Fuel Prices

I've not studied the mogas market specifically, but most markets are
based on speculation, not current conditions. That basically means that
any benefit associated with the effects of Katrina are already built
into the price of gas. Its just like the stock market. When a company
announces a great new money making opportunity, you don't have to wait
for it to pay off in order to see the stock price go up, the stock
prices goes up right away on the expection (as long as investors see it
as realistic). This is call the "perfect market theory". As long as
everyone has the same knowledge base of information (something the SEC
tries to assure) markets will automatically price based on that fugure
information, not the current situation.

So, in short, I"m saying that any benefit of the end of Katrina to gas
prices has probably already been reflected in the market. It would be
interesting to see what fuel futures are selling for right now.

-Robert

"Robert M. Gary" wrote in message
oups.com...
I've not studied the mogas market specifically, but most markets are
based on speculation, not current conditions. That basically means that
any benefit associated with the effects of Katrina are already built
into the price of gas.

Speculation is based on trends forecasting, not disasters.

Its just like the stock market. When a company
announces a great new money making opportunity, you don't have to wait
for it to pay off in order to see the stock price go up, the stock
prices goes up right away on the expection (as long as investors see it
as realistic). This is call the "perfect market theory". As long as
everyone has the same knowledge base of information (something the SEC
tries to assure) markets will automatically price based on that fugure
information, not the current situation.

"Perfect Market Theory" has been debunked so many times over so many years
I'm surprised anyone still holds with it. Hell, von Mises debunked it back
in the 1920's.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

Speculation is based on trends forecasting, not disasters.

Actually, that is totally wrong. Speculation right now is 1) How
damaged are the oil rigs in the gulf, no one really knows yet 2) What
is left of the infrustruction, no one really knows yet etc, etc, etc
If you actually study markets you will find that specualation is ALWAYS
there. Investors buy based on future values and speculate on anythig
that can effect price.

"Perfect Market Theory" has been debunked so many times over so many years
I'm surprised anyone still holds with it. Hell, von Mises debunked it back
in the 1920's.

Certainly misunderstood huh? Cleary, you've misundestood it. I guess
its been debunked just like evolution, right? New theories come and
go all the time, it doesn't make existing ones wrong. A more detailed
undestanding of the scientific method would make that more clear.

-Robert, MBA

"Robert M. Gary" wrote in message
oups.com...
Speculation is based on trends forecasting, not disasters.

Actually, that is totally wrong. Speculation right now is 1) How
damaged are the oil rigs in the gulf, no one really knows yet

It's hardly speculation AFTER THE FACT, other than how the market will
react; in that case, it's a FORECAST since it's based on historical data.

It's hardly speculation AFTER THE FACT, other than how the market will
react; in that case, it's a FORECAST since it's based on historical data.

I disagree, the fuels markets are always full of speculation. There is
still A LOT we don't know about the fall out of Katrina. Once that is
all know, speculation will be based on something else. Just look at the
fluctuations in the futures markets. Think of it this way. If your
neighbor knew exactly what the cost of supplying fuel was today and you
actually had knowledge of future events to come who would make the most
money in the market? You would buy fuels when you knew prices were
going up and wait when you knew prices were going down. Your neighbor
would just be reacting to current events and always one step behind the
market. The airlines have entire departments of people who's jobs are
to evaluate the fuel markets and try to gain knowledge of the markets
that others don't. At certain points they buy contracts. That's why
Southwest is doing so well right now. They are paying the lowest price
in the industry for jet-A because they bought a contract awhile back
that holds their prices until the end of the year. I was at the airport
the other day talking to a Citation driver who just paid under $3/gal
for his fuel. His company bought a contract before prices went up. Who
knows if they got lucky or were smart.

-Robert, MBA w/ a concentration in financial markets.

BTW: Just to be clear for those not familiar with financial portfolio
development.

Southwest is actually hedging their fuel contracts by buying contracts
in more liquid (i.e. tradable) commodities such as crude, etc. So,
while they may be paying market rate at any particular airport, they
are extracting income from the increased fuel prices through their
commodities contracts. So their effective rate for fuel is less,
although the credit card receipt may not reflect it. I just wanted to
clarify that.

-Robert

"Robert M. Gary" wrote:

BTW: Just to be clear for those not familiar with financial portfolio
development.

Southwest is actually hedging their fuel contracts by buying contracts
in more liquid (i.e. tradable) commodities such as crude, etc. So,
while they may be paying market rate at any particular airport, they
are extracting income from the increased fuel prices through their
commodities contracts. So their effective rate for fuel is less,
although the credit card receipt may not reflect it. I just wanted to
clarify that.

Jeez; the older I get, the more I realize how hard it is to get ALL the
facts about anything.

Thanks for the inside dope, Robert.

--
Dan
C172RG at BFM

"Robert M. Gary" wrote in message
ups.com...
BTW: Just to be clear for those not familiar with financial portfolio
development.

Southwest is actually hedging their fuel contracts by buying contracts
in more liquid (i.e. tradable) commodities such as crude, etc. So,
while they may be paying market rate at any particular airport, they
are extracting income from the increased fuel prices through their
commodities contracts. So their effective rate for fuel is less,
although the credit card receipt may not reflect it. I just wanted to
clarify that.

And they positioning themselves for fuel savings/availability, or just
playing the markets with extra cash they have laying around?


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

"Robert M. Gary" wrote in message
ups.com...

It's hardly speculation AFTER THE FACT, other than how the market will
react; in that case, it's a FORECAST since it's based on historical
data.

I disagree, the fuels markets are always full of speculation.

Non-sequitur.

There is
still A LOT we don't know about the fall out of Katrina.

Of course; we don't know the future, but that doesn't mena we can't abstract
from similar occurances in the past. That's still not speculation.


Once that is
all know, speculation will be based on something else. Just look at the
fluctuations in the futures markets.

Geez...they don't do market analysis, ala fellows like Martin Zweig?


Think of it this way. If your
neighbor knew exactly what the cost of supplying fuel was today and you
actually had knowledge of future events to come who would make the most
money in the market?

Oh, don't go down that loony "perfect market information" rathole.

You would buy fuels when you knew prices were
going up and wait when you knew prices were going down. Your neighbor
would just be reacting to current events and always one step behind the
market. The airlines have entire departments of people who's jobs are
to evaluate the fuel markets and try to gain knowledge of the markets
that others don't. At certain points they buy contracts. That's why
Southwest is doing so well right now. They are paying the lowest price
in the industry for jet-A because they bought a contract awhile back
that holds their prices until the end of the year. I was at the airport
the other day talking to a Citation driver who just paid under $3/gal
for his fuel. His company bought a contract before prices went up. Who
knows if they got lucky or were smart.

-Robert, MBA w/ a concentration in financial markets.

And you still haven't made a joint assessment from analysis - speculation
(wild assed guess).


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

Mathew,
If you honestly believe that the trading price of oil futures is not
based on speculation of future events, may I suggest you look to your
local high school for a begining class in economics.

-Robert