few billion as to exactly how much oil will cost in 2-6 years? The US consumes 20 million barrels a day, so at current prices that's $600 million a day at $30/bbl and $2 billion a day at $100/bbl. How much do you think you'd have to buy or sell in the futures market to move the price to smooth it out? Finally, it's very, very hard to know what's short term volatility and what's long term structural. Everyone "knew" that oil prices were going to be high forever because of peak oil and declining production. Turns out, maybe not.