Stuff You Should Know - Does oil speculation increase gas prices?

Episode Date: April 7, 2011

In an uncertain economy, investors often flock to commodities like oil, trading oil futures in a derivative market. Some believe this creates an artificially high price. Join Josh and Chuck and learn if this market is responsible for inflating gas prices. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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like what we would call a jack move or being robbed. They call civil acid work. Be sure to listen to The War on Drugs on the iHeart radio app, Apple Podcast, or wherever you get your podcasts. Brought to you by the reinvented 2012 Camry. It's ready, are you? Welcome to Stuff You Should Know from HowStuffWorks.com. Hey, and welcome to the podcast. I'm Josh Clark. Across from me is one Charles W. Chuck Bryant, and since there's a couple of microphones in front of us, that would make this Stuff You Should Know, the all audio podcast, all goodness, all the time. And in the other room is guest

producer Elizabeth Lizzie. Yeah. Our old buddy is back here working. Yeah. Which is nice. Giving us pieces of drive mango. And in between she worked for Emily, and so I just, I haven't been able to lose Lizzie. That's good. She's not when you want to lose. Lizzie's awesome. Stop picking on Lizzie, Chuck. I'm a big fan. I started the Lizzie Fan Club here. Oh, really? Yeah. And then I dissolved it. As you can see, I've not been invited to that. It was just me. Chuck, you remember when we were on the call with a senior White House official yesterday? Yeah, that was kind of cool, huh? Yeah, yeah. White House. Yeah, Obama administration. That's who's in there. Basically, we were talking about the, well, we were basically going over the talking points for the energy security policy

that he unveiled today. Yes. As of this recording, March 31, right? That's right. 30. Oh, is tomorrow the 31st? Yeah, that's right. March 30th. So he goes over this, or she's going over this with us. And basically, Obama has said that over the next decade, he wants to reduce American oil imports by a third, right? And something that every president going back to, I think, Nixon has said that. Okay. All right. So it's an ambitious goal is what you're saying. Well, not a third, but yeah, there's a video that John Stuart ran on the Daily Show where it literally showed the same clip from our last five presidents saying reduced foreign dependency on oil. They have the best researchers on that show. Yeah. So okay, well, Obama took his rightful

place following in the footsteps of Richard Nixon and has said that he wants to reduce our imports by a third in about 10 years. And one way to do that is to figure out how to conserve oil, how to reduce use, e.g., a smarter grid, more wind power, more nuclear, more clean coal. Clean coal is another one, natural gas. No, clean coal. And to basically get online our reserves that we have now. Right. So the big talking point around Washington with the Democrats right now is that oil companies have leases on something like 79 million acres of oil land, suspected oil land. That we're not tapping, right? That's not being used. They just own these leases, right? And then I think like 19 million acres are actually being mined for their

oil or natural gas. And Obama's position is, hey, you fat cats, you need to go ahead and start producing or else we're going to penalize you. Like invest in the United States. Yeah, come off some of these profits and start spending on exploration and production. Right. And get American oil out of the ground, which is hugely different than what he was saying he should do before. Right. Which is like no wash or drilling, nothing like that. Right. So it's kind of a big deal that he's really putting oil at the center of his energy security policy. But one thing we asked that they didn't really answer very well is what role does preventing speculation in the commodities market play in energy security? That's my question. I get the sense, and this is one of

those topics again that, you know, Chuck's little guitar playing English major brain has a hard time rapping around this. Yeah. But I get the feeling that there's not a lot of people in the government that want to talk a lot about oil speculation. It's sort of like, don't bring that up. No. Which is strange because it's whole, you know, there's that whole kicking around Wall Street during the recession thing that was going on. And that seems to have been largely abandoned. Right. But the question of whether or not oil speculation is affecting oil prices today, it still remains oils up to I think AAA saying a national average of 360 right now for unleaded, for regular. That's a national average. Yeah. Yeah. That's crippling. Yeah. And I know the

recession ended. I just made air quotes. But people are hurting. Food prices are increasing. Oil prices are increasing. Gas prices are increasing. And a $3.60 gallon of gas is crippling to the average American. Yeah. And that's average. I mean, you go to some places like California and in the summertime, they may be creeping up over five bucks a gallon. Yeah. So a lot of money for a gallon of gas. Yes, it is. A barrel of oil today is trading for OPEC, by the way, is stands to make $1 trillion in revenues in 2011. That's the course it's on right now. Yeah. It's a lot of cash. Yeah. I can't say it. So there's this idea out there that oil trading at $1.15 a barrel should actually be trading at something like $90 a barrel. Right. And that oil speculation

