Mischief in the Markets or World Oil Balance?
Submitted by CARPE DIEM
For the past three years, I have been looking into the excessive speculation occurring on the energy markets. I have done more than just scratch the surface; I’ve really delved deep into this issue to understand the extent to which market speculation is inflating the price of crude oil. I sat through the Enron hearings and saw how Enron manipulated the energy markets. Naturally, when I began to see wild swings in gasoline prices, I was suspicious of mischief in the markets.
And it’s not just me. While the Treasury Secretary and the Commodity Futures Trading Commission (CFTC) won’t acknowledge that excessive speculation is a big part of the problem, more and more people are reaching the conclusion that excessive speculation is a significant factor in the price Americans are paying for gasoline, diesel and all energy products.“
As the price of crude oil has doubled over the past year – up 40% so far in 2008 – more and more people, like the International Monetary Fund and even the Saudi Oil Minister, are coming to realize that speculation has played a significant role in the run-up of oil prices.
~U.S. Congressman Bart Stupak (D-Mich.), who introduced legislation aimed at “closing loopholes that are allowing speculators to manipulate energy markets and artificially inflate prices,” Stupak’s Prevent Unfair Manipulation of Prices (PUMP) Act.
MP: The chart above (click to enlarge) shows the “World Oil Balance” from 2003-2007 using EIA data (thanks to SBVOR). Could high oil prices, especially during 2007, be related at all to the fact that since late 2006 (shaded area), world demand started consistently outstripping world oil supply according to the EIA?
Note: The EIA will provided updated world oil balance data next week.
