How oil can be back to where it was 12 months ago - PART I.

George W. Bush would have you believe that oil is where it is because India and China are using more of it (he did that for food!!) - as if they've just started using twice the number of cars in just the last 12 months! Their economy is growing pretty fast - but not that fast. There is only one reason why oil is at 140 dollars a barrel - people are buying oil on the mercantile exchange as you and me would buy the stock of yahoo on Nasdaq. They are betting that the price of oil would go up next week - and when it does, they make a huge profit.

Here is a simple FAQ on how speculation drives up the cost of crude oil (arguably the most important commodity that is traded in the New York Mercantile Exchange (NYMEX) and its sister exchanges)

Q) So how does it all work?
A) Oil futures are traded in the 2 main exchanges - The New York Mercantile Ex (NYMEX) and the InterContinental Ex (ICE) in London.

The way these futures markets are supposed to work, is that both the producers (sellers of futures contracts) and end users (physical buyers of the commodity), have a market place to negotiate market prices in the future, to take some of the risk out of fluctuating daily market prices.
However, there is one more player in the game, the speculator. The speculators role is to keep the market liquid by betting on the price going either up or down of any given commodity on any given day or future day.
Speculators can make huge gains or losses in the futures market because the futures contracts are leveraged. Speculators control the value of the contract purchased with only a fraction of the money out of pocket.

Now that you have the basics, heres how the price get manipulated:
It's called cornering the market. Cornering the market has a long and checkered history. There are many techniques a group of speculators can use use if they buy up a majority of the open interest in the outstanding contracts in one commodity. By simply owning most of the contracts, the speculators refuse to sell until they can receive a much higher price.

(source: oil speculation - how does it work?)
Have some time on your hand? Read 'The Economic Purpose of Futures Markets and How They Work'.

Q) Who are these 'Speculators'?
A) These are no ordinary Joes. They are huge investment banks that owns hedge funds and pension funds. Banks like Goldman Sachs, Morgan Stanley etc. They are neither producing oil nor the end users - they just invest their big investment dollars in the hope that a (well predicted) change in price will result in huge profit.

Q) Why speculate on oil?
A) Since the US economy is slowing down (if not in recession already) resulting in a poor ROI in the stock market, the crash of the real estate market, the falling US dollar, the hedge funds and the pension funds are finding it hard to make money for their millionaire customers. That's where futures trading in crude oil comes in. They can, very safely - one can say, bet that the price of oil is on the up - for some time to come. Their reasoning is not entirely flawed. After all, the entire world runs on oil and the demand of oil is going up - while the supply is always under a huge question mark (stability in Iraq, confrontation with Iran, unstable Nigeria, new flexing of muscle of Russia, growing power of Venezuela etc etc etc), the demand is not going to go down any time soon (think China, India, F-150s, Toyota Sequoias, Tata Nanos). In short - its a low risk, high return investment.
I doubt there is any other commodity in the market that would give them a 100% profit in 12 months.

Q) Shouldn't the futures market reflect the fundamental law of supply and demand?
A) Of course they should. The futures markets were created to let users of commodities 'lock in' the price of the future today. For ex. airlines and home heating oil companies locking in the future price of oil today. The speculators, however, create a false sense of over-demand driving the price higher.

Q) How about regulation?
A) Good question. Shouldn't all this be regulated? After all - this is a good case of for regulation - right? Actually - there is a regulatory authority - it is known as the Commodity Futures Trading Commission (CFTC). They were created by the congress to make sure that the laws of supply and demand are met by the futures market. This is all well and good as long as the trading is done in the US. Th crude oil futures (that have an impact on the price in the US oil) are also traded in ICE as mentioned above. These trades are not regulated by the CFTC - thereby allowing manipulative practices and excessive speculation. BTW - it was the Bush administration that gave ICE the permission to trade US crude oil futures (Big Surprise!!) (source: this article from author F. William Engdahl)

Q) So who is making all this money?
A) 2 words for that - Hedge funds. Actually - no one really knows. The opacity of this whole deal is phenomenal. The information about who is buying the options at ICE and who is involved in this mess is protected by European laws.

Q) Isn't OPEC in control.
A) In one word - NO. It's out of their hands - and into the hands of hedge fund and pension fund manager sitting in an office on the Wall Street.

Q) What about the developing economies?
A) Oh - they are just a convenient, easy to understand people to blame - nothing more. As I wrote above - their economy is growing - but at a decent rate of 7-8% Not 70-80% per year as some would have you believe.


So here is the trillion dollar question? How does the price of oil come down?
That will be covered in Part II of this most important topic.