is accounting for $20 to $25 on top of the barrel price. And it counts for a lot of this increase in the price of oil. So this is nothing new. This is going on right now in 2011. But it just happened in 2008. Do you remember when oil hit $4 a gallon? It hit $4.11 as a national average, which is the highest ever. Yeah. I remember when it took the first big jump. Whenever that was, I was living in LA. And I remember it got over $2 a gallon. And it was a big jump. It was like one weekend it was $1.85. Then the next weekend it was like $2.35. That would have probably been like 2003 or 2004. Yeah. It was a big, it was like a 50% jump or something like that. Don't quote me. I'm going on my feeble memory. But I remember saying at the

time, you know what? I just had a feeling, said, this is something different. Gas is never going to be this cheap again. Never going to go back down. You know, in 1999, the average was $0.90 a gallon. 1999, it was so 12 years ago, $0.90 a gallon. Now we're at $3.60. We've already hit four and changed for an average. Yeah. I remember filling the little Honda up for like, you know, $14. Yes. That was just so beautiful. And now it's like so good. $60. Yeah. So, Chuck, from 2004 to 2008, the price of a barrel of crude oil increased from $31.61 in 2004 to $137.11 in July 2008. Crazy. Right? So gas prices grew from $193.409 over that same period. There's a lot of things, there's so much that goes into oil production that could affect

the markets. Yeah. Instability. Right? Right now, people are taking to the streets of Yemen and Syria and once in a while in Iran. They are overthrowing the government in Egypt. There's a civil war going on in Libya. Libya's oil production is virtually offline right now. Yeah. It's a little unstable. Well, it depends on who you're asking. It's actually pretty stable. It's just socialist, which is why everybody's like, oh, that's a dangerous country. Well, yeah, sure. If you're America, it is. Right? But that's one of the reasons that people said geopolitics and these unstable regions that produce oil has a lot to do with it. But Michigan Senator Carl Levin during a hearing said, you know what?

Yeah. It's unstable, but it's been unstable for decades. And we've been buying oil from them. Yeah. So that's not the reason. That's why he claimed at least. Right. And Hugo Chavez, remember through Sitco, that's the Venezuelan oil company that's here in the U.S. Through Sitco, remember he used to donate like a million gallons of heating oil to people in the northeast to keep them alive. Right. That was like basically him saying like, this is what socialism gets you, people of Boston, what do you think of that? How warm are you? Yeah. So it's unstable in that he's not a friend of America. We're not capable of pushing him around and we need their oil. Right. But we have a detente because people like money. Economies like money and we want to buy their

oil. So everybody's chill out. What's more, with this recent drop in production that's represented by Libya going into civil war, Saudi Arabia stepped up and said, you know what? That's 3% of the oil that's produced every day. Right. And we're going to add an extra 3% to make up for this temporary shortfall. Right. So there actually isn't any kind of dent in the production or supply side. Well, no, because you mentioned in the article, like, could it be peak oil? But no, it's not peak oil. We'll tell them what peak oil is. Well, peak oil, do we not podcast on the end? No, we never have. We need to do that. That's the point where, you know, there's only a finite amount of oil. So once we cross that little threshold, it's like all of a sudden there's

getting less and less oil. Yeah. And there's, there's a whole group of people out there, very educated, smart people are not crackpots. Although sometimes people look at them like that, who believe we have past peak oil, it's going to take us five years or 10 years to figure it out. But by that time, it'll be way too late. And the world's going to come to a grinding halt for a while until we can figure out what to do. A lot of people think that we haven't hit peak oil. And if you look at the, at least the published figures, Saudi Arabia is often accused of fudging on their numbers. I think they were found to a while back, but most people say, no, supply still exceeds demand, which if you look at Mr. Adam Smith's The Wealth of Nations, the basis of the capitalist

