CNN story - counterargument that it is supply and demand and not speculation based on IEA report
Speculation not to blame for oil - report
just some questions about the CNN article - some excerpts from it.
Since 2003, the volume of investment funds in commodity markets - especially oil - rose from about $15 billion to $260 billion, according to the International Energy Agency (IEA), which issued the report.
not important? huh?
this is the counterargument.
The IEA argues that if speculation drives prices too high, the market would be unbalanced. Either demand would fall off, or stockpiles would rise. Neither has happened. In fact, global demand for oil products has surpassed supply in every quarter since the fourth quarter of 2006, according to the U.S. Energy Information Administration. Fast-growing economies like China and India are consuming more and more oil. Meanwhile, it's difficult for oil-producing countries to quickly ramp up output. The IEA also made the argument that many commodities - such as coal and rice - are showing similar price increases, even those without the possibility of speculation.
just thinking it through. dunno, maybe my reasoning is flawed. whatever.
1 - it's hard to adjust oil/energy usage quickly - lag time. also there have been signs of demand drop off in unnecessary things.
2 - oil isn't a final product. it's often the starting point for manufacturing other products. instead of demand drop off, you will just get cost added to the product or reductions elsewhere (no peanuts from airlines :p).
3 - evidence for this should be increased prices and inflation across the board (since energy costs affect almost everything) - which is what seems to be happening.
4 - oil isn't a free market system. nationalization, price supports, cartels, flying monkeys, etc. skew supply and demand.
5 - oh, also coal is going up because of high oil prices.
i could be wrong. seems to me people can be divided up into 1) people that know (or think they know) what is going on, 2) people that really don't know so flutter about (like me, i'm a pretty butterfly!), 3) people that know, but lie because they have self-interest at stake, 4) people that don't know, so by default support the side in alignment with their interests / ideology.
my hunch has been that it's speculators (even tho i like the whole free market thing). but i'm not an economist, and i don't have the time to teach myself about the oil industry, speculation, commodities markets, neat ways to game the system, russian energy mafia, blah blah blah. to give an opinion that i was fairly secure about, i'd have to invest a lot more time.
so whatever. dun care no more. just following the story to see what happens and if my guesses were wrong, where my thinking went astray. and why i am idjiot. i suggested some simple ideas to implement for a quick drop in oil prices. but dun matter.