"As detailed in an earlier article, a conservative calculation is that at least 60% of today’s $128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. US margin rules of the government’s Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population."
The earlier article referred to above can be found here...
There are, of course, many different paths to something which approximates to the Truth, so I take some elements of these articles with a large pinch of salt. I would personally never describe 'Peak Oil' as an outright fraud for example. However, the material on the insanity of today's futures markets strikes me as being essentially along the right lines
And, of course, it comes as no surprise to see Goldman fucking Sachs named as one of the key Bubble Blowers. After all the good things they did with the subprime market it's reassuring to know that their hands are over oil pricing - in the same way that Californians must have slept easy in their unlit bedrooms knowing that Enron was looking after their electricity supplies
I don't know what's worse - having to consume a daily diet of the mainstream press, and even our own prime minister, completely blanking out the role of speculation in the rising costs of energy and food; pissing around promoting measures that won't improve the situation one little bit, or the risk, however slight, that some psychopath somewhere might pull a stunt to lock those inflated speculative prices in place
The problem with bubbles is that, sooner or later, they burst
Unless, some totally-random-coincidental-event occurs which genuinely makes the commodity you've been speculating in as scarce as you've been pretending it to be
It's not so easy to shore up a collapsing property market by making a few hundred thousand houses disappear overnight without killing potential buyers/ borrowers in the process
The supply of oil, or food, is a lot easier to fuck around with, particularly if you've got some friends in high places - about 35,000ft high
Goldmans seem pretty confident that oil's going to hit $200 - and they have proven to be very good at, um, guessing stuff