Thursday, May 26, 2011

Don't blame speculators for oil price spike

Say my NC State colleagues Srini Krishnamurthy and Richard Warr in an N&O op-ed today.  Srini and Richard point out that the recent run-up in oil prices can easily be explained by rising global demand (blame China) and falling supply (blame Libya).  Also, futures markets themselves are subject to the same market forces -- for every speculator who wants to buy an option that pays off when oil prices rise, there has to be a seller who thinks otherwise.

By the way, I just bought gas this morning and the price has fallen in Cary to 3.71 per gallon.  Do speculators get credit for falling prices too?

1 comment:

  1. On the lower prices - actually congress gets the credit for those.