Skip navigation

 Login or Register | Member Centre

Canadian oil producers shrug off SemGroup bankruptcy

SCOTT HAGGETT AND JEFFREY JONES

Reuters

Latest comment posted at 8:46 AM EST 23/07/08

Husky Energy and ARC Energy listed as among top creditors of energy trader, owed $50.1-million and $26.2-million respectively ...Read the full article

This conversation is closed

  1. Winston Smith from Canada writes: The neo-cons have created a casino economy and all the associated problems.
  2. Bub Slub from Calgary, Canada writes: What, billionaire oil companies worry about a few mil of receivables? What an easy headline to write. Must be the summer students at work.
  3. Kevin Go Riders from Canada writes: A sensational headline inedeed, I owe you 51 million you owe me 49 million of course I am going to shrug that off not because I don't care about 50 million but because I don't care about 2 million I owe someone in bankrupcy.

    As for neo con creating a casino economy futures trading is long established, formal trading floors like The Chicago Mercantile Exchange started in 1898 and its predessor the Chicago Butter and Egg Board goes back even farther, even before Winston was a gleam in his cousins eyes.
  4. Don Portz from Trochu AB, Canada writes: While so expert in the tradings/hedging commodities market, it sure seems to lend credence to the fact that speculators have had a large hand in the price of oil. Hopefully I am wrong. If I am not we could be in for a bumpy ride on oil prices as well as other commodities. Not too different from the 1920/30s.
  5. Winston Smith from Canada writes: Kevin Go Riders from Canada writes: As for neo con creating a casino economy futures trading is long established, formal trading floors like The Chicago Mercantile Exchange started in 1898, blah, blah, blah

    For your information there were NO POSITION LIMITS on ICE until last month. CFTC regulates WTI contract that trade on NYMEX but NOT ICE as it is based in London. Trades have been using ICE to skirt oversight by CFTC.

    Ignorance is not bliss Kevin Go Riders.
  6. Robert Cameron from calgary, Canada writes: Anyone who buys AND sells oil contracts is not a speculator. Most companies use these contracts to lock in a price and thus lock in their economics. Many oil sands plants would not be built without these contracts. They are there to guarantee the price, not to let it float. That is why the net exposure is very small - they have an offset or other guarantee against the position, either with Sem or with someone else.

    Companies get into trouble when they take a position (a.k.a. a BET) on a commodity going up or down. Bet wrong and you owe a lot of money...of course if you bet right, you make a lot of money, which is why people do it in the first place. But you cannot make a bet without a willing participant on the other side, which is the opposite of speculation!
  7. Howard Young from Canada writes: That's what happens when you "trade" oil. If they short sold oil futures they had to deliver the 500,000 barrels they were buying each day against those futures to meet the contracts. It sounds like they were speculating that oil prices would fall and that the cost of taking a long position would be made up by the profits made on the short position.
  8. R. M. from Regina, Canada writes: If they went bankrupt it obviously wasn't a hedge but rather they were caught on the wrong side of the market.
  9. Howard Young from Canada writes: Betting is fine, as long as you actually have the commodity to deliver if you bet wrong. It's equivlent to writing covered call or put options when you hold the underlying stock in your portfolio.
  10. Richard E. Gower from Canada writes: Robert Cameron from calgary, Canada writes: Anyone who buys AND sells oil contracts is not a speculator. ---- Companies get into trouble when they take a position (a.k.a. a BET) on a commodity going up or down.

    --------------------------------------------------------------------------------------------

    By definition, a speculator is someone who invests with the hope of gain but with the possibility of loss. A speculator can also be defined as someone who gambles recklessly. Just because a company deals regularly buying and selling in a commodities market, doesn't mean it can't be guilty of speculation. SemGroup and a lot of other similar organizations got greedy. SemGroup is now paying for it. Unfortunately, so did a lot of other people who didn't have a say in it, at the pumps. Hopefully, there will be some other big ones go down to follow SemGroup. Then the crude prices and pump prices will slide back to where they would have been without the reckless buying/trading behaviour we've seen over the last year and a half.

Comments are closed

Thanks for your interest in commenting on this article, however we are no longer accepting submissions. If you would like, you may send a letter to the editor.

Report an abusive comment to our editorial staff

close

Alert us about this comment

Please let us know if this reader’s comment breaks the editor's rules and is obscene, abusive, threatening, unlawful, harassing, defamatory, profane or racially offensive by selecting the appropriate option to describe the problem.

Do not use this to complain about comments that don’t break the rules, for example those comments that you disagree with or contain spelling errors or multiple postings.

Back to top