High oil prices due to SPECULATION?
Looking For Job Killers? Look at Gas Prices, Study Suggests
"Demand down
The spike in oil prices has
not been caused by natural market supply and demand, the study found. In fact, U.S. demand for oil has declined since 2005, while global demand has grown less than 4 percent. In addition, global oil reserves have been growing faster than consumption and the reserve-to consumption (ratio?) now stands at a higher level than it has been in a quarter of a century.
Today, OPEC spare capacity is almost three times as great as it was in 2008.
At the end of 2003 the price of West Texas Intermediate (WTI) crude oil (the “benchmark” for U.S. oil) was a about $30/bbl and the value of outstanding futures contracts (called “open interests”) for WTI was less than less than $20 billion.
Wall Street firms like Goldman Sachs and Morgan Stanley and hundreds of hedge funds led the charge into the oil markets, creating products that “financialized” commodities. Index funds and pension funds soon followed. In July of 2008, when WTI hit its peak price above $140/bbl, the average value of open positions at the peak in 2008 was over $150 billion, the study found.
Eight times as much money chasing the same amount of oil is a prescription for price escalation, CFA said."