NorthWest Florida Republican

I have been saying for quite some time that the speculators are the ones driving the prices in the oil markets. Now a new report shows that this is definitely the case.

In January 2000, speculators controlled 37 percent of contracts to buy West Texas Intermediate crude oil on the New York Mercantile Exchange, with the rest held by physical hedgers, including refiners and airlines that need to hedge against delivered fuel costs.

By this April, speculators controlled 71 percent of the contracts, according to data provided to the House Energy and Commerce Committee by the Commodity Futures Trading Commission. – Bloomberg

This goes completely against the left meme about how the oil corporations are gouging us with high oil profits because that’s what they want to do. I can just about hear the bursting of bubbles from those who insist on not facing reality.

Completely amazing how the price of oil can rise after a pledged boost in output from the largest oil producer in the world. It can’t be anything other than speculation.

Oil prices rose after Saudi Arabia’s modest production increase failed to push traders to sell. – Forbes

Much of this has started because of the declining market in realestate. Speculators looked for a growing market to place their funds in when the housing market popped. Oil seemed to be the up and rising place.

Several pension funds have also moved money from investments in other stocks to the oil commodities. Texas alone has moved over $70 billion in pension funds into oil.

Pension funds, Wall Street banks and other large investors that have no intention of taking delivery of fuel have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.

Granted, speculation alone isn’t driving up the prices. But it has to be a significant factor that people cannot ignore in looking at why the prices have gone up. Other causes such as increased oil usage in growing countries of China and India are also helping limit the supply of oil. Lack of refineries in the US is helping to drive up the costs of gasoline.

Environmentalists are also stopping development of alternate energy sources such as Nuclear and Wind Power. They are also keeping our search and development of oil fields at the same level that it has been in years. Stopping new drilling when they can.

Who knows what the entire solution will be. We will need oil even if all of the cars in the world ended up running on hydrogen. All of your plastics are manufactured with oil. Many other products you use are also manufactured with oil. It isn’t going away unless we find something new. We might as well prepare for the future with new Nuclear power plants and Oil wells until something more viable comes along.

I’m sure that the possibility that the oil companies are controlling the prices are still in the heads of the ones who refuse to see the market pressures.