MURDER, POLITICS, AND THE END OF THE JAZZ AGE
by Michael Wolraich
|
|
Was Wall Street to blame for high oil prices?
By Donal on Sun, 10/09/2011 - 7:27pm |
Back in 2008, when the price of oil was zooming up to $140 per barrel, there was a lot of chatter about whether Wall Street deserved the blame. And that debate hasn’t vanished. Last month, Sen. Bernie Sanders (I-Vt.) cited a report from the Commodity Futures Trading Commission as proof that “Wall Street speculators dominated the oil futures market.” Economists like Paul Krugman, meanwhile, have argued that supply and demand were the chief culprits. Oil was getting pricier because China, India and Brazil kept using more and more of it, and production couldn’t keep up. So who was right?
A new paper from the St. Louis Fed finds that both camps were, in a way. The authors, Luciana Juvenal and Ivan Petrella, combed through a wealth of economic and oil data to tease out various factors affecting the price of crude. Their conclusion? The sharp rise in price from 2004 to 2008 was primarily driven by supply and demand. Asia’s thirst for oil was growing, and the ability of countries like Saudi Arabia to keep up was declining. But a decent portion of the price increase, about 15 percent, could be chalked up to “financial speculative demand shocks.”
[It's a floor wax and a dessert topping!]
URL:
http://www.washingtonpost.com/blogs/ezra-klein/post/was-wall-street-to-blame-for-high-oil-prices/2011/10/07/gIQABkoYTL_blog.html
- 582 reads