You obviously don't remember the Acer Wars that took control of Vermont away from Canada...

Not all of us are as old as you Mike!

Not that I'm an expert, but I'm still not convinced that speculation is driving up oil prices. According to the NY Times, a recent federal task force report stated that "oil consumption grew 3.9 percent between 2004 and 2007. At the same time, oil supplies lagged that demand, with production growth from nations outside the Organization of the Petroleum Exporting Countries slowing to levels well below the historic averages." For other skeptical views (some of which I posted earlier), one can look here , here , and here .

But even if speculation were having some effect...so what? Our reliance on oil is a bad thing. It's bad for our foreign policy. It's bad for our troops who have to protect supply lines. It's bad for our economy. It's bad for the environment.

Economists have said that people will change their behavior when the price of gas is high enough to matter. Now it is, and people are. Those who can are buying more efficient vehicles. SUV and small truck sales are plummeting. Those who can are shifting to mass transit. Those who can are carpooling. Miles driven is dropping. And these things are bad?

Yes, there are households that have no choice but to spend upwards of 15% of their income on gas. They should not have to bear that burden. But surely there must be a way of helping those in need without removing the most powerful incentive to get the rest of us doing what we should have been doing over a decade ago.

Two-thirds of our oil is imported, and most of it goes to transportation. If we only drove the cars Europeans drive, we'd cut oil imports dramatically. New CAFE standards set fuel the new fleet efficiency average at 32 mpg by 2020; the Europeans are at over 40 mpg today. Right now. So it won't take new technology; it just takes different choices.

If we just use less oil, the price will go down too (or at least won't go up as much as it would with demand from China and India expected to increase anyway). And if the price of gas goes up 40%, you don't pay any more to drive the same number of miles if your next car is 40% more efficient.

Someday we're going to have to decide whether we're serious about dealing with our oil problem. To me, looking at the speculators is a distraction from this decision, whether or not they're affecting oil prices. The further this can is kicked down the road, the greater the pain when we finally have to deal with it.

Interesting that the Hummer sales in China are booming.

"But even if speculation were having some effect...so what? Our reliance on oil is a bad thing"

Um the ‘why’ and ‘so what’ is the basic premise of the thread, not the question of is dependency on oil bad (the answer to that is so obvious its not worth the 1’s + 0’s)

I understand that. But I question (1) whether the effect of speculation on current prices exists, (2) whether it's significant, and (3) why reversing it would be a good thing--which necessarily implicates asking what we're trying to achieve regarding oil usage. If the answer to the last question is that it would not be a good thing to lower prices in the long-term (because higher prices are making our society finally move in the right direction on this issue), then I wonder why there's so much concern about the first two questions; wouldn't they be moot? If getting off of oil is a good thing, and if speculation is either having no effect or is helping to drive up prices, why not allow speculators to speculate away?

To put it another way: even if speculation is affecting oil prices, isn't any proposed resolution meaningful only within the context of the overall national energy policy? I just feel that there's been such focus on whether speculators are driving up prices that the question of what to do about it in terms of our larger energy issues isn't getting much if any attention--and that we can't really answer the "what to do about it" question without the bigger context.

“because higher prices are making our society finally move in the right direction on this issue”

Bottom line: Long Term Real change in upward movement in prices will spur all the goodies on Gore’s wish list. Short term raping of the market will not. The increase in over 60% in less then 1 year without any serious supply / demand is fueling money to those that will not use that for what you are expecting should happen with higher prices while taking that money from those (As in. governments) that actually might want to make a difference.

This short term price spike has only fueled other environmental disasters (some yet to be realized and acted on) to plug the short term oil needs. No oil company or energy alternatives is shelling out new development based on $150 or even $120 being sustainable in the market. They are basing that on $60-70, you know where the rest is going?

You know the best way to make a short term environmental impact in the world? Hold the Olympics in China again.

Hmmm... Maybe the speculators are starting to get nervous and back off a bit?

First, the federal task force said consumption has increased over the past several years. And while I'm admittedly an economic amateur, it seems to me that even a modest increase can produce a sharp price rise depending on the demand-supply curves; even a slight shortage could sometimes create a price spike if demand is fairly inflexible.

Second, I thought economic theory said that high oil prices were exactly what was needed to spur other technologies. No one will invest in them as long as oil is cheap because they wouldn't be competitive. Why should companies, oil or otherwise, invest in solar if it's cheaper for people to use oil and will continue to be so?

I've never heard an economist say "we'll get off of oil as long as it remains relatively cheap." It is precisely only sustained high oil prices that provides a market incentive for alternatives--perhaps not by the oil companies, but by everyone else.