“U.S. motorists searching for someone to blame for the highest gasoline prices ever at this time of year have an easy target: hedge funds who have been quietly amassing winning bets on hundreds of millions of barrels of oil.
At a filling station in Midtown New York last week, several people were prepared to blame traders on Wall Street as they paid more than $4 per gallon to fill up their cars.
“It really is not supply and demand. It’s definitely speculation,” said John Keegan, an exterminator with pest control company Terminate Control, who was filling up his van. A cab driver said he was convinced the price would be just $1 a gallon if the government “stopped Wall Street trading oil.”
It is all very reminiscent of the anger in 2008 when gasoline prices were sent surging by a massive oil spike – also a time when there was a lot of speculative interest from investors.
And yet five years on, there is still no consensus among traders, analysts, and regulators over how big of an impact speculators have on the market – and what, if anything, should be done to limit their participation in oil trading.
Stories about booming U.S. oil production help create expectations among consumers for lower prices. But it remains a global market and the United States is still reliant on around 8 million barrels of crude imports every day.
Hedge funds say they are just an easy target and blaming them ignores global reasons for higher oil prices and the benefits they have brought to the U.S. economy….”
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