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Once again, speculators behind sharply rising oil and gasoline prices

Charlotte Observer -- U.S. demand for oil and refined products — including gasoline — is down sharply from last year, so much that United States has actually become a net exporter of gasoline, unable to consume all that it makes.

Yet oil and gasoline prices are surging.

On Tuesday, oil rose past $106 a barrel and gasoline averaged $3.57 a gallon — thanks again in no small part to rampant financial speculation on top of fears of supply disruptions.

Other factors driving up prices include last month's bankruptcy of Petroplus, a big European refiner, and a recent BP refinery fire in Washington state that's temporarily crimped gasoline supply along the West Coast; gas now costs an average of $4.04 a gallon in California.

"Speculation is now part of the DNA of oil prices. You cannot separate the two anymore. The


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Submitted Mar 09, 2012 By: bar1035
Category: Daily News Article Discussions > Topics Add to favorite topics  
Author Topic: Once again, speculators behind sharply rising oil and gasoline prices Back to Topics
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 13, 2012 12:53:48 AM

Shockjock1961, the USD hasn't been debased in history as much as it has been in the last three years. As the saying goes, you ain't see nuthin' yet!
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 13, 2012 12:52:28 AM

honda0105: over the past 8-10 years, many variables have changed. Those include decline in the value of the USD, significantly increased demand from emerging markets countries, no increase in refining capacity, etc.

Speculators have been around for centuries. Remember Tulip Mania? These days, hedging activities also cause price moves. With a potential Iran crisis, with all the subsequent aftereffects, hedging activity is in full force. When you consider that 20% of the world's crude supply passes through the Straits of Hormuz, even the slightest threat of disruption moves prices violently.

Bottom line: the factors affecting futures prices are complex and the prices today tend to move very fast, relative to even 5 years ago.
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Shockjock1961
Champion Author Illinois

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Message Posted: Mar 12, 2012 9:39:05 AM

"BTW, should the USD decline against major currencies, the price jump here when it comes to crude oil and gasoline, will be very significant. What's more, those days are coming"

What do you mean coming??? It's been in decline for over a decade now...
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honda0105
Champion Author Tallahassee

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Message Posted: Mar 12, 2012 6:00:17 AM

gemini: when you think back about 8 or 10 years ago, we had prices in the 1.xx range. That was before specutraitors were able to move offshore. By those, I don't mean a few thousand dollar investing, I'm talking big corporation, pig banks, etc. investing millions and billions in the gambling.
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 12, 2012 12:35:03 AM

honda0105, imho, the same reasons hold. Any anticipated cause that may disrupt supply is cause for futures to move up. Right now, Iran is one big reason. Although Iran exports crude oil, they import gasoline. Then again, there's the refinery situation here in the US. It's been about three decades or so since a new one has been built. Obviously, demand hasn't remained steady for all those years, here and esp. in emerging markets.

Had it not been for the mess in Europe (the PIIGS), we would've seen higher gasoline prices because of the currency effect. IMHO, some of the price increases are because of that, with international investors moving out of USD based assets into other currencies, esp. those of countries with rich natural resources.

Speculators do exist. However, speculation goes both ways, i.e. some make a bundle and some lose their shirts. Then again, it is very hard to separate "pure" speculation from hedging activities. I don't see how that can be done in a reliable manner. That article (OP) is speculating about speculators.

We are now exporting gasoline because it fetches a higher price internationally than domestically. That results in higher domestic prices. Re gasoline inventories increasing, I'd be willing to bet some countries are doing the same, should the crude oil supply be disrupted by the Iran situation. Naturally, gasoline will command a higher price on international markets.

All in all, there are several factors that drive gasoline prices and the interaction of those factors is quite complex. It gets even more complicated with the international demand and currency effects.

