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For many years, the Canadian dollar was pegged at a specific exchange rate with the US dollar. Only since 1970 has the Canadian dollar had a variable exchange rate. If you check out old exchange rates you'll see that around 1978 the Canadian dollar start to go down below 85 cents US, and doesn't really get much above there until the last 5 years or so. So, at least in my mind the on par is not the normal value, as only a few years after the rate was no longer fixed, the Canadian Dollar started to dip lower, and stayed that way for over 25 years.

2. Speculators keep prices LOWER than they would otherwise be. The alternative is that there are no speculators and instead somebody buys the oil as a long term investment and holds it and eventually prices go higher and higher because of it. Speculators are on BOTH sides of every futures deal, so they bet that prices will go down as well as betting that prices will go up. Speculators create a much more efficient market, where prices are much closer to what the market really believes they should be.

Just a real world example of this.

Those same "speculators" that drive oil prices higher have driven natural gas prices to 10 year lows. Yet NG drillers continue to drill and explore new production and so many people are confused by this. The answer is slapping them in the face if they would look at the futures market.

http://futures.tradingcharts.com/marketquotes/NG.html

The price for per MMBtu for delivery in August 2012 is $2.91. That is historically low. If you look ahead though, to the price per MMBtu for delivery in April 2016, the price of natural gas has doubled to $5.90.

How does this benefit consumers? Businesses making decisions will be able to clearly see that the low NG prices will not last indefinitely and plan accordingly and not invest in low efficiency, but cheaper, equipment that uses NG. Even consumers like me can look at that and factor in those fuel costs into out heating bill. Makes it easy to see if the extra cost of that 95% efficiency furnace is worth it or not. This extra concern about increased fuel costs pushes the consumption of NG down.

Producers are encouraged to continue producing new capacity because they are working on the assumption that the price of NG 3+ years from now will be close to $5 instead of $3. This extra supply pushes supply up and prices down.

If not for "speculators" then these price increases would simply show up in the spot market and since they are immediate the price swings would be MUCH more severe.

"Speculators" in a market economy are like a large capacitor in a DC power circuit. Any spikes or troughs in the voltage are smoothed out by the capacitor. The capacitor by itself cannot increase or decrease the voltage, but the voltage spike or trough shows up there first before it hits the powered equipment. Electronics, like markets, do not like sudden spikes.

I'd love to see the people who think speculation needs to be done away with to get rid of all their UPSs and surge suppressors and see how well that works out.

Saying that "all currencies are debased" is ridiculous.

- ha ha ha.

20 year trends:

gold

silver

platinum

palladium

copper

aluminum

lead

nickel

tin

zinc

iron ore

manganese

potash

phosphate rock

oil

Orange Juice - here you have to switch from year to year to see that prices are growing, it shows one year at a time, so in 2012 the prices are about 180, in 2005 the prices are around 100, in 2001 they are about 85, it's an interactive chart.

coffee - 2012, prices are about 250, in 2010 it's about 160, in 2006 it's about 110, in 2004 it's about 80, in 2001 it's about 55

etc.

The governments of all countries are destroying their currencies in response to the USA printing theirs as fast as USA can, that's what all of the fake interest rates set up by the Fed are about, that's what the stimulus and 'QE' are and were all about, bail outs, etc.etc.

Everybody is destroying their currency, you are not paying any attention.

Saying that "all currencies are debased" is ridiculous.

- ha ha ha.

20 year trends:

gold

silver

platinum

palladium

copper

aluminum

lead

nickel

tin

zinc

iron ore

manganese

potash

phosphate rock

oil

Orange Juice - here you have to switch from year to year to see that prices are growing, it shows one year at a time, so in 2012 the prices are about 180, in 2005 the prices are around 100, in 2001 they are about 85, it's an interactive chart.

coffee - 2012, prices are about 250, in 2010 it's about 160, in 2006 it's about 110, in 2004 it's about 80, in 2001 it's about 55

etc.

The governments of all countries are destroying their currencies in response to the USA printing theirs as fast as USA can, that's what all of the fake interest rates set up by the Fed are about, that's what the stimulus and 'QE' are and were all about, bail outs, etc.etc.

Everybody is destroying their currency, you are not paying any attention.

Ethanol subsidies would not exist if the Iowa caucus weren't the earliest primary. Corn prices have been driven so high by E85 that there has not been a need for subsidies in at least 4 years

Corn-based ethanol is looking less and less attractive:
http://futures.tradingcharts.com/chart/CN/M

Too bad US politics is disproportionately influenced by the Iowa caucus. Other wise ethanol subsidies would be gone.

