Did speculation drive up oil prices? Speculation in oil futures was forbidden in 2009 because it was thought to cause artificially high prices and world recession. The 2011 October bulletin of the Federal Reserve Bank of Dallas concludes that it was market fundamentals and not speculation that drove prices. All those Congress testimonies that I read so carefully looking for the actual mechanisms they were talking about, were, now we know, pure expert bullshit.
1 comment:
It depends on the window that we are talking about. The speculators rode on the perceived shortages. The boom was characteristic of a tightening market; given that, it was a one-way bet for the speculators-some of whom were the oil companies themselves. Their bets carried little risk, but one had to be in the markets to take advantage of it. The price rise does not have to be exclusively due to the speculators or natural demand.
Ivan
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