What is an oil speculator?

Question

and if there is no shortage of coal and oil then why are prices going up?

i am only 16 so make it simple,please thanks.

Answer 1

Ya, they speculate oil

Answer 2

its something that speculates oil

Answer 3

Speculators are people who buy things ahead of time, expecting the price to go up.  This happens with oil, corn, pork, etc.

So let's say I'm an oil speculator and you are, Exxon.  I say to you, I'll buy oil from you 6 months from now for $X a barrell.  If you agree to sell it to me, then we have a deal.  Now if the price of oil goes up higher than $X, I buy the oil from you and sell it for what it is currently worth and I make some money.  If the price doesn't go up and is below $X, then I have to buy it from you for $X and (because I don't really want the oil) I have to sell it at a loss.

The question you didn't ask is why do speculators drive up the price of oil.  Supply and demand.  They are taking (mind you, future) supply off the market.  While it is likely that the supply will go right back on the market, it is not guarenteed.  Besides, people assume that speculators know what they are doing and if they are buying a lot right now, that surely the price of oil must be going up in the future, thus the oil in hand today seems more valuable.  In the peaks and valleys of the market price, speculators make the peaks higher and the valleys lower.

There is a shortage of oil, kind of.  The supply of oil has remained constant, but the demand has increased.  India and China are starting to industrialize far more than they have in the past, and so more people can afford cars, and there are more diesel generators, etc.

I don't understand why these countries don't start building an infrastructure of renewable resources (ethanol, etc.) from the get-go.  They, unlike us, are no so married to oil at this point.  It is difficult (though hardly as difficult as some would make you believe) for us to switch to another fuel source.

Answer 4

They are people who have interest in selling oil for more expensive. They trade or give out false information to ther customers to drive up the price of oil when it really shouldn't be that much

Answer 5

An oil speculator is the one who determines the prices of oil; whether it will increase or decrease.

Answer 6

the oil company's are scamming us, they know oil is a must for travel