Some highlights from an interesting read:
Many blame record prices on Wall Street investors new to the oil market, saying they’re bidding up gas prices to artificially high levels – and soaking drivers.
As oil nears $130 a barrel, some say $10 to $70 of that price is due to Wall Street speculation.
Others say big-fund money is making it harder for traditional oil speculators to do their job. This camp says big funds distort traditional models used to predict prices and think $130 oil is a bubble ready to pop.
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If anyone is to blame, he says, it’s the Federal Reserve, which has been predictably cutting interest rates since August to shore up credit markets. When interest rates fall, investors flock to commodities as an inflation hedge.
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“After Israel invaded Lebanon, Hurricane Katrina, 9/11, all of these situations, we haven’t seen prices rise to these levels,” said AAA spokesman Geoff Sundstrom. “We have to wonder if the foundation behind these very high prices is nothing more than speculation.”