Did Speculators Cause A 400% Increase In The Price Of Oil?

Oil prices have dropped recently because of a weak global economy.  Prices had increased by 400% in a between 2004 and 2008.  This article attributes the 400% increase to Wall Street speculation.  There was not enough of an increase in demand, or a decrease in supply, during that period to explain a 400% price increase.

Speculators make money by purchasing oil future contracts.  That drives the price of oil up, and they benefit by selling oil that they put into inventory at lower prices.  The energy companies also benefit from the higher prices.  This article argues that Wall Street and the oil industry were successful in deregulating the futures market to enable  speculation.  The deregulation of the futures market is public knowledge.  Its also true that speculation in the oil futures market dramatically increased.  There is still a lot of debate, however, about the factors that produced the 400% increase in oil prices.  The article is quite long, but it provides an interesting perspective on the futures market, and the big time entry of Wall Street into the market.  Most of the efforts to enforce new regulations on Wall Street have been blocked by successful lobbying.