You do not shift your resources away from the dollar!

http://futures.tradingcharts.com/chart/GD/W

Good luck have fun :)

Is it so hard to fathom that to produce certain things properly actually has a cost? And if someone else comes around selling for less than that, that maybe they're the "bad guys"?

That's certainly one theory. A reasonable person would think, "If I had a competitor that's been able to charge less than me on every product for more than 50 years, maybe I'm doing something wrong."

I wonder if you even have a point to make with your milk farmers; everyone and their dog knows they work hard. You don't milk several hundred head of cattle thrice daily for shits and grins. The hours suck; you wake up before dawn and work until it's dark. The margins on milk have nothing to do with farmers being anything other than "honest hard-working people." It also has nothing to do with WalMart's CEOs spooking cows at night, or secretly controlling the network through which everyone from Morning Glory to my grandfather sells milk.

Instead, it has everything to do with milk being a "commodity"; I suggest you read the Wikipedia article on the subject. It's freely traded on a commodities market, where anyone who cares to can buy or sell milk. You can take a look at the price milk's been trading at here. What WalMart would like to pay for milk is irrelevant.

Unless you think WalMart through sheer technological brilliance discovered how to commoditize milk 50 years ago, I'd look elsewhere for why margins on raw milk are low. I'd suspect it has something to do with how many gallons of milk are produced and how many gallons people drink.

Green coffee beans trade at wholesale prices of somewhere upward of one dollar per pound on international markets.

No, it actually trades at $0.04 per pound according to the link you sent me http://data.tradingcharts.com/futures/quotes/KC.html(those units are dollars per contract size so it would be $166 per 37500lbs, not $1.66 per pound).

Since your initial assumption was wrong, the rest of your analysis is similarly wrong.

I stand by my $0.04 per pot.

I had a friend in the coffee shop business and it cost him about $0.04 per POT for coffee.

I think it's neat how you still keep in touch with your friends who live in 1963.

Green coffee beans trade at wholesale prices of somewhere upward of one dollar per pound on international markets. Specialty, fair trade, organic, or higher-grade beans will cost more.

Let's assume that your friend is using a small, 50-ounce coffeepot. Figure that will take a couple of ounces of ground, roasted coffee. Two ounces at one dollar per pound is a bit more than twelve cents' worth of green beans. That assumes that there is no cost to roast the coffee, package the coffee, store the coffee, or deliver the coffee; it also ignores the fact that coffee is actually trading closer to $1.66, and that it will lose another fifteen percent of its mass when roasted.

Heck, if the barista making the coffee earns $7.25 an hour (the U.S. federal minimum wage), then four cents pays her for a hair less than twenty seconds of work. I hope that you're not expecting anyone to spend time to wash those coffeepots and mugs. If the coffeemaker draws 1200 watts, and electricity is ten cents per kWh, then the ten minutes it took to brew the pot just burned through half our budget: 2 cents.

collect all of those fractions of a cent where the numbers are rounded into other currencies.

What you're joking about already exists in the form of Forex trading..

Whats convoluted about that? The US dollar went into free fall because everyone noticed that you bought a lot more then you produced. The percentage of your economy from manufacturing switched places with finance. To lazy to find the sources right now but it was something along the lines of 27% manufacturing and 14% percent finance and now its the other way around.

The point being that the US financial stability was no longer to be counted on and the dollar fell through the floor (eg. lost something like 30% of its value in a couple of years (http://futures.tradingcharts.com/chart/US/M).

Since its priced in dollars that meant that if they didn't raise the price they would be earning 30% less on every barrel sold. You wanna take a 30% pay cut? So they raised the prices and started looking for a more reliable currency.

I am not an economist but I have heard that pricing oil in Euros would somehow lead to the greenback being dropped as a reserve currency with all the ensuing negative effects on the US economy.

So is it so convoluted to think that the US would go to war to protect their economic interests? Its either that or some religious zeal to hasten Armageddon. Hmmm I guess its a coin toss.

I think peak oil already happened mate. Where've you been for the last ten years?

This isn't even up for debate

Not quite sure exactly what you think "isn't up for debate" - that environmental regulation "hurts the economy"? It's true - nobody disputes that dumping all of our crap in the ocean is cheaper that properly disposing of it. Generally, having breathable air and drinkable water are worth some economic loss - the "debate" is where to draw the line between the extremes of competing with China and hugging spotted owls.

