Letters to the editor
March 17, 2012
Theory of higher gasoline prices from speculation needs further examination
On March 4 I read a letter in your Letters to the Editor section regarding the reason for rising gas prices as being speculators. Though it may be a component of the reasoning behind rising gas prices I’m not sure it’s the reason.
If one understands the futures markets for commodities, they then know that futures contracts are bought and sold. So, for every buyer of a contract, there is a seller, both sides are speculating. If a person wishes to place responsibility on the speculators for the price rise in gas, they should then explain whether those speculators are the buyers or the sellers of those contracts. That is unless the writer of the March 4 letter means both sides of the contracts are making money.
In recent weeks, I’ve heard many non-traders place the blame for the price rise on the speculators, but I’ve not heard anyone say whether it’s the buyers – long position holders – or sellers – short positionholders.
To have any veracity in these speculator claims, the persons claiming the price rise is due to speculation should explain to us novices whether it’s the longs or the shorts causing the gas price rise problem.
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