Sunday, June 22, 2008

Who (or what) is responsible for high oil prices?

There's much discussion going on re the reason for recent run up in world oil prices. At the summit in Saudi Arabia King Abdallah blamed speculators (amongst others) for the state of affairs. However, at the same summit U.S. Energy Secretary Samuel Bodman blamed the record oil prices on a lack of production. This blogger has also seen arguments by some that a significant portion of the run up in oil prices has been due to the fall in the value of the U.S. dollar. 

OK, given that the boffins and all these very smart people don’t seem to be able to articulate an explanation that is persuasive to all, this blogger certainly can’t answer the question, though he is inclined to believe that it is due to an amalgam of multiple reasons. 

The article linked below marshals arguments in support of the “speculation” theory of high oil prices. This may or may not be supported by the fact that the Presidential candidates are suddenly jumping on the “close the Enron loophole” bandwagon. Since this regulatory issue was pointed out in June of 2006 in a report (“The Role of Market Speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat”) to the United States Senate Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs, this blogger wonders why they waited until June of 2008 to show "leadership" by stating that they will (note future tense!) now do something about it. 

‘Perhaps 60% of today’s oil price is pure speculation’

Obama vows crackdown on energy speculators

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