RIP Tim

This is very sad indeed. His was the clearest and cleanest analysis on TV. Such an iconic figure - he was never afraid to ask the hardest, most relevant question to anyone sitting across from him. He will be missed on Sundays, and every day of the weeks, months and years for a long long time to come.

Drive slow = save environment+save gas+save money+save lives+less noise

Yes that's right. Also right is the fact that the average price of a gallon of petrol has officially touched the $4 mark (add 40c to California price) - so do your math and figure if reaching 5 minutes early is really worth it - especially now?

Just refer to this wonderful analysis below and you will achieve all that I have promise in the title of this post!

Quote of the day

“Nearly everything you do is of no importance, but it is important that you do it”.
Mahatma Gandhi

'Creative' Recession Buster Sale

As the US economy is grappling with (the possibility of) a recession consumer electronics companies have devised novel ways of selling their merchandise.



C'mon guys - lets bust this recession one headphone, one mp3 player at a time!

Why did the chicken cross the road?

BARACK OBAMA:
The chicken crossed the road because it was time for a CHANGE! The chicken wanted CHANGE!

JOHN MC CAIN:
My friends, that chicken crossed the road because he recognized the need to engage in cooperation and dialogue with all the chickens on the other side of the road.

HILLARY CLINTON:
When I was First Lady, I personally helped that little chicken to cross the road. This experience makes me uniquely qualified to ensure -- right from Day One! -- that every chicken in this country gets the chance it deserves to cross the road. But then, this really isn't about me.......

DR. PHIL:
The problem we have here is that this chicken won't realize that he must
first deal with the problem on 'THIS' side of the road before it goes
after the problem on the 'OTHER SIDE' of the road. What we need to do is
help him realize how stupid he's acting by not taking on his 'CURRENT'
problems before adding 'NEW' problems.

OPRAH:
Well, I understand that the chicken is having problems, which is why he
wants to cross this road so bad. So instead of having the chicken learn
from his mistakes and take falls, which is a part of life, I'm going to
give this chicken a car so that he can just drive across the road and
not live his life like the rest of the chickens.

GEORGE W. BUSH:
We don't really care why the chicken crossed the road. We just want to
know if the chicken is on our side of the road, or not. The chicken is
either against us, or for us. There is no middle ground here.

COLIN POWELL:
Now to the left of the screen, you can clearly see the satellite image
of the chicken crossing the road...

ANDERSON COOPER - CNN:
We have reason to believe there is a chicken, but we have not yet been
allowed to have access to the other side of the road.

JOHN KERRY:
Although I voted to let the chicken cross the road, I am now against it!
It was the wrong road to cross, and I was misled about the chicken's
intentions. I am not for it now, and will remain against it.

NANCY GRACE:
That chicken crossed the road because he's GUILTY! You can see it in his
eyes and the way he walks.

PAT BUCHANAN:
To steal the job of a decent, hardworking American.

MARTHA STEWART:
No one called me to warn me which way that chicken was going. I had a
standing order at the Farmer's Market to sell my eggs when the price
dropped to a certain level. No little bird gave me any insider
information.

DR SEUSS:
Did the chicken cross the road? Did he cross it with a toad? Yes, the
chicken crossed the road, but why it crossed I've not been told.

ERNEST HEMINGWAY:
To die in the rain. Alone.

JERRY FALWELL:
Because the chicken was gay! Can't you people see the plain truth?'
That's why they call it the 'other side.' Yes, my friends, that chicken
is gay. And if you eat that chicken, you will become gay too. I say we
boycott all chickens until we sort out this abomination that the liberal
media white washes with seemingly harmless phrases like 'the other side.
That chicken should not be crossing the road. It's as plain and as
simple as that.

GRANDPA:
In my day we didn't ask why the chicken crossed the road. Somebody told
us the chicken crossed the road, and that was good enough.

BARBARA WALTERS:
Isn't that interesting? In a few moments, we will be listening to the
chicken tell, for the first time, the heart warming story of how it
experienced a serious case of molting, and went on to accomplish its
life long dream of crossing the road.

ARISTOTLE:
It is the nature of chickens to cross the road.

JOHN LENNON:
Imagine all the chickens in the world crossing roads together, in peace.

BILL GATES:
I have just released eChicken2007, which will not only cross roads, but
will lay eggs, file your important documents, and balance your check
book. Internet Explorer is an integral part of the Chicken. This new
platform is much more stable and will never cra...#@&&^(C% .........
reboot.

ALBERT EINSTEIN:
Did the chicken really cross the road, or did the road move beneath the
chicken?

BILL CLINTON:
I did not cross the road with THAT chicken. What is your definition of
chicken?

AL GORE:
I invented the chicken!

COLONEL SANDERS:
Did I miss one?

DICK CHENEY:
Where's my gun?

AL SHARPTON:
Why are all the chickens white? We need some black chickens.