Desptite whatever FUD you hear, we have a decent economy that created 176,000 jobs last month.

We have so much going wrong in this country after 8 years that even if we get a Democratic president and Congress, it will take 10 years to recover policy-wise after this administration is finally run out of office

That's funny; the current Republican president took an economy at the brink of recession and took it to booming in only a few years. I don't think it will take Democrats a decade to fix what isn't broken.

The environment isn't high school debate club; this is serious and it matters

True. That's why we need to stop pretending that there is 100% agreement an extremely politicized scientific issue when at least 10,000 climatologists disagree with the prevailing notion that man is responsible for the warming of the planet. It is irresponsible to pretend that we have a "consensus" or that "the debate is over" just because the prevailing truthiness supports your worldview.

Something's wrong when even the UN keeps revising figures on the extent of global warming - we're down to an upper limit estimate of a 17" rise in sea levels by 2100.

I can now sit back and observe the spectra emitted by my flaming karma - but, despite the prevailing notions on Slashdot, the United States has a strong and improving economy, and it is still very much debatable whether or not we will all be the proud owners of an above-ground swimming pool.

Supply vs. demand. Demand is increasing, and by the terms of "peak oil" regarding supply we have reached a plateau of oil production or the production is dropping. The math is simple, if "peak oil" was the case that means it would make sense if you could to buy future oil because as demand outstrips supply the price will increase.

Except that you *can* buy future oil, or more specifically oil futures. In fact there is an entire market for this, the prices for oil delivered in the future is available right here. It plainly shows that the people whose job it is to analyze and bet on the direction of oil prices do not see the dramatic imbalance of demand vs. supply which peak oil theory predicts.

Lots of comments here have focused on the bias of the people involved in this study. Well, the market is not biased -- if people thought that the price of oil is going to go way up in the next 10 years you can literally go out and buy some. Except they don't, they write books with half-baked statistics and scare people half to death talking about some fantasy "peak oil" scenario that is unlikely.

Keep your heads on, people. Having enough oil production does not mean that we are okay, it means that we are able to cook our planet death with readily available cheap carbon. If we don't accept that thinking we are going to run out soon, we continue down the path instead of addressing the very real problem of global climate change.

(This is from something I wrote up earlier this year, regarding a question I asked Professor Kenneth Deffeyes (a proponent of peak oil ideas) during a Q&A session after a talk he gave at my university. If anybody has a better answer, I'd honestly be interested in hearing it.)

Today there was a talk in Beckman Auditorium by Kenneth Deffeyes, Princeton professor emeritus and author of one of the more popular books on that ever-popular meme, peak oil. He discussed his belief that we had hit peak oil sometime around this past Thanksgiving, and that oil prices are going to fluctuate wildly and rise in the next 5 years of so.

During the Q&A period I went up to the microphone and asked the following: During your talk you briefly mentioned the futures market. Currently on the oil futures market, you can purchase a contract for a barrel of oil to be delivered in, say, the year 2010 or 2011 which is actually cheaper than a barrel of oil today [edit: nowadays it's actually slightly higher, 62 vs. 58]. What are your thoughts on why this is the case?

In his response, he had mentioned that he had been asked a similar question after he gave his talk at Merrill Lynch, basically: "If you really think oil prices are going to rise, why don't you put your money where your mouth is and buy up futures contracts?" He said to them that he wasn't too knowledgeable about futures contracts, and afterwards read up on them a little and found some of their intricacies bewildering. He said that he would want to purchase futures options for the coming few years, due to the extreme price fluctuations he expects, followed by regular futures in the longer term.

I'm not sure I bought his answer. Although I'm not sure about how far ahead one can purchase futures options, regular futures can definitely be purchased for 2012, which should be well into the period of soaring prices he predicts.

Do you see a trend here:
http://futures.tradingcharts.com/chart/CO/M

What about in Brent Crude, see any trend?
http://futures.tradingcharts.com/chart/BC/M

Look at the tables for Nymex crude futures:
http://futures.tradingcharts.com/marketquotes/inde x.php3?market=CL

Want to buy an oil future for delivery in 2030? I promise I can supply it, but I won't let you audit my stocks and you are supposed to risk your money now on a promise that I can supply when I can't even meet demand now. Still want to buy? OK, I'll give you a discount, say $50/barrel? No? $40/Barrel? Honest I can deliver it, I'm not lying or anything....

