I read that stock traders bidding on futures caused the increase in gasoline prices. How does that work?

Question

I read that stock traders bidding on futures caused the increase in gasoline prices. How does that work?

Answer 1

The increase in gasoline prices was caused by several things.  First off, oil is priced in dollars, which have lost some of their value.  So, oil now costs more.  Also, BRIC countries (Brazil, Russia, India and China) are now using much more oil than they did before - driving up the price.  And, the 'easy' oil has been found.  It is getting more expensive to find oil.  So, oil/gasoline will continue to increase in cost.

Answer 2

First "Nobody" didn't read your question.  Stock traders trade stock and have no effect on futures.

Speculation doesn't mean just buying oil.  In futures, it is just as easy to speculate on a price decrease (be short) as it is to speculate on a price increase (be long).  It is popular for politician to blame speculators for the increase in oil prices.  It deflects blame from the politicians who's unbalanced budgets are increasing the national debt, decreasing the value of the dollar and forcing prices up.

In fact, this is easy to disprove.  Brokers report positions to the government.  Analysis shows that speculators are about even on the long side and the short side, meaning that the speculators are basically trading with each other and the increase is due to real economic factors in the market.

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