Originally Posted by Jayhawk
You sound like my old third grade teacher. I didn't do homework for her either.
A very bad deflection, even for you.
Here's why people think oil IS a commodity:
"In the original and simplified sense, commodities were things of value, of uniform quality, that were produced in large quantities by many different producers; the items from each different producer are considered equivalent. It is the contract and this underlying standard that define the commodity, not any quality inherent in the product."
I'll post a list of commodities whose futures being actively traded. Let's first educate everyone on how futures trading works.
1) You enter into a contract, saying you'll deliver or purchase X quantity of a given product, on a future date, at an agreed-upon price.
2) When the date comes, you simultaneously buy and sell the product, using the agreed upon price and the market price as factors. The delta between them becomes your profit (or loss, if you're unlucky). For example, if you agreed to buy 1,000 gallons of gasoline on June 1st at $3.00 a gallon, and the market price on June 1st is $3.50 a gallon, you would make $500 profit on your bet.
Viola. Magic. Two-steps to becoming rich. Better than gambling, because you don't even need to pay anything out of pocket right away.
Here's a list of commonly traded commodities - tell me which ones you think would cause so much as a sputter in the nation's economy were it to jump in value by 300% in the next week:
Recycled Steel, plus a dozen other odd industrial metals.
Now then, compare the relative criticality of the items above with this list:
Light sweet crude
Pricing in futures markets has only a loose tie to supply or demand. It's based on what the majority of investors have guessed will happen to supply or demand. Stock and commodity prices are a lot like real estate values - each buy or sell order is a precedent used by other traders to determine what to offer/ask for their holdings. This is why stock markets spend millions on computer systems to constantly track not only price, but trends, order sizes, etc.
Stock markets are like huge schools of fish. One gets scared, the rest get scared. One gets hungry, the rest get hungry. They believe in "safety in numbers", and rarely travel in a direction opposite the crowd.
All that's completely fine and harmless until you start gambling with the two most important commodities to our economy. Oil and gasoline.
As much as you relish fucking your fellow American whilst still "playing by the rules", you really should look into living abroad as an expatriate. I think you'd get along famously with the other nearsighted, Godless, traitorous bastards who smell up the place.