Are speculators driving up oil prices?

Some claim that speculators are driving up oil prices artificially. For this latest price increase, however, it seems like speculation has actually been holding down oil prices.

By , Guest blogger

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    A motorist pumps fuel into his vehicle at JJ's Express Gas Plus station in Phoenix gas station in Phoenix, Arizona . Oil prices have spiked, but it isn't due to speculation, the author argues.
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It is often claimed that speculators are driving up oil prices artificially. That is a possible scenario, yet it wasn't applicable to for example the recent run-up in oil prices. For speculators to drive down oil prices paid by final users they must stock oil in physical inventories, something which they haven't done. Indeed, if you look at the numbers from the Energy Information Administration , it seems that speculation has been holding down prices. Crude oil and gasoline inventories are down by about 5.5% the latest year, while inventories of distillates (like diesel) and propane are down more than 10%.

Last
09/16/11 Week Year
Crude Oil 339.0 -7.3 -19.3
Gasoline 214.1 3.3 -12.0
Distillate 157.6 -0.9 -17.2
Propane 55.359 0.614 -8.361

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. This post originally ran on stefanmikarlsson.blogspot.com.

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