The Marxists are After the Oil Companies Yet Again

So Obama is out there again on these tax "subsidies" for oil companies. And it's only a matter of time before we hear about those evil "speculators" again. Well let's deal with the first one first, shall we?

It's already been shown that the big oil companies like Exxon-Mobil do not receive these so-called "subsidies" anymore. And they haven't for decades. A former Democrat Congressman is on the record as confirming this, even.

Secondly, let's talk about the oil commodity market, and the commodity markets in general.

The Marxists would have you believe that these boogey-man speculators are always driving up the cost of oil on some magical market where they are always making tons of money at the expense of the consumer. This is probably what the average Joe gets from the propaganda. "Speculators" drive up the price on the market, and the money they make comes directly from you when you fill up your vehicle, right? Wrong.

The oil commodity market, and any commodity market works just like any other market. There are buyers and sellers. The buyers bet that there are more people buying to increase the cost so they can sell the contracts of oil (corn, wheat, whatever) for a higher price than they bought it. Who are the sellers? The sellers are either people who sell contracts for a profit to the new buyer, or are selling on a bet the price will go lower instead of higher. I've been in the currency and commodity markets. And let me tell you through firsthand experience you can make money. Or at anytime if you bet the wrong way, you can also lose your shirt off your back. People who are buying oil contracts today could very well lose big time if something fundamental were to happen to suddenly cause more sellers than buyers to come into the market and in turn cause the price to dip. (Less demand, more supply -- you just can't get away from that supply and demand fundamental thing, can you?)

Say, for example, if our Marxist President were replaced and the new President actually stopped obstructing domestic oil production. Long before the first drop of oil was extracted, more sellers would come into the market just because of the perceived major shift in supply to come in the market. In the markets, prices always are reflective of policy and future events, such as in the stock market. The price of a stock isn't based on what a company has done in the past quarter, but what it is expected to do in the next quarter and beyond. The same holds true for a commodity market as well. Except in this case, the quarterly earnings/cash flow becomes how much of that product is expected to be produced.

So in other words, the buyers driving the market aren't making money off of you. They're making money off the losing sellers in the same market. And the opposite would hold true if the price of oil were falling. And you cannot, no matter how much you propagandize, get away from fundamental concepts like supply and demand.

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