Just a random thought about fuel I had on the way to work

[Usui Takumi 1,562]

So fuel prices will likely peak sometime this summer. Wouldn't it be great if, on a federal level, we lock the price at the peak with a floatable tax? That would definitely provide future price stability and perhaps help minimize the next generation of SUV driving soccer moms.

Edited March 8, 2011 by Sousuke

[^_^ 5,021]

So fuel prices will likely peak sometime this summer. Wouldn't it be great if, on a federal level, we lock the price at the peak with a floatable tax? That would definitely provide future price stability and perhaps help minimize the next generation of SUV driving soccer moms.

what do you mean by 'lock the price'?

[mawilson 2,133]

what do you mean by 'lock the price'?

The federal government could buy call options on oil futures at the current

prices, to make sure we do not pay more than X dollars per barrel in the future.

Some oil producing countries do the opposite - they buy protective puts to make

sure they can sell their oil for at least X dollars per barrel.

[^_^ 5,021]

The federal government could buy call options on oil futures at the current prices, to make sure we do not pay more than X dollars per barrel in the future.

We don't do this today? If not, any idea why not?

[one...two...tree 2,762]

One of the five members of the trade commission that regulates speculators is retiring in June and President Obama will have to appoint his replacement, which could potentially change the game play.

[^_^ 5,021]

One of the five members of the trade commission that regulates speculators is retiring in June and President Obama will have to appoint his replacement, which could potentially change the game play.

What about the endangered penguin habitat?

[mawilson 2,133]

One of the five members of the trade commission that regulates speculators is retiring in June and President Obama will have to appoint his replacement, which could potentially change the game play.

It's not going to change a damn thing. Oil is a global commodity and is traded globally.

Even if you place limits on how many contracts traders are allowed to buy or sell

here in the US, they'll just trade it in London, Frankfurt, Singapore or somewhere else.

[mawilson 2,133]

We don't do this today? If not, any idea why not?

Well the options themselves cost money; and if the price drops below the strike price,

they become useless.

Back in 2008, when oil prices were approaching $150, Mexico bought a ton of December

$80 puts at something like $2 per contract. The puts were so cheap because no-one

expected it to go below $80. When the prices eventually dropped to $30 per barrel,

Mexico exercised the options and made $50 on each put ($80-$30).

Edited March 8, 2011 by mawilson

[^_^ 5,021]

Well the options themselves cost money; and if the price drops below the strike price,

they become useless.

Back in 2008, when oil prices were approaching $150, Mexico bought a ton of December

$80 puts at something like $2 per contract. The puts were so cheap because no-one

expected it to go below $80. When the prices eventually dropped to $30 per barrel,

Mexico exercised the options and made $50 on each put ($80-$30).

So you're saying we need to invade Mexico and take that money.

[mawilson 2,133]

So you're saying we need to invade Mexico and take that money.

I don't want to invade any more ####### countries. If we're going to invade a country,

let it be Australia.

[^_^ 5,021]

I don't want to invade any more ####### countries. If we're going to invade a country,

let it be Australia.

The 'nice' parts of Australia are as probably no larger than the state of NY. That should be easy.

[JohnSmith2007 353]

Why in the world would you want gas to stay at its highest price? It makes everything we do more expensive. That is the dumbest idea I have ever heard.

[^_^ 5,021]

Why in the world would you want gas to stay at its highest price? It makes everything we do more expensive. That is the dumbest idea I have ever heard.

I think it's based on the assumption that the long-term trend of oil prices will be up and this summers peak price will be a good price looking back a decade from now.

[Usui Takumi 1,562]

Why in the world would you want gas to stay at its highest price? It makes everything we do more expensive. That is the dumbest idea I have ever heard.

No. 1 - It creates stability, which is many ways is more relevant than having occasionally lower prices.

No. 2 - It helps progress efficiency which is good for the economy in the long run.

Edited March 8, 2011 by Sousuke

[^_^ 5,021]

I think it's based on the assumption that the long-term trend of oil prices will be up and this summers peak price will be a good price looking back a decade from now.

No. 1 - It creates stability, which is many ways is more relevant than having occasionally lower prices.

No. 2 - It helps progress efficiency which is good for the economy in the long run.

I was wrong.