Comments: Over a $105 barrel

"Goldman Sachs is one of the biggest traders in energy derivatives"

This fact tells us that Goldman Sachs has a vested interest in market volatility.

What amazes me is that when the oil price rises by a significant amount in a day then a rash of pundits appear to justify this change in terms of “fears” over supply. And yet there has been no failure of supply – years of wars, hurricanes, refinery explosions but no rationing at the petrol pump.

Even if there might be a problem in a few years’ time that’s no reason for the price of oil for delivery in three months’ time to rise.

Surely the obvious explanation for the high oil price and high price-volatility is speculation by the likes of Goldman Sachs and other US-based speculators.

There’s no difference between today’s commodity speculation and the Asian currency speculation of the 90s. It’s driven by a ready supply of vast amounts of cheap money being put on what’s seen as a one-way bet in a restricted market. To describe this as “free market forces” is ridiculous.

Just as governments take steps to stop disruptive speculation in currency and equity markets, the oil market is too important to be left to manipulation by speculators. The US government could make oil price speculation unprofitable but it doesn’t, for reasons that seem all too obvious.

Posted by David Sandiford at April 26, 2005 06:51 AM

I too echo the comments of the previous poster. The Economist is simply accepting the rhetoric of such biased companies. I've seen elsewhere that while world energy demand is up, the overall demand is not more than 5%, so these skyrocketing prices are indeed part of the speculation, something stated by Asian financial analysts over a year ago, so perhaps if the media would do its job maybe the truth of such biased allegations made by Goldman's could be vetted.

Posted by ron rivers at June 13, 2005 09:17 PM