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The author at DiscussEconomics Blog in a related article titled Are Speculators to Blame for Oil Prices? Resources to Inform writes:
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Felix writes:
In 1980 a weather forecaster told me that the best weather forecast was to simply forecast tommorrow's weather to be the same as today's. Don't know whether that's still true. Posted July 23, 2008 4:49 PM
David writes:
This is probably a naive question but shouldn't arbitrage mean that the future price is just the present price plus interest? Otherwise, if the future price for 6 months from now was say 15% higher than the spot price, wouldn't you just borrow some money, buy some oil or other commodity on the spot market, sell the futures for 15% more and pocket the difference? Posted July 23, 2008 7:10 PM
Matthew writes:
David, That's how its taught, but not so simple in oil markets. The futures prices are nearly always lower than spot prices. http://en.wikipedia.org/wiki/Backwardation Under the above logic, there have been simple arbitrage trades in oil for the last 30 years. Posted July 24, 2008 2:30 AM
floccina writes:
It is the wrong bet. This cornucopian only believes that over the long run (5+ years) it will get more affordable to more humans to travel at a given level of comfort. That could mean cheaper gasoline or more efficient vehicles or other things. Petrol may have been getting less affordable in the west but more affordable to the Chinese. Posted July 24, 2008 9:30 AM
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