Replies

Many studies by reputable academics have looked at whether speculators are responsible for volatility in commodities markets and found that this is not the case; price swings have overwhelmingly been driven by economic fundamentals.

What were the 'economic fundamentals' that led to the spike in oil prices in 2008?

You ask: What were the 'economic fundamentals' that led to the spike in oil prices in 2008?

There is a 17 year cycle in oil that has repeated itself many times [1974, 1991, 2008]. Every 17 years we see a spike in oil followed by a rejection of the high by 50-75%. I have traded oil and I will tell you that I was looking for a high in oil prices in 2008. And it was the day that Goldman Sachs came out and said [with prices at $140] that oil was going to $200.00. I knew that was the key statement to the high in price [never go with what Goldman says]. That week [July 7, 2008] we put in a doji on the weekly oil chart [sell signal] and oil fell to $39 by year-end. Nobody blamed me for causing prices to drop $100.00

Now here is the real culprit .. State Gasoline taxes. The average profit for Exxon on a gallon of gasoline is about $0.02, and the average state tax on gasoline is $0.48. The scariest thing is that the average American is too stupid to realize the media and administration has this all wrong ... even O'Reilly has drunk the Kool-Aide.

http://thespeechatimeforchoosing.wordpress.com/2011/04/29/the-truth-gasoline-taxes-vs-evil-exxons-profits-plus-why-oil-prices-are-so-high/

I would guess they were the same “economic fundamentals” that caused the price of gasoline to plummet from over $4.00 a gallon to about $1.50 basically overnight.

I always suspected speculation was a major factor in oil pricing, but after Bush signed the executive order to expand offshore drilling and the price collapsed so quickly - with zero change in the actual supply OR demand for oil - I no longer have any doubts.

As another has said, Eric Bolling, a former “oil man” and solid conservative, will tell you that speculation has a huge effect on the market and people who do not actually consume the oil control a majority of the market. I’m not sure why this is considered “investing” by some because it isn’t. Imagine what the prices of food, clothing, and housing, etc., would be if 75% of the perceived demand for those items came from people who didn’t actually use them.