We peaked because discoveries of new oil peaked long ago:
http://en.wikipedia.org/wiki/Oil_reserves

An article on Bloomberg predicting that new oil will come on tap is not the same as new oil coming on tap. Just like last year promises of new oil from Opec never materialized (Opec claiming nobody wanted it!).

Do you see a trend here:
http://futures.tradingcharts.com/chart/CO/M

What about in Brent Crude, see any trend?
http://futures.tradingcharts.com/chart/BC/M

Look at the tables for Nymex crude futures:
http://futures.tradingcharts.com/marketquotes/inde x.php3?market=CL

Want to buy an oil future for delivery in 2030? I promise I can supply it, but I won't let you audit my stocks and you are supposed to risk your money now on a promise that I can supply when I can't even meet demand now. Still want to buy? OK, I'll give you a discount, say $50/barrel? No? $40/Barrel? Honest I can deliver it, I'm not lying or anything....

We peaked because discoveries of new oil peaked long ago:
http://en.wikipedia.org/wiki/Oil_reserves

An article on Bloomberg predicting that new oil will come on tap is not the same as new oil coming on tap. Just like last year promises of new oil from Opec never materialized (Opec claiming nobody wanted it!).

Do you see a trend here:
http://futures.tradingcharts.com/chart/CO/M

What about in Brent Crude, see any trend?
http://futures.tradingcharts.com/chart/BC/M

Look at the tables for Nymex crude futures:
http://futures.tradingcharts.com/marketquotes/inde x.php3?market=CL

Want to buy an oil future for delivery in 2030? I promise I can supply it, but I won't let you audit my stocks and you are supposed to risk your money now on a promise that I can supply when I can't even meet demand now. Still want to buy? OK, I'll give you a discount, say $50/barrel? No? $40/Barrel? Honest I can deliver it, I'm not lying or anything....

We peaked because discoveries of new oil peaked long ago:
http://en.wikipedia.org/wiki/Oil_reserves

An article on Bloomberg predicting that new oil will come on tap is not the same as new oil coming on tap. Just like last year promises of new oil from Opec never materialized (Opec claiming nobody wanted it!).

(This is from something I wrote up a couple months ago, regarding a question I asked Professor Deffeyes during a Q&A session after a talk he gave at my university. If anybody has a better answer, I'd honestly be interested in hearing it.)

Today there was a talk in Beckman Auditorium by Kenneth Deffeyes, Princeton professor emeritus and author of one of the more popular books on that ever-popular meme, peak oil. He discussed his belief that we had hit peak oil sometime around this past Thanksgiving, and that oil prices are going to fluctuate wildly and rise in the next 5 years of so.

During the Q&A period I went up to the microphone and asked the following: During your talk you briefly mentioned the futures market. Currently on the oil futures market, you can purchase a contract for a barrel of oil to be delivered in, say, the year 2010 or 2011 which is actually cheaper than a barrel of oil today. What are your thoughts on why this is the case?

In his response, he had mentioned that he had been asked a similar question after he gave his talk at Merrill Lynch, basically: "If you really think oil prices are going to rise, why don't you put your money where your mouth is and buy up futures contracts?" He said to them that he wasn't too knowledgeable about futures contracts, and afterwards read up on them a little and found some of their intricacies bewildering. He said that he would want to purchase futures options for the coming few years, due to the extreme price fluctuations he expects, followed by regular futures in the longer term.

I'm not sure I bought his answer. Although I'm not sure about how far ahead one can purchase futures options, regular futures can definitely be purchased for 2011, which should be well into the period of soaring prices he predicts.

By the way, #8 is not directly related to the event.

It wont pass either, like most of his garbage, but still scary hes still trying.

What is scary to me is that the money behind these types of bills can afford to have someone re-introduce them over and over, perhaps just changing the wording a little. All it takes is for one of them to slip by unnoticed and get passed. Then we have a law in place and it would be hard to remove it.

For anybody who thinks that it's easy to get a stupid law removed from the books, consider the 1937 law which sets the price of milk based on how far the dairy farm is from Eau Claire, Wisconsin. (The further away, the more you get.) The idea was to encourage dairy production outside of WI.

According to USDA statistics, milk production in California is over 63% higher than that in Wisconsin. Despite how obvious it is that this law is bogus, it still wasn't overturned when it was due to expire around 1999. Guess the contributions and PAC money did the trick.

So obviously, if Hatch manages to get one of these rediculous laws passed, we'll probably be stuck with it indefinately.