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39 comments on Winchester Lets Brown Have Both Barrels
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I do not believe the speculators angle at all. Speculators are selling as much oil as they are buying - the net impact on the market is zero. It is the people who buy and do NOT sell who are driving prices up; and it is these people who are buying oil to supply refineries.
Are you saying we buy oil and then destroy it? Surely not. No economy could survive that;-)
When we use oil for a fantasy flight all we have left is the memory of the flight of fantasy we enjoyed - perhaps in Las Vegas or Bangkok.
Here is a March 2007 study from the Oxford Institute for Energy Studies that specifically looked at the question of whether speculators cause high energy prices: http://www.oxfordenergy.org/pdfs/WPM32.pdf
Their conclusion is that there is no correlation whatsoever between speculator activity and higher energy prices.
There is a great chart on p. 36 of the report that tracks net long speculative positions against oil prices. As you will see if you look at the chart, there is no correlation between net spec long positions and prices. Speculators are as likely to be net short when prices are rising as they are to be net long. They are as likely to be "improperly" holding back energy prices as "improperly" pushing them up.
The entire issue is a canard that was brought back from the dead most recently by Alan Greenspan in, I believe, 2005, when he sought to evade responsibility for his inflationary fed policies by blaming higher energy costs on speculators.