Some people are claiming that there is a $60 dollar premium on the current price of a barrel because of speculation. Even oil producers are saying that. So that does not make sense to me. If it curently costs say $50 to make a barrel, and a producer can sell it for $60 and make money, then if that producer's competitor says to a customer "I'm charging $120 based on futures speculation," that first producer would jump in and say, "Holy crap! A $60 premuim for speculation! Screw that! I'll GLADLY sell you all the oil you can take for $70 and still make DOUBLE what I usually make!" The current spot market should correct and track a lot more closely to supply and demand than to allow such a huge markup based on futures speculation. It would seem like the only way you're going to make money in futures is to know what the price really is going to be. I mean it does you no good at all to agree to buy a barrel at $130 next year if the price is really going to be $60. Unless this really is a true bubble and people are just passing the overpriced contracts on to bigger and bigger suckers, until the bubble pops, and someone is left holding a poisonous 130-dollar contract to buy 60-dollar oil.
dragonrider Reviewed by dragonrider on . McCain credits Bush for drop in oil price Republican John McCain on Wednesday credited the recent $10-a-barrel drop in the price of oil to President Bush's lifting of a presidential ban on offshore drilling, an action he has been advocating in his presidential campaign. The cost of oil and gasoline is "on everybody's mind in this room," McCain told a town-hall meeting. He criticized Democratic rival Barack Obama for opposing drilling on the Outer Continental Shelf. Bush recently lifted the executive order banning offshore Rating: 5