economy, if supply exceeds demand, prices should remain low. And oil is not the kind of thing you want rewriting the rules of base economics. No, because ultimately it's a commodity and a commodity is something that we can make things out of or something we need. Wheat is a commodity. We need that pork belly. Pork belly is a commodity. It's the most delicious commodities. And oil is a very, very vital commodity. So if Carl Levin saying, yeah, that's unstable, but we can deal with them, right? If Saudi Arabia is saying, yes, Libby is offline right now, right? But we're going to make up the shortfall. If we haven't actually passed peak oil and the supply still exceeds the demand, a lot of people are saying, why is oil so high? Why is it increasing and increasing? And there's

a correlation that's going on right now. The answer to that, obviously, for a lot of people's minds, and I'm not taking a position on this because it is a very controversial thing to say that is oil speculation. Yeah, there's speculation that the speculation is what's driving up the price. Right. That's perfect, Chuck. Yeah. And one of the ways that it's being, I guess, suggested is that from, I think, July of 2008, there were 617,000 oil futures contracts on the market, on the oil commodities market. Can we explain what a future is? We'll go back. I just wanted to give this one last stat out and we'll go back to the beginning. And then January of 2011, so July of 2008, 617,000. January of 2011,

1 million futures contracts on the oil market. Yeah, that's right. And between those two times, after the last bubble burst, it's been creeping up and up and up. Prices have basically commensurate with oil futures contracts. Right. So it really looks a lot like it could be oil speculation that's driving up the price. Yes. So let's talk about oil speculation. Yes. And my mind starts to melt starting now. Okay. All right, Josh, the future, and you're going to have to help me with this, but any kind of future is a contract between a buyer and a seller. A buyer agrees to purchase fixed amount of a commodity at a fixed price. In oil future, we're talking about oil, obviously. So it's different than actually buying into a commodity because you're just betting on whether

or not it will be higher or lower at the end of your contract. Right. Is that correct? A future is a derivative. And a derivative is any kind of financial contract or instrument that's the value of which is based on the value of something else. You know what it is? To me, to my little brain that doesn't think about this stuff well is it's a made up way to make money almost. That's exactly right. It's like someone created this and said, hey, this doesn't even exist. Right. But as long as there's someone buying and selling it, it does exist. Because so a futures contract is very standard. It's not an exotic financial instrument. Right. But the way that it's being used in the derivatives market is extremely exotic and volatile.

The war on drugs impacts everyone whether or not you take America's public enemy. Number one is drug abuse. This podcast is going to show you the truth behind the war on drugs. They told me that I would be charged for conspiracy to distribute 2200 pounds of marijuana. Yeah, and they can do that without any drugs on the table. Without any drugs. Of course, yes, they can do that. And I'm a prime example. The war on drugs is the excuse our government uses to get away with absolutely insane stuff. Stuff that will piss you off. The property is guilty. Exactly. And it starts as guilty. It starts as guilty. The cops. Are they just like looting? Are they just like pillaging? They just have way better names for what they call like what we would call a jack move or being

robbed. They call civil acid. Be sure to listen to the war on drugs on the iHeart radio app, Apple Podcasts or wherever you get your podcasts. How's that New Year's resolution coming along? You know the one you made about paying off your pesky credit card debt and finally starting to save for retirement? Well, you're not alone if you haven't made progress yet. Roughly four in five New Year's resolutions fail within the first month or two. But that doesn't have to be the case for you and your goals. Our podcast, How to Money, can help. That's right. We're two best buds who've been at it for more than five years now

and we want to see you achieve your money goals and it's our goal to provide the information and encouragement you need to do it. We keep the show fresh by answering listener questions, interviewing experts and focusing on the relevant financial news that you need to know about. Our show is chock full of the personal finance knowledge that you need with guidance three times a week and we talk about debt payoff. If let's say you've had a particularly spend thrift holiday season, we also talk about building up your savings, intelligent investing and growing your income. No matter where you are on your financial journey, How to Money has got your back. Millions of listeners have trusted us to help them achieve their financial goals.

