Thursday, May 22, 2008

Gas prices....who's to blame?

Yesterday was filled with stories about how gas and oil prices are reflecting supply and demand, as opposed to being driven up by speculation, and that the "windfall" profits go to the oil producers and not traders on Wall Street.

Bloomberg reported a different angle in this story that:
Oil's rally to a record above $135 a barrel came as traders bought crude to cover wrong-way bets that prices would decline, according to data from the New York Mercantile Exchange.
The House hearings have tried to investigate the effect of speculation on the commodity pricing of oil.

So who is to blame? Consumers who allow oil and gas to exist in an inelastic market? Producers who (supposedly) fail to increase refinery production? The Fed and the Bush Administration for a weak dollar? Wall Street for driving up futures through speculation? In the end, it is, as always, a combination of all these, and the only power left to consumers is to consume less.

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