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Even if you don't think you do, you already know plenty about commodities. Want us to prove it? No problem.
What makes oil produced in Saudi Arabia different from oil exported from Nigeria? It's the same thing that makes the corn you ate at last summer¿s barbecue different from the corn used to produce ethanol. Stumped? Well, don't feel bad, it's a trick question. The answer? Absolutely nothing. Corn is corn no matter where it comes from -- just as wheat is wheat and natural gas is -- right! -- natural gas. (Though the quality may differ, the make-up is uniform.)
So, in less elaborate terms, corn and oil (and all other commodities) are homogenous goods that can be processed, resold and more often than not, used as an input to the production of other goods or services. These goods are traded on a commodity exchange, thus setting the price-per-barrel (or other metric unit) used to value them.
Now pay attention, here's a question that indeed does have an answer: What is the difference between a commodity and a stock? While a stock can tank and become worthless, a commodity cannot have its value be wiped to zero. One other difference: Most commodities are traded in futures, meaning traders buy and sell where they think the price of a product will be at a certain point in the future. Stocks trade based on the value of the underlying company at that point in time.
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Monday, August 04, 2008
Pelosi: Democrats Offer Immediate Relief in 10 Days vs. Republican Plan to Save 2 Cents in 10 Years
Comtex
WASHINGTON, Aug 04, 2008 /PRNewswire via COMTEX/ ----WASHINGTON, Aug. 4 /PRNewswire-USNewswire/ -- Speaker Nancy Pelosi released the following statement today on Democratic proposals to bring relief to Americans at the pump:
"Democrats offered a real solution to high energy prices that would bring immediate relief within 10 days by forcing the President to free our oil from the nation's stockpile. The Republicans propose to give away public lands to Big Oil, which will not immediately reduce the price at the pump and save Americans only 2 cents 10 years from now. This Republican hoax is unworthy of the serious debate we must have to reduce the price at the pump and promote energy independence.
"House Republicans have opposed forcing oil companies to drill on the 68 million acres they already control, new investments in renewable energy, increasing vehicle fuel efficiency standards, making mass transit more affordable, cracking down on price gouging, and releasing oil from the government's stockpile. When it comes to energy policy, Republicans are once again promoting the interests of Big Oil and the Bush Administration that has resulted in $4 a gallon of gasoline.
"Democrats in Congress are aggressively addressing the range of economic issues confronting American families, and in the past few weeks alone, protected homeowners from foreclosure, invested in college affordability, ensured women receive equal pay for equal work, protected our children from toxic toys and products, and made another historic investment in veterans care. Democrats are producing and passing real economic solutions for the American people."
SOURCE Office of the Speaker of the House
Copyright (C) 2008 PR Newswire. All rights reserved
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