4 ms·

These oil and gas futures are all publicly traded, as are most of the corporations working in the field. If it’s really so easy to make money because the market

by woah 4y ago

These oil and gas futures are all publicly traded, as are most of the corporations working in the field. If it’s really so easy to make money because the market is rigged, guess what? You can get in on the action too.

Workaccount2 4y ago
Everybody complains that energy companies manipulate prices to enrich themselves. For some reason though none of them are happy that they can use their inside knowledge to get rich...
- algoatecorn 4y ago
  Yep, I have friends who think the price at the pump is due to companies like Exxon and their "ability to price gouge". Like what? Yea dude Exxon is so powerful they let their stock freefall for 6 straight years post-2014
  - guerrilla 4y ago
    Your friend is right. They literally have record-breaking income right now[1]. It just headlined the FT two days ago. This is also happening with distributors/utilities. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-8593352852e2 https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...
    - algoatecorn 4y ago
      That doesn't mean they are right. This is a complex topic that I don't have time to write a thesis on at the moment. Some things to consider: cost cutting 2014-2019 enabled much higher profits when demand went through the roof, alternatives and substitutes, how is the price of OIL determined?, spot vs future, refinery capacity, how much of oil -> gasoline is vertically integrated, who oil producers sell to, who buys the oil, who distills it. So who's doing the price gouging? Oil producers? Distillers? Gas stations? Everyone? Are prices being gouged, or are there intricacies in this system which have compounding price effects on supply and demand hiccups?
      - guerrilla 4y ago
        > So who's doing the price gouging? Oil producers? Distillers? Gas stations? Everyone? Yes, the entire supply chain, at least in my country. It's been news for quite a while. > Are prices being gouged, Yes and there's a lot of talk of intervention for that reason, even in the US.
        benj111 4y ago
        Have you got figures to back up your assertions that the entire supply chain is price gouging? Or is this purely on the basis that you're experiencing high prices so anyone that passes on those price rises are defacto price gouging?
        guerrilla 4y ago
        > Have you got figures to back up your assertions that the entire supply chain is price gouging? This a false dichotomy. It's been in the news here pretty much constantly, especially in the financial press, to the point it's common knowledge. I'm neither digging up those articles nor translating them for you though. You'll just have to take my word on it (or not.)
        tacker2000 4y ago
        So you are not going to substantiate your claim and just say its “common knowledge” and “take my word”? Alright then.
        benj111 4y ago
        How is it a false dichotomy? Price gouging would show up on the P&L it's very easy to demonstrate. Citing unnamed newspapers and 'common knowlege' doesn't demonstrate anything, or inspire confidence. Petrol stations tend not to be very profitable. Not knowing where you are I can't say whether you're the exception. But as petrol is fungible, unless you're accusing them of collusion or something I don't see how they could price gouge. Same with refineries. So that just leaves the oil drillers. You have got OPEC and stuff, but the average non opec oil drillers have the choice of selling at the market rate or not at all. And I'm not sure how selling at the market rate, be that for massive profits, or a loss is price gouging. Unless you want to devalue the term.
    - vba616 4y ago
      There's a Lukoil station near where I live. The price they are charging doesn't differ much from say Exxon/Mobil. Is that because they are colluding?
      - m000 4y ago
        Of course they are. It is more profitable to hike prices to match your less-efficient competitors and maintain a facade of competition, rather than crushing them to become a monopoly and risk a heavy-handed government intervention.
  - mushbino 4y ago
    What have Exxon and other oil companies profits looked like this year? Have they been hurting or making record profits?
consp 4y ago
It takes money to make more money (especially in any appreciable amount) and that is not possible for everyone so the "You can get in on it too" argumentation is quite insulting to a lot of people as far as I am concerned.
- netrus 4y ago
  The argument is that it is obviously never easy to make money in a transparent market - because SOMEONE with money would do it until the prices adapt. The difference between todays spot market and futures tells you something about the challenge to provide additional storage at scale.
  - guerrilla 4y ago
    > because SOMEONE with money would do it until the prices adapt But they are. Your premise is wrong. This just headlined the Financial times 2 days ago[1]. This and the last quarter have been record profits for energy companies and that's not even counting local profits, which are also at record heights. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-8593352852e2 https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...
    - netrus 4y ago
      Well of course they makes record profits, something they have increased in value (storage, stock, permits...) But they cannot buy more gas now and sell in the future than they already do - as we can see from the prices.
    - gorkish 4y ago
      Someone at some point is gonna have to start defining what the hell "record profits" actually means and why it's good for some companies to make "record profits" out of nothing but hype and bad for other companies to make "record profits" because they were smart about holding their previously money-losing gas investments until a more favorable economic condition. Gas is still trading worldwide at a price far below it's 6:1 energy value relative to oil, so IMO everyone needs to stuff this "record profits" line right back up their ass where they got it in the first place. There's not a gas shortage; gas is still overproduced and dirt cheap. We do however seem to be long on crybabies that can't buy it at 20:1 anymore. Financially and politically punishing domestic producers in Europe and the West led to this problem in the first place where it's simply not possible to be price competitive with Russia and the Middle East where the labor, environmental and regulatory standards to produce it are weak or ignored. Nobody seems to give one shit about how much "profit" those suppliers make from the sales, consequences be damned, so long as they give the best price.
andrepd 4y ago
Sure, let me just get a couple hundred million in capital, I'll be there in a minute. If people are complaining that something is wrong, the answer isn't "well why don't you take advantage too"
- vkou 4y ago
  I assure you, there are plenty of people with a few hundred million they are looking to invest who aren't in on the Big Gas conspiracy! Yet, most of them don't seem to be tripping over themselves to collect this free money. It could be because: * The market has priced in the cost of storing all this gas between now and February. * Storage is expensive, and is at capacity. * Building out new storage that only will be useful for a total of two years (Or however long you expect the war to last) is a poor investment. * An increase in storage capacity will lower the spread between the spot price of gas in October and the price of gas in February, as suppliers price in the increase/reduction in demand * Europe transitioning to electric (heat pump, baseboard, etc) heating will lower demand for gas. There's a reason that difference in spot pricing exists.

