Is Oil Speculation Responsible for High Gas Prices?

• “Yes”

  

  “Market Fundamentals Alone Do Not Explain the Current High Prices”

• No Objections Yet

Market Fundamentals Alone Do Not Explain the Current High Prices

Consumer Federation of America

Expert Verified | See Profile

Recommend (0) Comments (0)

Both short term and long term fundamentals had been essentially constant over the past six years. The short term measure most frequently cited is spare OPEC capacity. While it has fluctuated, it shows no significant downward trend. In fact, over this period, the correlation between excess capacity and price is positive, not negative; which is, of course backwards.

Similarly, the best long-term measure of capacity – the reserve to consumption ratio – is also increasing slightly while prices are increasing. Again, upon close examination we find that the correlation is slightly positive, which is contrary to the claim and expectations. These oil market numbers do not include a doubling of biofuel production, representing a growth of about 1 million barrels per day, equal to about half of the OPEC excess capacity.

Evidence

Image

Long Term Fundamentals

Image

OPEC Excess Capacity Compared to the Price of Crude

Next Argument

"Yes" Consumer Federation of America

• Lack of Regulation Has Cost Oil Consumers Billions
  0
• Market Fundamentals Alone Do Not Explain the Current High Prices
  0
• There is a Large Speculative Premium in the Price of Oil
  0
• If Fundamentals Did Not Change, We Have to Find What Did
  0
• The Link Between Trading and Rising Prices
  0
• Regulatory Reform is the Way to Solve the Problem
  0

"Yes" Public Citizen

• Speculation is Knocking the Supply-Demand Fundamentals Out of Whack
  0
• Energy Traders Buying Up Physical Oil Assets in Manipulation Bid
  0
• Real Solutions For a Real Problem
  0

"No" NYMEX

• Speculative Activity on Exchanges is Managed by Position Limits
  0
• Analyze the Data
  0
• Market Fundamentals Most Important Factor in Current Market
  0
• Demand Continues to Grow, Supply Remains Relatively Constant
  0
• There is No Conclusive Data that Speculators are Driving Up Prices
  0

Most Objections

Speculation = High Gas Prices?

• Yes
• No

View Results