The extreme volatility that has gripped oil markets for the last 18 months has shown no signs of slowing down, with oil prices more than doubling since the beginning of the year despite an exceptionally weak economy.
The instability of oil and gas prices is puzzling government officials and policy analysts, who fear it could jeopardize a global recovery. It is also hobbling businesses and consumers, who are already facing the effects of a stinging recession, as they try in vain to guess where prices will be a year from now ”” or even next month.
A wild run on the oil markets has occurred in the last 12 months. Last summer, prices surged to a record high above $145 a barrel, driving up gasoline prices to well over $4 a gallon. As the global economy faltered, oil tumbled to $33 a barrel in December. But oil has risen 55 percent since the beginning of the year, to $70 a barrel, pushing gas prices up again to $2.60 a gallon, according to AAA, the automobile club.
Considering speculation on real estate helped fuel the current crisis one would think people who have money to invest would think twice about speculation on commodities, especially considering the funky production and inventory numbers that the on which the oil market likes to rely…but human nature is what it is.
A good argument on why we need to explore our own oil-rich areas and decrease our dependence on foreign supplies.
When the big financial firms can and do put billions of dollars into the oil market they can drive the market and if they only buy long they will drive the market up. This is not speculation, it’s manipulation and it’s what’s caused that surge to $145.00 a barrel and it’s what’s driving the price up again right now.