by woah 4y ago

Workaccount2 4y ago

Everybody complains that energy companies manipulate prices to enrich themselves. For some reason though none of them are happy that they can use their inside knowledge to get rich...

algoatecorn 4y ago
Yep, I have friends who think the price at the pump is due to companies like Exxon and their "ability to price gouge". Like what? Yea dude Exxon is so powerful they let their stock freefall for 6 straight years post-2014
- guerrilla 4y ago
  Your friend is right. They literally have record-breaking income right now[1]. It just headlined the FT two days ago. This is also happening with distributors/utilities. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-8593352852e2 https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...
  - algoatecorn 4y ago
    That doesn't mean they are right. This is a complex topic that I don't have time to write a thesis on at the moment. Some things to consider: cost cutting 2014-2019 enabled much higher profits when demand went through the roof, alternatives and substitutes, how is the price of OIL determined?, spot vs future, refinery capacity, how much of oil -> gasoline is vertically integrated, who oil producers sell to, who buys the oil, who distills it. So who's doing the price gouging? Oil producers? Distillers? Gas stations? Everyone? Are prices being gouged, or are there intricacies in this system which have compounding price effects on supply and demand hiccups?
    - guerrilla 4y ago
      > So who's doing the price gouging? Oil producers? Distillers? Gas stations? Everyone? Yes, the entire supply chain, at least in my country. It's been news for quite a while. > Are prices being gouged, Yes and there's a lot of talk of intervention for that reason, even in the US.
      - benj111 4y ago
        Have you got figures to back up your assertions that the entire supply chain is price gouging? Or is this purely on the basis that you're experiencing high prices so anyone that passes on those price rises are defacto price gouging?
        guerrilla 4y ago
        > Have you got figures to back up your assertions that the entire supply chain is price gouging? This a false dichotomy. It's been in the news here pretty much constantly, especially in the financial press, to the point it's common knowledge. I'm neither digging up those articles nor translating them for you though. You'll just have to take my word on it (or not.)
        tacker2000 4y ago
        So you are not going to substantiate your claim and just say its “common knowledge” and “take my word”? Alright then.
        benj111 4y ago
        How is it a false dichotomy? Price gouging would show up on the P&L it's very easy to demonstrate. Citing unnamed newspapers and 'common knowlege' doesn't demonstrate anything, or inspire confidence. Petrol stations tend not to be very profitable. Not knowing where you are I can't say whether you're the exception. But as petrol is fungible, unless you're accusing them of collusion or something I don't see how they could price gouge. Same with refineries. So that just leaves the oil drillers. You have got OPEC and stuff, but the average non opec oil drillers have the choice of selling at the market rate or not at all. And I'm not sure how selling at the market rate, be that for massive profits, or a loss is price gouging. Unless you want to devalue the term.
  - vba616 4y ago
    There's a Lukoil station near where I live. The price they are charging doesn't differ much from say Exxon/Mobil. Is that because they are colluding?
    - m000 4y ago
      Of course they are. It is more profitable to hike prices to match your less-efficient competitors and maintain a facade of competition, rather than crushing them to become a monopoly and risk a heavy-handed government intervention.
- mushbino 4y ago
  What have Exxon and other oil companies profits looked like this year? Have they been hurting or making record profits?

