Current mood:	bitchy
Current music:	*sounds of evil fan*

ok .. I have to work...
ok .. since petrol is soooo expensive now .. I actually have to WORK .. *bleah*

to keep u all entertained ... here is a very balanced article about WHY petrol is so expensive and whether it will ever go back to reasonable levels again ...

http://useconomy.about.com/od/commoditiesmarketfaq/p/high_gas_prices.htm

we must remember that oil producing countries are NOT the ones getting the wind fall from these increased prices .. it is the commodities traders who earn the bulk of the "profit"

a simplified version of the futures contract purchase system is like this:

Oil Producer: "I offer to deliver you 50 barrels of crude oil on 1st October 2010 for USD 50 per barrel ok. Delivery at Port XYZ"

Purchaser A: "Ok .. I pay u now for ur 50 barrels of crude oil at USD 50 per barrel .. MAKE sure u deliver 1st october 2010 at port XYZ ahh !!!"

[Purchaser A PAYS Oil Producer USD50 per barrel for a future supply now] pls note: Oil Producer gets paid at USD50 per barrel rate now.

Purchaser A: "Eh eh eh !!!! I got cheap contract leyy ... I got USD50 per barrel for oct 2010 delivery @ port XYZ .. wan buy anot??? I expect prices will go up in one months time !!"

Purchaser B: "WAHHH !!!!! ok ok ok !!! cool mann .. I buy from u USD70 per barrel for oct 2010 delivery .. can can ??"

[Purchaser B PAYS purchase A USD70 per barrel]

Oil Refinery: "WEiii !!!! where is the crude oil??!!!!"

Purchaser Z : "I got I got... 50 barrels October 2010 delivery port XYZ, I sell to you at USD135 per barrel .. u wan anot ?? dun wan u can go and die .. "

Oil Refinery: *think think think .. ok lah .. I can sell processed at USD750 per barrel .. * "OK !! I buy !!"

Purchaser Z : *grinzzzzz!!!* DONE !!

Purchaser Z: *calls purchase A* "eh .. anymore cheap future delivery ahh !!!"


so u seee ???

PETRONAS does NOT get the windfall ... the profit makers are purchasers A, B, C, D, E ========> Z

Petronas will get an increased price for say .. october 2020 supply .. but by october 2020 the above scenario will repeat itself and the actual price when it reaches the refinery and our petrol pumps, would be obscenely and artificially increased by the very same Purchasers A - Z.

what petronas OUGHT to do is to do its own refinery project and be an exporter of PETROL and jet fuel .. and not be just merely a crude oil producer ... this is why the arabian countries and venuzuela can sell to their domestic markets at such a low price .. coz they have own supply of crude and own supply of processed crude.

The above is a simplistic explanation .. but it is pretty accurate.

I shall not confuse the issue wid things like "closing price, margin calls, underlying price, effective short selling, hedging" and watnots ... is just a very simple:

"I promise to deliver to u product ABC at Future date and I want RM25 ringgit for this promise"

and futures traders just keep on buying dat promise over and over at consecutively higher and higher prices until the time for dat promise is to be fulfilled. But u see .. the original promise maker onli gets that RM25 as that is what he contracted for wid the first purchaser of dat promise lo ..

now u knoe horr .. is a direct selling nightmare !!!

same wid rice, same wid corn, same wid flour .. everything is like dat .. so dun think the producer of the goods will earn lo .. and even if he produces MORE, the markets will still be driven up by these derivative traders .. selling promises which are "in the air" over and over and over.

This is why the arabian crude sellers all think the current prices are illogical, totally illogical. Production is UP, and demand is LOWer, YET .. futures prices are going crazy.

This is why Japan suspended futures trading on rice to stop the madness in relation to rice.

Hope explain until like dis can understand horrr ... need me to do a Prada Wallet or LV bag example anottttt ?? gegegegegegegegege