*Updated June 9th, 2011*
Here is a list of resources online that are in the midst of the discussion regarding the role of speculators in driving the price of oil sky high. Let us know if we’ve forgotten some important / useful articles. We’ll be continually updating this post with new articles so check back frequently.
Correlation Between Speculators and Oil Prices
- Mike at About.com talks about the root causes.
- Removing speculators will help reduce price? not so fast.
- About.com again provides a resource showing the wide variation amongst ‘experts’ regarding future price of oil.
- Econbrowser on the role of speculators on world oil price.
- PDF on why speculation is not a problem from the IER.
- Hamilton v. Krugmen and others on yay or nay re: speculation and oil prices.
- A question for Krugmen from Kling (debate continues, check these two out).
- July 8 updates, 2008:
- America needs a scapegoat.
- The economist says no way to speculation warning politicians to watch what they say.
- Nixonian fallacy in the. Washington Post
- Shoot speculators! Not so fast…..says Newsweek
- Spot markets v. futures markets. Are they connected?
- Another academic, this time from Harvard, lines up to sayno way to oil speculators.
- Learn more about the problem created by worldwide oil demand adjustmentsdue to Chinese oil consumption. Declines expected in 2008?
- 2009, OPEC blames speculators
- Are speculators responsible? Forbes piece
- Blames QE2
- Obama blames speculators.
What’s your take? We’d love to hear from you. If you have a longer article you’d like to post let us know and we’ll feature you here.
Contrary to what US Energy Secretary Samuel Bodman says I don’t think supply and demand are really causing the problem. There are to many other factors at play here. Too many middle men skimming profits. Too much manipulation of supplies and inventories. The price of oil nearly doubled and gas went up a third in just one year and yet figures are coming out that indicate we are using less gas, not more, probably because people are cutting back on gas. That clearly means supply and demand have nothing to do with these prices. Speculation is driving prices !!! Lawmakers blame loopholes in commodities trading like the Swaps loophole or Enron Loophole. Whatever you want to call it, It’s a get rich quick scheme and not much less obvious than a pyramid scheme. There is no way supply is causing this gas crisis. I put the full blame on speculators and commodities traders and I am sick of the smoke and mirrors. The meeting in Saudi Arabia hasn’t achieved any substantial results from what I can see. The price of oil is still going up. There must be something else that’s driving prices up and I think I know what it is. Although il appears to be a good hedge against inflation, a lower dollar and a low oil supply, in reality nothing could be farther from the truth. The main thing driving inflation is oil prices and as inflation goes higher investors buy more oil driving inflation higher again. Some experts predict this will trigger the worldwide recession. This will result in lower gas consumption and it will free up more gas supplies.. I am no expert but even I can see the writing on the wall. Investors are going to loose their shirts on oil. We may be looking at another ENRON. Hedge funds will topple leaving old age pensioners with nothing. The government won’t be able to bail them out this time because the cost would be far to great. The CFTC and ICE will be too slow to react to the cracks forming in commodities trading so the govenment will finally step in. By that time it will probably be too late. http://www.nbtv.ca
We can say, it SPECULATIVE INVESTMENT as main Culprit behind the
rise of OIL Pricing and Food Pricing.
When there is Growth around the globe, everyone knows that DEMAND is rising,
and there is lesser chance of DROP price and hence NO LOSSES if they make investment.
Becuase of this theory, actual RISE in PRICE is Higher.,
normaly it should rise by 10-20% or 30% ……….but this SPECULATIVE INVESTMENT
had increased the PRICE RISE to much Higher by 100-200 or 300%.
Further, The commodity Exchange around the world keeps MARGIN MONEY
to 5-10% this has accelarted the Investment Value further higher.
The can Invest just 5-10% money and get there PURCHASE LONG POSITION
Increasing the MARGIN MONEY requirement to 100% of value of LONG POSITION
and NO ROLLOVER of position for Future contract over 3month., will Bring down
the OIL and FOOD price to there REAL VALUE.
Hi ,Thanks for sharing this nice information .
Thanks a lot.
My posting was on July 2008 about speculative position with Lower Margin Money requirement.
We can see what happen last 6month !!
If the MARGIN MONEY requirement were 100% or Equalant assets,
this problem should never have been arrived.
FYI., there is still same Position rebuilt on Commodity /Foreign Exchanges with
excessive speculations. Hope that, We will see next bubble burst soon on it.