Re: OIL; Just to know

Posted by MarkB_MI on September 16, 2005 at 19:02:47 from (64.31.11.157):

In Reply to: OIL; Just to know posted by jfp on September 16, 2005 at 08:05:47:

You mis-understand the role of commodities futures markets. Futures markets are essential to stable commodity prices. Commodities speculators accept the risk that commodity producers and consumers are unable to accept. For example, a farmer can get a guaranteed price for his crop before it has been harvested, while a milling company is guaranteed a supply of grain at a set price. If the cash grain price fluctuates, it is the commodity traders who win or lose. And more commodities traders lose money than win. Yes, they can win big, but they can lose big, too.

Much is made of the spot price of crude oil, but in reality most oil is bought and sold on the futures market. Were there no futures market, you can bet that fuel prices would fluctuate even more wildly than they do now.

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