"Report Faults Speculators For Volatility in Oil Prices"

WASHINGTON - Speculation by large investors — and not supply and demand for oil — were a primary reason for the surge in oil prices during the first half of the year and the more recent price declines, an independent study concluded Wednesday.

The reports are part of a battle between Washington and Wall Street over how money is channeled into commodities. The issue took on urgency as food and gas prices soared and after the CFTC in July revealed that more than half of all oil trading came from speculators.

This undermined earlier contentions by the CFTC that speculators weren't influencing oil prices, and prompted lawmakers to ask the CFTC's inspector general to investigate how the agency gathers its numbers.

more:
http://online.wsj.com/article/SB122100706431117489.html?mod=googlenews_wsj

what a revelation.... which is precisely why we need more control over our own resources - especially energy... speculation... on a lot of things....   who woulda guessed it.

-- Modified on 9/10/2008 1:10:51 PM

all commodities have been volatile as of late, but where is the outrage inre to the run up and subsequent fall in corn for example. The percentage rise and fall in corn futures is right on par with oil prices.

For that matter doesn't anyone remember the Dot.com boom and bust.? Speculation is not evil in itself, it's actually necessary to keep liquidity in the market place. The same as where would the stock market be without shortsellers, they are looked at as evil, but they are a necessary part of the markets.

perfectly good food into fuel.... and we wonder about the sanity of our "leaders!"  man oh man alive.... where are the "Bright folk!"

Not sure where "evil" came into the discussion.  I certainly didn't characterize it that way.  

To clarify:  I found this part interesting:

"This undermined earlier contentions by the CFTC that speculators weren't influencing oil prices, and prompted lawmakers to ask the CFTC's inspector general to investigate how the agency gathers its numbers. "

in stating that "it is not a fossil fuel"

After eight years even the most diehard Bush supporter has to admit that he doesn't come across as the brightest of individuals, but he is a rocket scientist compared to Pelosi.

but the public at large considers everything to do with oil is perpetrated by evil, rich, giant corporations that manipulate the price of oil at will.

Your title "No shit Sherlock" said it all. I wish people would realize that speculators, even those capable of driving the price of a particular commodity don't always profit. They still have to get out with their profits the same as everyone else.

The markets sometimes have a mind of their own, just ask anyone that shorted AOL or Yahoo during the Dot.com boom. They were eventually proved right, but they went bust all the same.

Simple way of ending unmitigated speculation is to prevent anyone who does not take delivery from taking part in the speculative trade of crude oil. It is well known fact large users like airlines do hedge in commodity markets.

There is significant difference in commodity speculation like corn, orange juice and the like. These can be grown in many parts of the world and there are cartels like OPEC which controls production and distribution. So they are not the same. I can drink grape juice instead of orange juice but I can put diesel in my gasoline car or vice versa.

Crude oil is a utility and we all know what happened when Enron was allowed to engage in speculative trade. Rolling blackouts in California and P&G almost went out of business.

Regardless of GA Gamblers argument, speculation crude and other commodities are not the same.

Oil is produced in many parts of the world also.

You may be able to drink grape juice instead of orange juice, but what if you raise livestock? What are you going to do when feedstocks go through the roof? Or it you own a Starbucks when coffee skyrockets

Free markets need to remain free. What I am trying to say is that if end speculation in one commodity you start down that slippery slope of having to end it in all commodities. Not to mention the fact that we are only capable of regulating the US markets. These commidities are produced, traded, and consumed world wide. How do you propose to get Hong Kong and Frankfurt  to go along. The only thing you will succeed in doing is chasing another industry out of the US and into other countries.

If the playing filed is equal. Speculation for the sake of greed is not part of free market. Cartels are not part of free market.

Basic tenant of free market is based on products, service and information about them flow free between buyers and sellers where the buyers and sellers are able to negotiate price. Speculators are neither a buyer or a seller, simply a diversion for making profit.

Oil is produced in many parts of the world but enough to affect the market. Unfortunately all most of it is concentrated in the wrong hands.