As to whether speculation drive oil prices in 2008, see the following:
Did Speculation Drive Oil Prices? Market Fundamentals Suggest Otherwise
by Michael D. Plante and Mine K. Yücel
(lead-in snipped)
Energy consumption increases as GDP rises; but energy consumption in developing countries increases almost twice as fast as in developed countries. GDP expansion in emerging economies was particularly strong between 2005 and 2007, averaging 8 percent per year. Real GDP in China, for example, grew by an average 12.7 percent annually between 2005 and 2007, while the nation’s oil consumption increased 5.1 percent annually during the period.
From the beginning of 2007 to mid-2008, weekly prices for West Texas Intermediate (WTI) crude oil jumped 152 percent, from $57 to $143 per barrel. It’s possible that growing demand for crude oil might not be the reason for the rise. However, if the increase was due to other factors, oil consumption should have begun falling in response to the higher prices. Instead, there was almost no consumption decline during the period, implying that oil prices were driven by growing world income and demand.
(snip)
A speculator wanting to drive up the current price of oil would have to buy in the spot market. Since the price is determined in a cash marketplace where transactions are settled with physical oil changing hands, speculative buyers would have to store their purchases, and inventories would rise. Instead, during the oil price run-up in 2007 and 2008, inventories in the U.S. were being depleted. Chart 3 shows WTI prices and U.S. oil inventories and illustrates the workings of an efficient market—as supplies diminish, prices rise and the market tightens.
Another possibility might be speculators using floating storage, keeping oil in tankers at sea and off the market. Floating storage appears to increase in 2008, rising from 68.4 million barrels at the end of October to 97 million barrels in May (Chart 4). However, floating storage declined in June and continued falling throughout the summer.
We would have expected to see floating storage rise significantly during the summer if speculators were in the market; instead, the opposite occurred. Floating storage did rise much later in the year, but that was concurrent with the global recession.
There is one additional type of storage—producers maintaining the oil as reserves and not producing. However, if we look at OPEC output, it clearly rose as oil prices went up, until July 2008. OPEC increased production by 2.4 million barrels per day from the beginning of 2007 to July 2008. Non-OPEC production remained relatively constant and did not rise, though this is largely a function of non-OPEC producers’ zero excess capacity rather than an attempt to restrict output.
http://www.dallasfed.org/research/eclett/2011/el1111.html
And oil prices are not $106 a barrel, they're closer to $125. Which is in line with the price in 2008 when gasoline was last at $3.50 a gallon. Falling demand in the US means jack when demand globally is at record levels of 89 million barrels a day and overhead capacity margins are razor-thin. This is supply and demand, with perhaps some small (no more than 5-10%) "risk premium" based on fears over Iran. It's quite frankly appalling to see the news media and politicians pandering to people's basic economic ignorance on the issue and blaming it on speculation instead of confronting the elephant in the room: the era of cheap oil is over, prices aren't coming back down, and people need to both get used to it and make lifestyle changes to accommodate it.
Sucks for a lot of people since the infrastructure and transit systems of the US are built around the assumption of plentiful cheap oil; it's going to be a painful and unpleasant adjustment, but frankly? It should have started years ago when there was more room for manoeuvre. Blaming it on "speculators" and ignoring the fundamentals of supply and demand in a global market isn't going to do anything to change the situation, or to make it cheaper to fill your tank.
= new reply since forum marked as read
