Speculation: How could the system be "un-gamed"?

[Duke Newcombe]

Please excuse my limited depth of knowledge regarding oil and energy, but the talk of having achieved "Peak Oil" and it's day to day effects on me, my family, and my community brought me to the dance late, so to speak.

I understand, just like in other commodities markets, that speculation can affect the normal demand/supply relationship. In other words, psychological reasons having absolutely nothing to do with the actual scarcity or availability of a product.

It's my belief that this false scarcity narrative being promoted by speculators, oil companies, and others should be counteracted. But how? If you can game the systems to produce higher prices based on a scarcity narrative, can a country do anything with it's retirement plan investments, strategic reserves, and money policy to "un-game" the system, in order to exert downward pressure on oil prices?

Any ideas or knowledge would be appreciated.

Duke

[baldguy]

1. Speculation doesn't require scarcity.

All thats required is a little regulation & oversight.

[BOHICA06]

2. If someone in the world is willing to pay $135

for a barrel of oil, then there will be plenty of folks willing to sell that someone a barrel of oil. If you are only willing to pay $100 - and you don't have a total internal supply - then you don't get to set the rules and you don't get the oil.

We have to BOTH - reduce the demand and increase OUR supply. A Marshall program of 200+ Nuclear plants and coal liquification would put huge downward pressure on the oil market. BUT, we don't have the will.

I want to see drilling rigs in the Gulf off of Florida (better grouper fishing) and caribou warming themselves beside rigs in ANWR .... BUT, we don't have the will.

I want efficient affordable electric cars and special lanes for their lower speeds, too.

[Duke Newcombe]

3. Successful speculation would.

If the orange crop looks like it is on tap to be a bumper crop, the market will not support a scarcity scenario, and the concomitant prices. Oil supplies and reserves globally are at normal or peak capacities now, but the pricing is based upon something that is barely knowable: how much of the black stuff is still in the ground.

Duke