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July 01, 2009



So if speculators are buying the distant contract and selling near contracts,it seems to me that this should bring supply into the market. If I am an oil explorer, high futures prices enables me to sell anticipated production to fund exploration projects. This brings new supply into the market.

In any case this seems to be an example of the Hotelling principal and it is far from clear that it is a bad thing.

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There's no doubt that the oil and gasoline industry have been dominating our life for the last few years. Very interesting post. I have been wondering for a long time about this issues.

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