Quote:
Originally Posted by NickN
I understand thats now how it works but the way it works now doesn't seem to be helping anybody.
What would you do if groceries were traded the same way as oil, and someone popped up one day and started screaming a plague of locusts might be coming and groceries went up to double the price when no locusts had even been spotted?
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The law of supply and demand is what determines price - it's Economics 101. The interesting issue is what causes the demand, and the key issue in the debate is that people are buying oil who don't actually need oil but are buying it in the hope of being able to re-sell at a higher price. Whilst a fraction of those buyers are legitimately fearful of some disruption to oil supplies down the track, it's clear that most are just investors who treat oil as any other tradeable commodity.
If you look at commodity markets people are doing just as crazy things with orange juice, sugar, soy beans, wheat, and you name it. The locust plague 'scare' could well drive up the price of farm produce and encourage people to start buying it even though they didn't need it, in the hope they could resell it at a profit.
There are policy considerations about free markets etc that are worth discussing although YSSY is probably not the ideal 'venue'.