That’s precisely my point - speculation can’t work, not for long anyway, unless there is a fundamental in the form of tight supply. In that case, what is pejoratively called ‘speculation’ is really just a scramble by investors and buyers to secure future supplies as a lower and/or predictable price.
However, tight supply can be natural (e.g. ‘peak oil’) or artificial. I don’t think we’ve hit ‘peak oil’. Rather the continuation of policies designed to limit access to the natural reserves creates an artifical shortage.
Those who are long in the market (the evil speculators) will take it up the chute if the tight supply that is mostly a product of stupid policy that can be reversed, is reversed.
This is why this is a winner for the GOP if they play it right, because Obeyme can’t ease up without alienating and demoralizing his environut base. But then, never misunderestimate the ability of the GOP to drop the ball. They didn’t get the moniker “The Stupid Party” for naught.
I disagree to some point there - over 70 percent of oil futures contracts in 2008 were held by speculators - defined as being neither a producer or end consumer (such as a refinery).
And with investment banks such as Goldman not being subject to position limits, price pressure was built over several months by investors scrambling to get in on the returns - and then Goldman got the suckers lined up and profited by shorting the downside as well.
And I sense that happening again, we are hearing the same kind of claims that we heard in 2008 about spiralling Asian demand that really was never there - even as US gasoline usage is tanking.
But this can only happen if supply is tight and the perception is in place that nothing is being done to drive future increases in supply. Obama satisifies that requirement to a 'T'.