Ensure that your resolution turns into ongoing progress. Listen to How to Money on the iHeart Radio app, Apple podcasts or wherever you get your podcasts. So Chuck, you have a bunch of oil and I have a refinery over here. Sweet. In my backyard. Why are we podcasting? And I'm saving up for a better life for us. So I want to buy some oil from you. All right. But I think that oil, the price of crude is going to go up a year from now. Per barrel. Right. So I'm going to go ahead and buy it for the market price now. Right. And you're going to sell me a futures contract. So we have an agreement that a year from now at the end of March 2012, that contract expires because I have to buy that oil from you. Yeah. Okay. But not now,

a year from now. Right. Now, if I'm right and oil goes up, say I'm buying 100 barrels at 50 bucks a barrel. That's our future contract. So our contracts are five grand. Right. If it goes up, if the price of oil goes up to $52 a barrel a year from now, I just got 50 barrels of oil for 200 bucks less than I should have paid. It's a good deal for you. It is. But a futures contract is also, well, it's a bet. Right. Yeah. Because the price of oil could go down. Right. I said in 2012, at the end of March 2012, I'll buy those 50 barrels of oil from you for 50 bucks. But if the value of oil in March 2012 is 48 bucks a barrel, then I'm paying 200 more than I could have if I just bought on what's called the spot market, which is I go to you, I want your oil

right now and you sell it to me for whatever the market price is. Right. And if this sounds weird, it's not so different than it betting on whether or not a stock will go up or down. It's the same thing. It is. But in a lot of ways, it's just kind of, it's saying, it can also, it also comes into play if I don't need oil right now. Right. But I'm going to need it in the future and I think it's going to go up. Right. Right. Now, when the real bet comes in, when I'm saying that I think it's going to go up, I'm going to go long. It's called going long. Yeah. And at the end of this contract, you're actually going to get oil, correct? If you're holding the contract and that I have with you, then yes, I have to buy oil from you. Right. That is a future. Give me my money. I'll

give you your oil. Right. But that's an important thing to distinguish because that is a future and that means actually oil is being traded at some point. Right. And that's a normal thing. Right. Okay. Now, that's going long. If I'm betting that oil prices are going to go up. If I think oil prices are going to fall, I'll go short. Yes. Right. So it's virtually the same thing. We go into a contract. Right. So Chuck, let's say conversely, you think that oil is going to go down. So you're happy to sell me a futures contract. Yeah. Right. The price of oil goes down. Right. Yeah. We say for five grand, the price of oil goes down to 48 bucks a barrel. Right. And you buy that contract back for me at the market price. You just made 200 bucks. Sweet.

Yeah. Okay. So there's going short and there's going long. But as you said, in a standard commodities market that there's not a secondary derivatives market going on, then ultimately there's going to be an exchange of oil. Yes. The secondary derivatives market, you never get caught with the contract when it expires. You're trading contracts day by day, moment by moment as the price of oil changes up and down throughout the day. You're making money off of those fluctuations by buying and selling, by shorting and longing the price of oil on these contracts. And that is speculation. That leads to what's called an artificial market. Right. Supply and demand no longer applies to the commodity itself. Supply and demand

is also subject to the financial instruments as well. Yeah. The whims of who has a lot of money and can affect the market with a big purchase. Right. So that's called an unstable market because it's very volatile. It's not nearly as steady as a real tangible market. No. I mean, if you look at just a regular commodities market where there aren't any futures or derivatives trading by anybody besides the people who actually will end up with this stuff, there's the changes, the fluctuations over a month or a year or a quarter are pennies or a buck or two here. It's when investment banks and hedge funds who, by the way, when interest rates are very, very low, tend to turn to the commodities market to safely park their

money because they're not going to make much money when interest rates are low. They turn to the commodities market. When they get involved, that's when things start going from $30 a barrel in 2004 to $140 a barrel in 2008. Right. And that's what happened with the housing bust. All of a sudden, Wall Street, housing wasn't a good place to put any money. So Wall Street flocked over to speculation futures, oil futures. Right. And we should say again that this is all very much debatable. Yes. If you believe that oil speculation is affecting oil, this is how it happens. We're just explaining that. That's what we do. Well, what we just explained was how derivatives trading works. This is no secret. It's the effect that it has. That's what's debatable.

So the people who believe that there is consequences for oil for derivatives trading say that here's what happens. If you want to get your hands on actual oil, you aren't going to be able to keep up with an investment bank or a hedge fund manager who is buying up futures. Right. So you're going to need oil now and you're going to have to stockpile. It's one good thing about oil is you can stockpile it for a while, right? Well, and oil producers can hoard it. That's exactly right as well. But you can also, the derivatives market in futures can also inadvertently force a hoard among people who actually use the oil, who are buying oil for use, not just trading in the derivatives market by saying, okay, I can't buy futures because they're just too expensive right

