The phrase "bona fide contango" means an operator should be able to buy front-month crude, take delivery, pay associated storage charges and hedge the inventory by selling the second-month future. Let's run some numbers from April 22, 2005: 1. Go long June crude oil at $55.39; 2. Go short July crude oil at $56.54; 3. Take delivery of June crude on May 24: a. Pay $55,390 for 1,000 barrels; b. Incur interest of three-month repurchase, 2.80%, for one month, or approximately 13 cents per barrel; c. Incur storage and pumping charges of approximately 60 cents per barrel; 4. Deliver the stored crude oil on June 23, the July expiration date, and receive $56,540. Commercial traders should be able to clear 42 cents a barrel on this deal; others should not try this at home. Contango, if it is emitting the proper price signals, should lead to increases in inventories and to lower prices in the future. Has this been the case?