• About
  • Contact
  • Editorial
  • Policies
  • Archives
Angry Bear
Relevant and even prescient commentary on news, politics and the economy.
  • US/Global Economics
  • Taxes/regulation
  • Healthcare
  • Law
  • Politics
  • Climate Change
  • Social Security
  • Hot Topics
« Back

Hopefully Firms are locking in Future Oil Prices

Edward Lambert | December 16, 2014 12:10 pm

From WSJ, low oil prices can be locked in for a year… (link)

oil futures

Remember, it also depends on what currency you buy the oil with… The US dollar is getting strong, while some emerging market currencies are getting weak. Comparative advantage suddenly increased for US firms?

Comments (4) | Digg Facebook Twitter |
4 Comments
  • rjs says:
    December 16, 2014 at 2:26 pm

    it’s a zero sum game….someone has to sell that contract to the companies that intend to lock in current prices…so whoever is selling that contract, be it a bank, oil company or speculator, will take an equivalent loss if prices rise in the interim…

  • Edward Lambert says:
    December 16, 2014 at 6:17 pm

    Rjs,
    Either way, those prices can be locked in, for good or for bad.

  • Bruce Webb says:
    December 17, 2014 at 12:46 am

    “someone has to sell that contract to the companies that intend to lock in current prices…so whoever is selling that contract, be it a bank, oil company or speculator”

    This is a problem how? These three categories of market participants have on the whole been screwing over the 99% for over 30 years now. I understand that their might be second order victims here (say pension funds that have no social responsibility ethos in their investments but are not necessarily bastards per se), but as far as “banks” “oil companies” and “speculators” are concerned my response to them coming out on the wrong side of a contract is “cry me a trickle”. Particularly as they would be betting on a price reset in oil that would remove billions of dollars from consumer pockets in the way of gasoline and fuel oil price increases over the period of the contract.

    Live the life of a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” and die impaled on the trident of fundamental supply and demand. Fuck their arbitrage/rent seeking.

  • rjs says:
    December 17, 2014 at 8:49 am

    Bruce, my comment was not meant to convey a moral judgement about who wins and loses from lower futures prices for oil or energy…it was just that i felt Edward’s post conveyed the impression that low futures prices implied free lunch for everyone, and i hence felt it would be useful to clarify that over the lifetime of each contract there may be several winners and losers and that on net they all add up to zero…much more paper swaps hands than any real energy; BP, for instance, has been said to buy and sell 10 times more paper petroleum than the real stuff that comes out of the ground…i’m not so sure that we can be confident about beating the Goldman et al at the game that they created…ie, when oil crashed from over $140 in 2008, there were probably many who might have thought it would be a good idea to lock in future prices at $95…and that would be the price they would have paid when oil subsequently fell all the way to $35 in 2009…

Featured Stories

Black Earth

Joel Eissenberg

Macron Bypasses Parliament With ‘Nuclear Option’ on Retirement Age Hike

Angry Bear

All Electric comes to Heavy Equipment

Daniel Becker

Medicare Plan Commissions May Steer Beneficiaries to Wrong Coverage

run75441

Contributors

Dan Crawford
Robert Waldmann
Barkley Rosser
Eric Kramer
ProGrowth Liberal
Daniel Becker
Ken Houghton
Linda Beale
Mike Kimel
Steve Roth
Michael Smith
Bill Haskell
NewDealdemocrat
Ken Melvin
Sandwichman
Peter Dorman
Kenneth Thomas
Bruce Webb
Rebecca Wilder
Spencer England
Beverly Mann
Joel Eissenberg

Subscribe

Blogs of note

    • Naked Capitalism
    • Atrios (Eschaton)
    • Crooks and Liars
    • Wash. Monthly
    • CEPR
    • Econospeak
    • EPI
    • Hullabaloo
    • Talking Points
    • Calculated Risk
    • Infidel753
    • ACA Signups
    • The one-handed economist
Angry Bear
Copyright © 2023 Angry Bear Blog

Topics

  • US/Global Economics
  • Taxes/regulation
  • Healthcare
  • Law
  • Politics
  • Climate Change
  • Social Security
  • Hot Topics
  • US/Global Economics
  • Taxes/regulation
  • Healthcare
  • Law
  • Politics
  • Climate Change
  • Social Security
  • Hot Topics

Pages

  • About
  • Contact
  • Editorial
  • Policies
  • Archives