BTW, should the USD decline against major currencies, the price jump here when it comes to crude oil and gasoline, will be very significant. What's more, those days are coming.
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honda0105
Champion Author Tallahassee

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Message Posted: Mar 11, 2012 7:12:18 AM

gemini: it still does not explain the high pump prices. Even though the barrel price is 2/3rds of what it was at its high in 2008, the price is at the pump is inching up to the prices seen in August 2008.
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 11, 2012 12:14:53 AM

Pete12, it's because of the PROBABILITY of supply disruption in the Middle East, over the Iran situation. That's why refiners are willing to lock in higher prices now, lest they be even higher in the future. When the crude futures move up, so do the gasoline futures, since the raw material (crude oil) for gasoline (and other byproducts of the refining process) is expected to be more expensive in the future.

That's a very simplistic explanation. However, hopefully it suffices to explain how/why the futures prices move.
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Pete12
Champion Author Albany

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Message Posted: Mar 10, 2012 7:04:42 PM

I can't figure why gas futures are so high with the supply holding steady?
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sparky808
Champion Author Honolulu

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Message Posted: Mar 10, 2012 7:02:11 PM

Thank you for posting.
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remay
Champion Author Houston

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Message Posted: Mar 10, 2012 4:56:35 PM

Once again??? So they STOPPED at some point?
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CaesarI
Veteran Author Augusta

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Message Posted: Mar 10, 2012 1:48:35 PM

Still don't care
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dave27johnson
Champion Author Chicago

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Message Posted: Mar 10, 2012 12:55:39 PM

"Historically, financial speculators accounted for about 30 percent of oil trading in commodity markets, while producers and end users made up about 70 percent. Today it's almost the reverse."
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 10, 2012 12:47:04 PM

HYEgasCA, excellent, truthful post. The number of whiners here is amazing.

To date, I have not met a single mainstream Dem/liberal supporter who actually understands how money/business/investing, etc. works AND can explain it coherently. Most of their whines/complaints usually fall under the common headings of "the govt. should do something", "the rich are greedy", "big oil cos. are ripping us off", etc.

Here's a few home truths. The so-called greedy rich are the ones who provide jobs. About 65-70% of the jobs in the US come from small businesses. Under Comrade Obama's definition of "rich", those who own these very businesses will be taxed heavily. Only an utter moron won't realize that means slower economic growth and less jobs created.

As far as Big Oil is concerned, these whiners ought to read the annual reports of Big Oil for the last few years. I have. When crude oil prices rise beyond about $120/bbl, Big Oil's profit margins DROP.

ExxonMobil (XOM) refines 5 M bbls/day and extracts only 3.5 M bbl/day. Ergo, they have to buy the difference on the open mkt. The higher crude prices go, the less profit they make.

BTW, XOM's net profit margin is right in the middle of the S&P 500, i.e. there are as many cos. MORE profitable than them as there are on the other end. All the ignoramuses do is focus on the absolute numbers, rather than the relative ones. Plus, we have liberal politicians calling for higher taxes to grab more money from them. Newsflash: those profits belong to the shareholders, not the govt. So, rather than blowing money on non-essential items, learn to invest, see your money grow, lower your effective tax rates and don't let politicians bamboozle you into killing the geese (job providers) that are laying the golden eggs (jobs)!

Sorry for the rant. However, sometimes these whiny posts just become too much!
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Shockjock1961
Champion Author Illinois

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Message Posted: Mar 10, 2012 10:47:46 AM

Sure, you can tell by the gas guzzlers wit a single passenger, traveling 20+mph over the speed limit that Americans are feeling "ripped off" by the higher gas prices...
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MelB70
Champion Author Boston

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Message Posted: Mar 10, 2012 10:05:48 AM

Prices are up because they finally figured out they can charge us whatever, totally rip us off and we will pay, because we need that gas...End story
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honda0105
Champion Author Tallahassee

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Message Posted: Mar 10, 2012 9:52:46 AM

wow, I'm just flabbergasted at how many people think the president of the US has the power to control the global oil market prices. Wow...
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gawxnative
All-Star Author Atlanta

