Pension companies and government having shares in oil?

Question

i was discussing this with my father the other day. i was asking why the n.z government is so eager to keep oil going rather than to find an alternative. we reckon that new pension schemes being introduced that have been in place in the u.k and america etc for many years have a lot to do with it. collectively there are billions of dollars going into these government run schemes for saving for a pension and a pile of money just sitting there isnt going to make any more so they invest it. it used to be in realty but now we think because of the need it is in oil. what do you think?

Answer 1

The pension funds are diversified. They do not invest in just one thing. With that said a lot of such funds have diversified to include energy and other commodities (steel, etc).

Some would argue that derivative trading (ex. futures contracts for oil) result in an increase of the price of crude oil which would result in an increased cost per gallon at the pump.

Does derivative trading impact our daily costs? They sure do! Over the long term, do they impact our cost for goods and services? I would argue that they do not (some disagree).

Can the government (or the international community) stop derivative trading? Probably could phase it out, but the cost and time would likely not be worth it.

Is derivative trading a bad thing? In my opinion, no.