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Not just tankers, but oil storage depots. One of the largest oil storage areas is in Cushing, OK. The amounts of oil stored there are at record levels. As re

by rmah 16y ago

Not just tankers, but oil storage depots. One of the largest oil storage areas is in Cushing, OK. The amounts of oil stored there are at record levels. As reference, read: http://www.voanews.com/english/news/a-13-2009-01-23-voa61-68809857.html http://www.voanews.com/english/news/a-13-2009-01-23-voa61-68... or http://af.reuters.com/article/energyOilNews/idAFN0222687620110302 http://af.reuters.com/article/energyOilNews/idAFN02226876201.... It's so full that they're building more capacity to store more oil. The situation is the same in other parts of the world. BTW, this is common knowledge for those who follow the commodities markets. Oil prices are high because of perceived risk of potential supply contraction due to instability in the middle east. It's a risk trade, i.e. speculation.

natrius 16y ago
And if those speculators are right, people will be praising them for having the foresight to save oil for such a situation, which will lower prices compared to the speculation-free scenario. Speculation could probably have negative effects on markets in theory, but it's so hard to take such claims seriously since they're rarely based on sound economics.
- im3w1l 16y ago
  Speculation has had negative effects in practice: The tulip crisis. Sometimes speculation can turn into a pyramid game. I'm not saying that this is always, or even often the case, but it is sometimes the case.
  - RickHull 16y ago
    > Speculation has had negative effects in practice: The tulip crisis Guess who got hurt in the tulip crisis? ... The speculators. Their harm tends to be self-contained.
Eliezer 16y ago
So somebody is paying nontrivial amounts to store oil that they think will be worth more tomorrow than today. If they're right, they win. If they're wrong, they lose money. If what they believe is true, they help us all and make a profit. If what they believe is wrong, they hinder us all and make money. Where is the private incentive that is actually at odds with the public one?
- Eliezer 16y ago
  Er, hinder us all and lose money.

by rmah 16y ago

natrius 16y ago

And if those speculators are right, people will be praising them for having the foresight to save oil for such a situation, which will lower prices compared to the speculation-free scenario. Speculation could probably have negative effects on markets in theory, but it's so hard to take such claims seriously since they're rarely based on sound economics.

im3w1l 16y ago
Speculation has had negative effects in practice: The tulip crisis. Sometimes speculation can turn into a pyramid game. I'm not saying that this is always, or even often the case, but it is sometimes the case.
- RickHull 16y ago
  > Speculation has had negative effects in practice: The tulip crisis Guess who got hurt in the tulip crisis? ... The speculators. Their harm tends to be self-contained.

Eliezer 16y ago

So somebody is paying nontrivial amounts to store oil that they think will be worth more tomorrow than today. If they're right, they win. If they're wrong, they lose money. If what they believe is true, they help us all and make a profit. If what they believe is wrong, they hinder us all and make money. Where is the private incentive that is actually at odds with the public one?

Eliezer 16y ago
Er, hinder us all and lose money.