now. So I'm going to buy whatever I can get my hands on. So the spot market that deals in actual oil right that moment has a higher demand, which means the actual price of oil goes up, which means those oil futures go up even further, which means prices across the board rise, especially for gasoline. That's right. And when big companies like Goldman Sachs and Citigroup are these huge financial institutions are buying up tons and tons of speculating, then that's going to have a really big sway on the market. That alone will, right? They stand to gain tons of cash. Tons of cash. But imagine if you not only stood to gain tons of cash from the secondary market, but you're an oil producer as well. Yeah. And all of a sudden you're speculating on your own

production or buying oil futures. If you buy a bunch of oil futures for a higher price, you can actually, the market trades on rumor, right? So people are like, well, somebody's buying up a bunch of this stuff and the price is actually rising, right? So that a lot of people are going to be willing to pay more and more and more. If you're an oil producer doing that, then you're going to stand to gain through the financial instruments and through the actual sale of your oil. And there was an investigation into this, the secondary oil markets that found that in the New York Mercantile Exchange alone, which is the commodities market or one of them for the US, 11% of the oil futures contracts were owned by Vital, which is a Swiss oil producer.

Yeah. So how Chuck, how can an oil company be allowed to artificially inflate the price of oil for its own gains? And how can investment banks be allowed to drive up the price if that is in fact what's going on? How can they be allowed to drive up the price of a commodity as valuable as oil if normally it should be something like 30 or 40 or $50 a barrel and it's double or triple or quadruple what experts believe its actual value should be? Well, it shouldn't be able to happen because they're starting in 1974 with our Congress that was something put in place called the Commodity Futures Trading Commission, the CFTC, and they were put in place specifically to prevent this kind of thing from speculation artificially inflating prices of commodities.

So they were like, they've realized a long time ago this could be a real problem. Let's put this thing in place and let's make them keep it in check. So if you were trading on that exchange, you got to file reports every day. The commission looks them over, keeps an eye out for speculation. They know if somebody's trying to corner the market. They know who. And they try to stop it. Yeah. But quite a few things have happened to neuter, for the most part, the CFTC. Yeah, because you can create a federal agency and empower it all you want. But if successive presidents disagree with you about the value of that agency, they can neglect it. They can strip it of its powers. They can, as you say, neuter it

and not even have the courtesy to put newticals on it afterward. Just leave it laying there. So in 2000, a very big thing happened. Prices were still pretty low for oil, less than 30 bucks a barrel. But a little company called Enron started lobbying Congress to remove regulatory powers of the CFTC. And basically what the deal was, the CFTC had regulatory powers over the official exchange. Right. So Enron says, hey, New York mercantile exchange. Yeah. And CFTC, I'm sorry, Enron said, hey, we've got this software that allows futures to be traded over the counter, which is something outside of the formal exchange market. Right. It's basically like, I can say, hey, Chuck, you've got a bunch of futures in your pocket. Can I come

to your house and buy it? Yeah. And it'll be a legitimate exchange, but it's over the counter. It exists outside of the market. That's right. And that became known as the Enron loophole, because all of a sudden, OTC trading was allowed for futures exchanges with no government oversight, because it was out of the jurisdiction of the CFTC. So Josh, that was one thing happened in 2000. Then another little thing came along called the Intercontinental Exchange. The ICE was set up in London, and that was to trade European oil futures. And the funny thing about that is it was headquartered here in Atlanta. So it's headquartered in Atlanta, but it's European oil futures. So the CFTC didn't have any oversight over them because it was European.

Right. So you could trade American oil futures on this exchange. Well, six years later, that's when they set up the American terminals to allow that. Think about it. Like the time in London and the time in New York are totally different, and that's kind of a problem. So really, if you can get these commodities, the same commodities trading on the same time zone, you have a more robust market. That's right. And now, all of a sudden, the CFTC couldn't even regulate these formal exchanges on the formal market, even though it was based in Atlanta. They set up trading posts, trading posts, terminals inside the United States. In New York.