consp 4y ago

It takes money to make more money (especially in any appreciable amount) and that is not possible for everyone so the "You can get in on it too" argumentation is quite insulting to a lot of people as far as I am concerned.

netrus 4y ago
The argument is that it is obviously never easy to make money in a transparent market - because SOMEONE with money would do it until the prices adapt. The difference between todays spot market and futures tells you something about the challenge to provide additional storage at scale.
- guerrilla 4y ago
  > because SOMEONE with money would do it until the prices adapt But they are. Your premise is wrong. This just headlined the Financial times 2 days ago[1]. This and the last quarter have been record profits for energy companies and that's not even counting local profits, which are also at record heights. 1. https://www.ft.com/content/0d84255c-84ba-4462-b80a-8593352852e2 https://www.ft.com/content/0d84255c-84ba-4462-b80a-859335285...
  - netrus 4y ago
    Well of course they makes record profits, something they have increased in value (storage, stock, permits...) But they cannot buy more gas now and sell in the future than they already do - as we can see from the prices.
  - gorkish 4y ago
    Someone at some point is gonna have to start defining what the hell "record profits" actually means and why it's good for some companies to make "record profits" out of nothing but hype and bad for other companies to make "record profits" because they were smart about holding their previously money-losing gas investments until a more favorable economic condition. Gas is still trading worldwide at a price far below it's 6:1 energy value relative to oil, so IMO everyone needs to stuff this "record profits" line right back up their ass where they got it in the first place. There's not a gas shortage; gas is still overproduced and dirt cheap. We do however seem to be long on crybabies that can't buy it at 20:1 anymore. Financially and politically punishing domestic producers in Europe and the West led to this problem in the first place where it's simply not possible to be price competitive with Russia and the Middle East where the labor, environmental and regulatory standards to produce it are weak or ignored. Nobody seems to give one shit about how much "profit" those suppliers make from the sales, consequences be damned, so long as they give the best price.

andrepd 4y ago

Sure, let me just get a couple hundred million in capital, I'll be there in a minute. If people are complaining that something is wrong, the answer isn't "well why don't you take advantage too"

vkou 4y ago
I assure you, there are plenty of people with a few hundred million they are looking to invest who aren't in on the Big Gas conspiracy! Yet, most of them don't seem to be tripping over themselves to collect this free money. It could be because: * The market has priced in the cost of storing all this gas between now and February. * Storage is expensive, and is at capacity. * Building out new storage that only will be useful for a total of two years (Or however long you expect the war to last) is a poor investment. * An increase in storage capacity will lower the spread between the spot price of gas in October and the price of gas in February, as suppliers price in the increase/reduction in demand * Europe transitioning to electric (heat pump, baseboard, etc) heating will lower demand for gas. There's a reason that difference in spot pricing exists.