Another week, another round of blaming "speculators" for high oil prices.
The latest luminary to weigh in is the former Saudi Arabian oil minister Sheikh Ahmed Yamani. (Yes, he's still alive.)
He says the situation today is far different than it was during his heyday in the 1970s: "Now it is because of problems with the price-setting system in the futures market. Traders buy and sell depending on rumours, not supply and demand. So much money is flowing into the market, it's almost like gambling." Clearly, Yamani is not on board with Sadad al-Husseini, the former Saudi Aramco official who's expressed grave concerns about the health of his country's aging giant fields, and the prospects for the newer ones.
Yamani will find plenty of company, however, with corporate chiefs struggling with high fuel prices. The head of the French shipping firm CMA CMG, who's slowing down his container ships to conserve fuel, says, "This boom is artificial. Only speculation can explain the run up in price. One way or another, governments must put a stop to this."
Be careful what you wish for. Congress is pushing the Commodity Futures Trading Commission to "do something," and that something may very well turn out to be an increase in margin requirements. But for everyone who's long oil, there's someone else on the other side of the trade. Barclays commodities chief Paul Hornsell says the real speculators are short right now… so an increase in margin requirements would force the shorts to cover, and commodity prices would actually be forced higher. Wouldn't that be just swell?
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