I called in to the Schill Williams show the other day. I was going to explain why gas goes up with the futures market but can also go up when the futures price falls. I was shouted down by ol' Schillbio because he didn't want me to keep him from being able to demogouge the issue.
I'm going to write the explanation here and then email him this blog address.
If you're reading Philly boy here it is.
When they buy oil it is at auction. Actually there are TWO auctions. The Futures Auction and the Spot Auction. When the futures auction is on the upswing it may be possible to cheat the price for your customers a little by buying on the spot market. The price on the spot usually lags the futures price in an up market. Also when the market turns down the spot price will lag behind the futures market also making the spot price HIGHER than the futures market. This is why some companies get caught with a rising price when the futures market drops. Because the spot price will rise so some people can cover their butts.
Do you get it now you impatient needle dragging jackass?
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