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By Times Staff
Published January 6, 2008

$100 a barrel? Don't panic Jan. 3

Raise oil's margin requirement

The price for a barrel of oil could be brought down by $15 to $25 per barrel within a matter of two weeks or so if one step was taken. The step is not releasing strategic oil reserves or begging for more production by OPEC. In the past few months, there have been numerous experts and financial papers that have been quoted as saying that from 15 to 35 percent of the current price of oil has been built into the price by speculators betting on increasing oil prices. This is done by big speculators taking on "long oil contract positions." These speculators, who are generally intelligent, have money, are opportunists, capitalists and, most important, realize what a great story they have working in their favor. They also will not be taking delivery of their oil purchases - they will "roll" their contracts each time delivery is supposed to take place. They're in it for the money, and the worldwide oil story is fueling a feeding frenzy. Among the stories: emerging markets consuming more and more oil, refinery shutdowns, the Middle East in turmoil, lack of conservation of oil resources by the United States, and so on and so on.

Oh yeah, besides fundamentals - worldwide fear and greed.

Of course, doing their job, the worldwide media covers in detail these unsettling stories.

Unfortunately, most of the issues publicized are accurate.

Yes, oil should be high under the current world economic climate. However, what needs to take place sooner than later are responsible measurers that can stabilize oil prices for the over good of many countries and their citizens. So what is the one step that could be taken with a matter of days that would lower prices?

As of Jan. 3, 2007, just about anyone who is able to buy stock can also open a commodity account and buy go long or short (sell) for future delivery oil contracts. Each oil contract represents 1,000 barrels of oil for future delivery. As of today, anyone can (on margin) "go long" oil contract for $6,300. Today, one oil contract represents roughly $99,000 worth of oil.

I would have to believe speculators have begun "parlaying" their profits by using the monies made by going long even more contracts.

What must be understood is the vast majority of these speculators are not in the oil business. They are hedge fund, advanced or professional commodity traders and a number of average "momentum" individuals playing the "oil ride" upward.

So what can (must) be done to bring oil prices down to a true market value, sans speculative excess?

In a nutshell, the commodity exchanges need to raise margin requirements significantly. I would be willing to bet if a cash margin requirement of 33 percent to 50 percent of the value of an oil contract were required, you would see the price of oil drop like a rock in a matter of two weeks.

Larry Hanks, Indian Rocks Beach

For mass e-mail, use that BCC field Solutions column, Dec. 31

Yeah, Macs can't hold candle to PCs

"Whatever you do, don't get a Mac," advises John Torro.

Unless, he might have added, you want an operating system that's far less subject to viruses, freezes and crashes, more user-friendly and, of course, much faster than Windoze.

By the way, the newer Intel Macs run Vista. But why would you want to?

Nick Hobart, New Port Richey

Metro scoops up 1,000 lots Dec. 29

Rosier housing outlooks off mark

Realtors say "it's location, location, location." John Ryan of Metro Development announced it will hold 4,000 vacant Florida lots until 2010, whenhe expects the housing market to rebound. The Homes section's last-page article by Kenneth Harney predicts that housing will spring back far sooner (2008)?

Contrary to Mr. Harney, state officials estimate that '08 will be another year of losses in tax revenue due to a further drop in home sales. Those officials already cut the '07 budget by $1-billion. Doubling that cut in '08 won't be easy. If they can't, the alternative is to raise the millage rates (that option slipped into this year's August legislation). High taxes cut sales, and even higher taxes will cut sales further (and revenue, too).

The Times said high taxes keep retirees from buying here. What's next, higher taxes to drive out more of those already here? Seems logical that those on a fixed income can least afford big tax bills.

Bill Boyd, Apollo Beach

Various Page One Business items Dec. 28

Some suggestions on recurring issues

"Property tax injustice": What about those "star-bellied" homeowners who bought homes for $10,000 to $20,000 about 45 years ago? Who should they pay? Our government could levy a special catch-up tax.

"Theft of consumer records": How about a large payment to every consumer whose records they failed to protect? Maybe some jail time? Our government could help the citizens.

"Credit card balances out of control": So two of three families are living paycheck to paycheck. That may be 66 percent of the population with serious money problems. Just like the government that spends about $2-billion more each day than it takes in. No wonder our dollar is tanking against strong currencies.

"PIP is back": For those of us fortunate enough to have full medical coverage today, this is a tax and should be levied as such. We cannot file a claim, but it may give us the right to sue.

And that's just part of Page One this Friday.

William G. Corristan, Tampa

They give their 2 cents over losing a quarter April 9

Publix reaches into worker's pocket again

Are they still doing it? You bet they are! I just received, with condolences, my second notice that Publix is taking another 25 cents an hour from my salary, the second 25 cents in six months! When I have to pay Publix to work there, I will quit! In the past year, my hourly pay has gone from $8.75 to $8.25. I have been working for Publix for 10 years. My question is can Publix go below minimum wage when taking away money from my wages?

Joan B. McKee-Szucs, New Port Richey

Health care coverage

Get upset over the EEOC decision

Why is there no outcry over the Equal Employment Opportunity Commission'sdecision to allow corporations to end coverage of health care after 65 if they so desire? For the past 30 or 40 years, organized labor set aside many pay increases in order to have health care coverage for members when they retired. Now that it is in corporate interests to forgo this commitment, for a government agency to allow this to happen is outrageous.

The White House and all the appointments made to our regulatory agencies know their days are numbered. To allow major changes to suit corporations will be grandfathered in and will be almost impossible to undo. Just remember the oil depletion allowance put in effect in the 1950s. It's still there, along with many others.

Jack Levine, Palm Harbor

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[Last modified January 4, 2008, 21:06:11]