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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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Tuesday, June 17, 2008
Pelosi Statement in Advance of the President's Anticipated Energy Address Tomorrow
Comtex
WASHINGTON, June 17, 2008 /PRNewswire-USNewswire via COMTEX/ ----Speaker Nancy Pelosi issued the following statement tonight in advance of President Bush's speech tomorrow on energy:
"The President's proposal sounds like another page from the Administration's Energy Policy that was literally written by the oil industry: give away more public resources to the very same oil companies that are sitting on 68 million acres of federal lands they've already leased.
"In just the last year, Congress has promoted energy independence by raising efficiency standards for vehicles for the first time in 32 years, investing in American-grown biofuels, and forcing President Bush to increase gas supplies by suspending government purchases for the Strategic Petroleum Reserve. We have provided enforcement tools to go after those who are speculating on oil and manipulating the price and we will continue to push for solutions that end our dependence on foreign oil."
Background
-- The fact is there are 68 million acres onshore and offshore in the U.S. that are leased by oil companies - open to drilling and actually under lease - but not developed.
-- If oil companies tapped the 68 million federal acres of leased land it would generate an estimated 4.8 million barrels of oil a day - six times what ANWR would produce at its peak.
-- The fact is 80 percent of the oil available on the Outer Continental Shelf is in regions that are already open to leasing-but the oil companies haven't decided it's worth their time to drill there.
-- The fact is that drilling in the Arctic Wildlife Refuge wouldn't yield any oil for 10 years-and then would only save the consumer 1.8 cents per gallon in 2030.
The New Direction Congress is committed to bringing real relief to those feeling the pinch from high gas and diesel prices and ensuring the needs of families and businesses are put before the interests of Big Oil companies. We will continue to work to develop other innovative legislation that addresses high energy costs and our shift to a more energy efficient economy. The American people deserve a cleaner, greener, more energy efficient future.
SOURCE Office of the Speaker of the House
Copyright (C) 2008 PR Newswire. All rights reserved
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