Have your own reason why did the poor chicken cross the road? Drop a note.

It aint over till it's over - well it's over.

“If we had same rules as the Republicans, I would be the nominee right now,” she said.

…and if grandma was male, she’d be grandpa.

if Obama had never been born, Hillary would be the nominee right now. It’s a fair point.

If I had been born to a lawyer rather than an Air Force enlisted man, I might have gone to an Ivy League school instead of a state university in my adulthood.

If I hadn’t gotten married and had a child so young, I might be a CEO somewhere…. or not.

Some very funny, insightful and entertaining comments here:
http://thecaucus.blogs.nytimes.com/2008/05/19/clinton-this-is-nowhere-near-over/

Email from Indian Railways Online Ticket booking service

The following is an email my brother received a few days back. I am thoroughly impressed with this level of service.
----------------------------------------
From: care@irctc.co.in
To: ********@hotmail.com
Subject: Email From IRCTC
Date: Thu, 1 May 2008 04:27:13 +0530

Dear Customer,

Thank you for using IRCTC's online rail ticket booking services.
From 1st April?08 Railway has revised the passenger fares. As you have booked tickets prior to 1st-April?08 an amount of Rs.31.00 towards the difference of fare for the ticket booked vide PNR No 2346***863 has been issued to electronic payment gateway on 04/30/2008 08:09:28 PM. Same shall appear in your account within two to three working days. You are requested to please check with your credit card issuing banks regarding the same. We regret the delay if any, in crediting back the refunds.
We solicit your continued patronage to our services,
Warm Regards,
care@irctc
----------------------------------

Absolutely fabulous. Next they should
1. Increase the overall safety of train travel by improving the technology they use to run them (signaling, hardware, communications etc)
2. Improve the level of security and general ambiance on the railway station (cleanliness, hygiene and better policing).
3. Have better communication ON the train - things like - 'The next station is blah blah' in a local language and English.
4. All trains should have automatic doors that are opened by a conductor or the driver when the train arrives at a station or leaves a station.

Little things that go a loooooong way in making train travel a lot more safer and palatable for all strata of the society.
Got more suggestions? Drop a comment. Maybe I will send Lalu a congratulatory note. :)

My Reasons..

It seems that now everyone has a reason not to like Hillary - here are mine:
- Her convenient invention of the Bosnia Sniper fire.
- Her crazy gas tax idea - even she doesn't believe in it. It just sounds like a good gimmick to throw out to her illiterate base.
- Her portrayal that somehow she deserves this nomination and then the presidency. She comes across as though the country owes it to her. Well even if she becomes the President - I dislike her just for patronizing the general public. No one is born to get the biggest prize - you gotta go and get it. Oh - and Bush is different.
- Her fear mongering tactics - the 3 AM AD, the Osama AD. Its just plain wrong. She proved that she is no better than the republicans. Really - terribly poor taste.
- Her speeches. They are just plane and ordinary: "I had so fun with him and enjoyed doing that". Contrast that with Obama's fiery oratory after the NC/Indiana primary and you will know what I am talking about.

"I love this country too much to see it divided and distracted at this critical moment in history. I believe in our ability to perfect this nation because it's the only reason I'm standing here today. I know the promise of America because I've lived it...it is the light of opportunity that led my father across an ocean, it's the founding ideals that the flag draped over my father's coffin stand for. It's life and liberty and the pursuit of happiness. In this country justice can be won against the greatest odds...and when we are told that we can not bring about the change that we seek, we answer in one voice: Yes we can!"
And
"The attempts to play on our fears and exploit our differences, to turn us against each other for political gain, to slice and dice this country into red states and blue states, blue collar and white collar, white, black, brown, young, old, rich, poor ... this is the race we expect, no matter whether it's myself or Senator Clinton who is the nominee. The question then is not what kind of campaign they will run; it's what kind of campaign we will run."
You gotta look at the whole thing to appreciate it more:

Know your Shi*

A stranger was seated next to a little girl on the airplane when the stranger turned to her and said,
'Let's talk. I've heard that flights go quicker if you strike up a conversation with your fellow passenger.'
The little girl, who had just opened her book, closed it slowly and said to the stranger, 'What would you like to talk about?'
'Oh, I don't know,' said the stranger. 'How about nuclear power?' and he smiles.
'OK, ' she said. 'That could be an interesting topic. But let me ask you a question first. A horse, a cow, and a deer all eat the same stuff -grass - . Yet a deer excretes little pellets, while a cow turns out a flat patty, and a horse produces clumps of dried grass. Why do you suppose that is?'
The stranger, visibly surprised by the little girl's intelligence, thinks about it and says, 'Hmmm, I have no idea.'
To which the little girl replies, 'Do you really feel qualified to discuss nuclear power when you don't know shit?

