Oil touts • 16 May 2008 • The SnowBlog

Oil touts

Here's an idea: buy up oil as soon as it becomes available and then sell it to other people at a profit. Sounds a bit farfetched, doesn't it. We're used to the idea of investment bubbles in most areas: bubbles being caused when buying and selling become more about profit than use. Which is to say, when people buy a house or a ton or copper not because they plan to use it, but because they plan to sell it again at an opportune moment. But somehow you don't expect people to do that with oil. You get the impression that it will be used up as quickly as it's available. But the ever excellent Jon Taplin, whose blog I find distinctly more-ish, sees just such a speculative environment. I'm glad to have stumbled upon his explanation, because the record profits of oil companies have had me baffled for a while. Usually, when the cost of your raw materials go up, your profits are squeezed. But not if the price rise is down to stockpiling and tactical selling. See here and here for more. And if you're interested in such things, read his excellent thoughts (which coincidentally mirror my own) about a catastrophic Republican meltdown in the offing here.


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