It's almost like the OTB. Like, oh, horse racing is illegal, but this race is in Cuba, but you can bet on it on the Lower East Side. Yes. And so as these things just kept going and going, the CFTC just lost any jurisdiction whatsoever. And there are crafty people that are coming up with these things. They're basically saying like, let's set up a way where we can make gobs of money outside of regulation. And I mean outside of regulation. People have no ideas. I was reading some blog posts, and it was about how the aluminum market was being cornered by somebody, and they thought it was some hedge fund manager, and they had an idea of who, but not enough to publish. But they have no idea who's buying what. It all exists in the

shadows of derivatives market due because it's outside of the jurisdiction of this federal agency that was created specifically to police these things. You know, I'm never going to be wealthy. What? Because I'm one of those dumb schlubs who's just like, let me go out and earn my paycheck. And I'm not like against the stock market. Like I'll invest in the stock market and set up my 401k and all that, but I'm not, I can't even fathom the kind of what causes someone to think of like, hey, how can I really make tons of money with no oversight? And I'll invent this way to trade ether and not real ether. People would buy ether from me, especially drug dealers. Patrick Bateman would have eaten you alive. Oh man, I'd be so dead. So there was a

July 2008 report by the International Energy Agency that concluded that speculation didn't really have anything to do with it. They're like, no, no, no, that's not what's driving oil prices up. There's another report the next September contradicted the IEA report. It said, no, there's actually a lot of correlations between this big influx of money and oil futures and the rising cost of oil. I mean, I'm a dummy. To me, it kind of looks plain that that's probably what's been happening, but there's probably a lot of people are going to write and say, oh, what you guys didn't consider was XYZ. No, there's a lot of factors that go into producing and buying and selling oil. And there's no way you can cover all of them. And that's not the point. And I don't

think that's anybody who's accusing the speculation of influencing the price. That's not the point of anybody because there's nobody who's going to say this is 100% of the problem. There's other stuff that does have this effect. I think what gets people to say speculation is having an effect is because there's people out there who's like, it has no effect. And it's just not possible that a million futures contracts can't have some effect on the end price. And it is just correlated. It's not causal. But it shot up so quickly. Exactly. Right along with it. It was, I don't know. And I mean, ultimately, what it comes down to is the average American who's still, you know, maybe unemployed, paying tons of money for food is getting reamed at the pumps,

though. And if there's anything that could be done to reduce that without causing harm to the markets, why not? But hey, good news, Josh. In 2008, Congress introduced the consumer first. Hey, how about that? Consumers first. Right. The Energy Act in May 2008. Yeah. And that would have extended oversight for the CFTC to foreign lands. Yeah. Probably would have helped a lot. And it died on the Senate floor. A month later. A month later. Yeah. They said, consumer first. Let's kill it. They're talking about it now. Like this whole Obama push is basically making the oil companies out to be bad guys. So the Democrats are really taking, they're banging the war drum against oil companies right now. And then investment bankers are a fun target,

too. So this is coming up again. Right. But it's coming up like it did in 2008 because oil speculation is rampant. The war on drugs impacts everyone. Whether or not you take drugs. America's public enemy number one is drug abuse. This podcast is going to show you the truth behind the war on drugs. They told me that I would be charged for conspiracy to distribute 2,200 pounds of marijuana. Yeah. And they can do that without any drugs on the table. Without any drugs. Of course, yes, they can do that. And I'm a prime example of that. The war on drugs is the excuse our government uses to get away with absolutely insane stuff. Stuff that'll piss y'all. The property is guilty. Exactly. And it starts as guilty. It starts as guilty. The cops. Are they

just like looting? Are they just like pillaging? They just have way better names for what they call like what we would call a jack move or being robbed. They call civil acid. Be sure to listen to the war on drugs on the iHeart Radio app, Apple Podcasts or wherever you get your podcasts. How's that New Year's resolution coming along? You know the one you made about paying off your pesky credit card debt and finally starting to save for retirement? Well, you're not alone if you haven't made progress yet. Roughly four in five New Year's resolutions fail within the first month or two. But that doesn't have to be the case for you and your goals. Our podcast, How to Money,

can help. That's right. We're two best buds who've been at it for more than five years now and we want to see you achieve your money goals and it's our goal to provide the information and encouragement you need to do it. We keep the show fresh by answering list of questions, interviewing experts and focusing on the relevant financial news that you need to know about. Our show is chock full of the personal finance knowledge that you need with guidance three times a week and we talk about debt payoff. If let's say you've had a particularly spend thrift holiday season, we also talk about building up your savings, intelligent investing and growing your income. No matter where you are on your financial journey, How to Money has got your back.

