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Originally Posted by ngdawg
My statement that it's a speculative market markup is not my opinion, it's said almost daily on the news business report I listen to every morning. .
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I think you need to get some other opinions because the one that's on your news report is completely wrong.
The high cost of oil is driven by the demand for the product, specifically the top marginal demand, and the inability of producers to make more.
The price of each barrel is set in the global marketplace. If you don't want to pay $130 a barrel, but someone in China does, then you won't get that barrel to consume.
Finally, pumping oil at $130 a barrel is very VERY profitable for the producers. If it were speculators driving up prices then the producers would be drowning the market in oil right now, taking advantage of those high prices. Yet the fact is that world production is not going up, and inventories are not rising. This is de facto proof that we are in a supply constrained environment, not one driven by speculators.