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Message Posted: Mar 10, 2012 9:30:38 AM

What else is new..Seems like the change is a complete disconnect with American consumers
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mrpc90
Champion Author Illinois

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Message Posted: Mar 10, 2012 8:11:13 AM

And Stephen Chu doesn't even own a car. I suppose that the government provides a car and a driver for him?
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WES03
Champion Author Maryland

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Message Posted: Mar 10, 2012 7:49:55 AM

Energy Secretary Steven Chu admits the Obama administration isn't interested in lowering gas prices. That's rather revealing.
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Hobby001
Champion Author Michigan

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Message Posted: Mar 10, 2012 7:27:46 AM

Comprof,

HYEgasCA: Thanks for as truthful a post as I have ever seen on this web site.

I agree totally!
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tomok
Champion Author Portland

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Message Posted: Mar 10, 2012 5:39:09 AM

United States has actually become a net exporter of gasoline, unable to consume all that it makes.
Yet oil and gasoline prices are surging.

And, Big oil is selling fuel and natural gas on the world market for higher prices, there will be NO price reduction for the cost of fuel or natural gas IN the US. Barry will support natural gas and oil production for sale on the world market to pay for his ‘spending gone wild’ addiction. The US ‘oil and natural gas resources’ belong to the citizens of this country and are to be used by those same citizens! Speculators, manipulators and the banks continue to unfairly and unjustly make the driving public pay higher prices at the pump for their benefit.
Whatever the size or shape of the vehicle is, Produce and ‘Drive’ vehicles with high MPG, are very reliable, have a ‘reasonable’ cost and a good ‘value’ for the money. Consider using other forms of less expensive transportation to lower your cost, if possible.
The price of fuel at the pump is too high!
12/22/2012!
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comprof
Champion Author Houston

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Message Posted: Mar 10, 2012 1:20:37 AM

HYEgasCA: Thanks for as truthful a post as I have ever seen on this web site.
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N5EXY
Champion Author Austin

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Message Posted: Mar 10, 2012 1:03:30 AM

Good grief.
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HYEgasCA
Champion Author Fresno

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Message Posted: Mar 10, 2012 12:52:45 AM

I'm so sick of the nut cakes on this website who say GREED, GREED, GREED,....every time speculator is mentioned

This is typical liberal jargon. You guys sit around screwing up the capitalist system with all your environmentalist crap, by putting restrictions on everything that exist. You guys have NO idea of how a company operates yet you guys are experts in everything. A perfect example is President Obama whose only career is a community organizer. Why don't you guys go out and produce something rather than sit on your lazy butts, waiting for Obama to send you other peoples money. Its not the speculators causing these problems it stupid liberals that have NO though process what so ever on how anything works. If you guys knew how things operated you would know that communism/socialism is a failure.

Oh and remember this, the only reason you guys have the luxuries that you do is because of people like me who do something rather then sit on our butts complaining about the very system that gives us so much.

Greed, Greed, Greed, said by people who say give me, give me, give me
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abacus44
Champion Author Toms River

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Message Posted: Mar 10, 2012 12:39:58 AM

Tell us something new.
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DJRIO
Champion Author Miami

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Message Posted: Mar 10, 2012 12:35:13 AM

I guess no remember that we are not the only one in using oil in the world.speculators are the government elected officials that wont endorse natural gas. with that said oil will have competition. oil will drop in price.
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MidNJ
Champion Author New Jersey

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Message Posted: Mar 10, 2012 12:32:44 AM

LCSTEEL,

"Where did this person just wake up from, how long have they been sleepping???"

!!!!!!