Millions of listeners have trusted us to help them achieve their financial goals. Ensure that your resolution turns into ongoing progress. Listen to How to Money on the iHeart Radio app, Apple podcasts or wherever you get your podcasts. And I know everyone thinks we're anti-capitalism but that's not true at all. It was just play fair. Just play fair. Or at the very least admit that you're having the effect that you're having. That's what I think would gall anybody who is like, yes oil speculation has an effect. And it's not just oil by the way. If you want to read a really cool article on speculation, commodity speculation, read Frederick Kaufman's The Food Bubble. He tries very hard but fails ultimately in the end to connect

Goldman Sachs trading wheat and creating a wheat bubble that created the food crisis in the riots in Haiti in Egypt in 2008. He came so close but he wasn't able to. But it's worth a read anyway. It was in Harper's Lake last year. Interesting. So that is oil speculation. It's us speculating on oil speculation. We're speculating as little as we can. If you want to learn more about that, type in oil in the handysearchbar at HowStuffWorks.com. We have a bunch of cool stuff on the side about that. And I said oil followed by handysearchbar, which means listener mail. Josh, I'm going to call this sperm donation. Dear Josh Chuck and Jerry, but I'm going to say Lizzie today. Yeah, because Jerry has left us. Say it again. Dear Josh Chuck and Lizzie. Yeah. My name is Melanie. I'm a college

student from Seattle attending full-time school in South Korea. I was listening to how twins work and it made me think of my own unique family situation. My mom and legal father, her husband, could not have a child together, so they decided to get a sperm donor. The laws are looser now, but 20 years ago information was more closed off and secretive. I grew up not knowing really anything about my real dad until just about a month ago. In late February, the day before I was to depart back to South Korea, I got a letter in the mail from my real father. He lives in Athens, Georgia. Pretty cool. Yeah. We had been communicating through Facebook and email and I've discovered that we have quite a bit in common despite never knowing each other. Of course you do. Jeans, baby.

It's all the jeans. I wonder if it turned out to be Biker Lee. We have very similar handwriting, religious spiritual beliefs, paranormal experiences. It sounds like Biker Lee. TV show taste. He is a nurse and that was the first job I ever wanted, so it's not Biker Lee. No, it's not. And he was a journalist and my main talent and a large interest of mine is writing. On top of all this, five years ago or so, my mom received a letter from a lady who had registered the same donor number. So in short, I also have a half brother. That's cool. That's very cool. We were able to meet once actually in my senior year and also discovered we had several things in common. My boyfriend was a part Japanese guy named Max.

And as was his best friend, a part Japanese guy named Max. Wow. Same political views, both played guitar, same favorite band, half brother, half sister, reunited. Does she say the same favorite band? She doesn't mention what the band is. Okay. But she said this leads me to my request that we do an episode on sperm and egg donation and how relationships can develop. So let's add that to the kitty. Okay. To the cue. Yeah, let's do that. That's Melanie A. Thanks a lot, Melanie. Glad you got to come down to Athens for a little while, right? No, she did not come down. She just was in contact. You definitely have to go to Athens. While you're there, make sure

you eat at Harry Bassett's. I strongly recommend the Chicken Rochambeau. Okay. They do not kick you in the crotch when you order it. I promise this isn't like a prank. No, no. If you were produced outside of the traditional means of reproduction, we want to hear about it. Yeah, a good one. Wrap it up, send it in an email to stuffpodcast at howstuffworks.com. For more on this and thousands of other topics, visit howstuffworks.com. To learn more about the podcast, click on the podcast icon in the upper right corner of our homepage. The How Stuff Works iPhone app has arrived. Download it today on iTunes. Brought to you by the Reinvented 2012 Camry. It's ready. Are you?

The war on drugs is the excuse our government uses to get away with absolutely insane stuff. Stuff that'll piss you off. The cops, are they just like looting? Are they just like pillaging? They just have way better names for what they call, like what we would call a jack move or being robbed. They call civil asset for it. Be sure to listen to the war on drugs on the iHeart Radio app, Apple Podcast, or wherever you get your podcasts. Here's today's Fortnite weather report. iHeartland has been hit by a major blizzard. The snow has turned iHeartland and Fortnite into a winter wonderland. With new festive games, including a winter themed escape room, a holiday obstacle course, ice skating,

hidden holiday gifts, and more. Look out for upcoming special events from your favorite artists and podcasters all month, along with scavenger hunts, and new how fan are you challenges. So embrace the holidays at iHeartland in Fortnite. Head to iHeartRadio.com slash iHeartland today.