

Who is inflating the oil bubble? - ideas101
http://specials.rediff.com/money/2008/jun/03bubble1.htm

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marvin
I don't think this is a bubble at all. It seemed ridiculous to me that 30-40
year oil futures were valued at 50$ a barrel when most scientific theories of
oil production dictate a dramatic decline in worldwide production during the
next few years. In fact, I played with the idea of speculating on the 10-year
price of oil a few years ago, but my understanding of markets at the time was
not good enough to realize that there was actually a thriving futures market.
Gasoline can't be stored for more than a few months, and getting hold of and
selling physical crude oil is probably more hassle than it's worth.

Perhaps the current development is a bit of an overcompensation..but not much
of an overcompensation. The current price of oil is probably higher than is
dictated by supply and demand, but when it comes to futures, a correction up
has been in the coming for a long time. Unless all speculators are certain
that we will have a dramatic increase in fuel-efficiency (on the order of 50%
over the next ten years) across all markets that buy fuel, there is no hope
that there will be an abundancy of oil in the future. Add this to the fact
that China and India are expected to consume more oil in the future, and
things look very different. I think what has happened is that speculators have
finally realized this, and that the current price spike is caused by
"speculators" correcting the price up to a realistic level. This is how
markets are supposed to work, and no new laws or political hand-wringing will
be able to do anything about it.

Saying that this is a bubble seems like wishful thinking. When politicians
start investigations to check out whether this is the case, there should be
reason to worry. Actual bubbles are rarely identified with this great unity.
If they are so certain, why don't the ambitious politicians of the US short
crude oil futures for a few billion dollars? I think that would be quite an
interesting spetacle.

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josefresco
Answer: Speculators.

Not a lot of meat in that article, cool motorcycle though!