Great question!!
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umitb
Champion Author Indianapolis

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Message Posted: Mar 10, 2012 12:31:30 AM

ok
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Beboper
Champion Author Virginia

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Message Posted: Mar 10, 2012 12:30:13 AM

just greed
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Rageagainsttm
Champion Author Tampa

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Message Posted: Mar 10, 2012 12:30:00 AM

u know it
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LCSTEELERBOB
Champion Author Gary

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Message Posted: Mar 10, 2012 12:28:34 AM

where did this person just wake up from, how long have they been sleepping???
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RangerTrainer
Champion Author Ottawa

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Message Posted: Mar 10, 2012 12:27:55 AM

Reality
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SparkieMi
Champion Author Kalamazoo

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Message Posted: Mar 10, 2012 12:27:28 AM

Greed and more greed...
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carloco75
Champion Author Richmond

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Message Posted: Mar 10, 2012 12:27:18 AM

No sit...
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 10, 2012 12:26:04 AM

LOL! The amount of ignorance displayed in this thread is truly astronomical. The number of posters merely complaining about something that they don't understand in the first place is astounding. I see posters throwing around terms like "speculator", "insider trading", etc. I'm willing to bet money none of the complaining posters have any real knowledge of the terms they're using so very loosely.

Come on, all those who have been complaining. Prove me wrong!
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MidNJ
Champion Author New Jersey

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Message Posted: Mar 10, 2012 12:25:42 AM

The real question is about Robo voting, and WOW how does an article generate so many votes?
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Buddy2264
Champion Author Tampa

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Message Posted: Mar 10, 2012 12:25:15 AM

Is it speculation or devalue of the US dollar also?
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feistyfella
All-Star Author Detroit

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Message Posted: Mar 10, 2012 12:23:55 AM

criminal ####s
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MidNJ
Champion Author New Jersey

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Message Posted: Mar 10, 2012 12:22:17 AM

Documentation is important!!!

Acording to my records this article, posted by bar1035, is the top.

It generated 71 votes so far.

????????

The question is WHY???
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hotrod_brother
Champion Author Tampa

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Message Posted: Mar 10, 2012 12:20:55 AM

I speculate that I will never win the weekly gas prize on this site. Been cashing in 5,000 points for 5 tickets a week for years now.
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52MPG
Champion Author Dayton

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Message Posted: Mar 10, 2012 12:20:47 AM

speculation and possible disruptions both seem to be driven by politics.
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liao
Champion Author Montreal

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Message Posted: Mar 10, 2012 12:19:08 AM

Speculators always exists in the stock exchange market looking for big bucks, manupilating all kinds of commodities. It hurts more for everybody when it comes to oil.
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frostyWV
Champion Author West Virginia

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Message Posted: Mar 10, 2012 12:18:38 AM

tell us something we don't know.
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pastorpaulcg
Champion Author Virginia

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Message Posted: Mar 10, 2012 12:17:36 AM

Unfortunate
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TheSicilian
Champion Author Jacksonville

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Message Posted: Mar 10, 2012 12:17:32 AM

again proving that supply and demand would be better left alone Econ 101
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Rudy
Champion Author Detroit

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Message Posted: Mar 10, 2012 12:17:23 AM

It's hard to hate OPEC when the speculator's pull crap like this. The government likes their hand in everything. When will the step in and do somehting about this!! Supply and demand is dead as far as oil is concerned.
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geminijax
Champion Author Jacksonville

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Message Posted: Mar 10, 2012 12:15:55 AM

METEOR49, so why don't you CHOOSE to learn how to invest and profit from rising gas/crude prices? Now that learning process does take hard work. I know that for a fact.
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Rappcommuter
All-Star Author Virginia

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Message Posted: Mar 10, 2012 12:15:48 AM

Speculators amplify the gas price fluctuations.
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Bigwaynef
Champion Author South Carolina

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Message Posted: Mar 10, 2012 12:14:19 AM

Once again & again...
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Bonito
Champion Author Dayton

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Message Posted: Mar 10, 2012 12:13:55 AM

Don't forget the RICH that the speculators work for! What goes around will come around!
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