Who knows?

Science didn’t get us into this current oil price mess, (political actions, and commodities traders did) so science is not going to get us out of this current mess in the near term.

Well finally looks like public pressure is getting through to congress:

http://money.cnn.com/2008/06/17/news/economy/oil_trading/index.htm?cnn=yes

"NEW YORK (CNNMoney.com) -- Fed up with soaring oil prices and a chorus of people blaming Wall Street speculators, Congress is considering a host of rules aimed at limiting the inflow of investor money into oil contracts. .........."

I am sure that the demand for oil is growing, and that it will continue to grow, but I don’t buy the theory the current oil bubble was caused buy that increase alone. So, I’ll espouse my usual, a conspiracy theory!

Who will benefit from this bubble?
Who are the speculators?
Why wouldn’t you guess the oil companies themselves?

* They are already knowledgeable and in the oil business
* We know that they have to have lots of money to invest, and it would give them lots of revenue without the blame for price gouging.
* It doesn’t hurt them in terms of volume because the world isn’t really using and buying less oil, and the supply which they don’t own all is limited.
* It aids their drive for local drilling over which they will have more control.

Let’s hear some better theories!

Wow it took Ono4 till the 3 page of this thread to post a cartoon! New record....

Well, one top oil analyst says the price rise is not primarily due to speculation. From yesterday's New York Times:
______________

As the ninth hearing of the month gets under way on Wednesday, one of the nation’s best-known energy experts, Daniel Yergin, is expected to tell Congress that the focus on speculation is largely misguided.

Mr. Yergin will join numerous other energy experts who have declared that the rise in oil prices can be explained by basic economic factors, such as the limited growth in supplies in recent years, a weakening dollar, a global surge in energy demand and a string of production disruptions in countries like Nigeria.

“When an issue is this hot, it would be so much easier if there was a single reason to blame,” Mr. Yergin said in an interview on Tuesday, previewing his testimony before Congress.

“The oil shock is real and is about the hottest political issue right now,” he said. “So Congress feels the pressure to do something but there is not much it can do to promote peace in Nigeria or to get the value of the dollar to go up.”

Mr. Yergin is the chairman of Cambridge Energy Research Associates, a consulting firm, and the Pulitzer Prize-winning author of “The Prize,” an authoritative history of the oil business. He will speak on Wednesday before the Joint Economic Committee, headed by Senator Charles E. Schumer, Democrat of New York.

Mr. Yergin said the market is relentlessly bidding up oil prices in response to deep-seated fears that the growth in demand will keep outpacing the growth in oil supplies in coming years.

“There is a shortage psychology in the financial markets and that is reflected in the price of oil,” Mr. Yergin said in the interview. “You are seeing a lot of people who have never invested in commodities who are now piling into the market. But calling it speculation is way too simplistic.”

Oh....I get it, its not foreclosure these days either thats the problem, but its people that can't pay their mortgages thats the problem..

This might help clear the air a little more,

http://seekingalpha.com/article/81267-hayward-and-butler-comment-on-speculation-in-oil-markets

The only issue I have with this article is that the data they ref in the article is suspect as its not so clear cut who's buying the shorts in this market. (hence the need for regulation)

Far be it from me to claim any expertise on the matter, but Joe Nocera's article in Saturday's New York Times says oil speculators are the "Easy Target, but Not the Right One," and (I think) briefly addresses the long-short argument in the article referenced in the prior post.

Also, Paul Krugman in his blog argues that the evidence is lacking that speculation is having an effect on spot prices, and his recent column argues that prices of commodities that have no speculative market, such as iron ore, have surged recently, suggesting that old-fashioned supply and demand are the root causes.

I think I need to rein in on this thread as its seems even I have forgot the basic reason "Loosely regulated commodities market'