Btw, you don't blog anymore. Why?

One simple question - a not so simple answer! So - instead of trying to answer you, my friend, I will do start blogging again.
So - tune in to akvblogs.blogspot.com at the usual time my friends. I have news to share, photos to show, politics to discuss - my usual banter.

Different moods..

Here is a light hearted comparison..


We've always conjured that maybe - just MAYBE the chimp will give a better press conference, run the country a bit better, etc etc, but now - here (or here, if the link does not work) is the real stuff - solid proof that it is only a matter of testing the two together and its quite possible that the underdog might come out on top - now that's not a fair statement - is it? It really depends who you think the underdog really is!

Photo of the day

Somebody save the poor dog!!

Rudy Giuliani was in New Hampshire yesterday.

Happy Thangsgiving folks

Thanksgiving is one American holiday I really like. It's all about the good stuff. Food, friends, family, friends of family and family of friends. No presents, no decorations, no cards - it's just about having a good time.

Happy Thanksgiving.

Use a 17 cent disposable razor for over a year!

I saw this on lifehacker the other day - I was simply surprised that what I do every day (or every other day) is actually going to be featured in the Chicago Tribune.
Here is the tip in 1 line: TO MAXIMIZE THE LIFE OF YOUR RAZOR BLADE, DRY IT AFTER SHAVING USING A TOWEL OR PAPER - OR SIMPLY SHAKE IT DRY.

Have other tips? Share it.

Photo of the Day

The demonstrations in Pakistan are not to be ignored. How can you ignore them anyway? There are 5 cameras in this photo. 6 if you count the one taking this shot. One wonders if they would shout as much or even get arrested if there were no cameras. We've all seen those video clips when people are shoving to get in the camera frame - many a times - finding it difficult to wipe off that smirk from their faces, sometimes even when they are getting the lathi on their heads. Even when Mohtarma Benazir Bhutto came back to the country and was offering prayers at a religious place, people were shoving each other, even with their hands raised in prayer. It's not funny at all.
By the way, isn't she loving every moment of this circus?

What's the difference?

Vs



Both places (Burma and Pakistan)
-have NO democracy,
-have military at the helm of political affairs,
-have the military crushing popular uprisings.

Then why do western nations favoring one (U.S. Is Likely to Continue Aid to Pakistan (or click here if link does not work))
and put sanctions and condemn the other?

Flying back home on a clear evening

Last night, I returned from Atlanta after attending a conference. It was a nice evening and the sky was clear when my Delta 747 descended from 30,000 feet. The sun had set and we could see the beautiful orange colors on the horizon. As soon as the plane did a turn and tilted a little, I could see the numerous lights - both moving and stationary. The towns and cities below me were alive and moving. What I thought I would see - or rather expected I would see, was just a faint light at the horizon and then darkness on the ground, as the deep dark woods devoured whatever light there was , and a few reflections of the waning evening in pools of water here and there. This was what my mind was trained to expect while flying down from the skies into the Raleigh - Durham International airport, or RDU. The airport is small, the parking is cheap and the roads are friendlier - and without any tolls.
This was my first time flying after moving into the Boston area. For 3 and a half days car parking, I paid $84 - and my home was another 45 minutes drive away.

But it sure felt much better as soon as I told my GPS to take me home!

The woods were lovely, dark and deep.
But I have promises to keep,
And miles to go before I sleep,
And miles to go before I sleep.

Bobby (Piyush) Jindal, Governor, Louisiana (2007 - ? )

Yes - that's right, Piyush Jindal was elected governor of one of the most backward/poor/conservative states in the USA (trust me - I have lived in Louisiana). He is merely 36 year old, married to Supriya and has 3 kids. He can trace his ancestry to Punjab, India.

Maybe, the US is ready for an African American or a woman president. I would prefer the former. What do you think?

"it is not the end of life"

After declaring that the nuclear deal is needed for the forward movement of India and calling those opposing the deal “enemies of development and peace”, the government in India became just that - enemies of development and peace.

Clearly, the lure of power had won over the need to pursue the deal which, according to the PM and Madame Gandhi, was in the national interest.

The prime minister even went ahead and uttered these unfortunate words:

"I do attach importance to seeing this deal through, but if the deal is not through, it is not the end of life"

Sure, it is not the end of life. Life would also not end if you, Mr. PM would have stood by your words and resigned in protest. Life would not have ended if you had not been attracted to the lure of power. Life would definitely not end if you stopped licking Madame's shoes and adhered to some principles and had the good of India on your mind. Shame on you Manmohan Singh, Sonia Gandhi, Communist Karat and all those who are not a part of the solution. They can only stand in the way of any solution.