I don't know either, but the thought of a bunch of free market "speculators" affecting what I pay at the pump makes me want to punch someone in the face.

The price jumped primarily because Morgan Stanley issued a report saying oil would hit $150 by July 4, and the markets responded and turned the report into a self-fulfilling prophecy.

But speculators are not to blame. I watched a video a few weeks back when it first hit $135 and the president of the NYMEX, the exchange we get those dollar figures from, said that their analysis indicated speculators were not driving up the price. And since the quoted prices come from there, his word should carry some weight I think.

There is no consensus on why oil is rising as it is, but many credible people -- like T. Boone Pickens, for example -- point to simple supply and demand. The world is at most producing 87 mbpd, and demand is above 86 mbpd, and it might be worse than that since those figures are far from exact. A lot of things you can go without, but no one wants to be the one without oil if there's not enough to go round, and so the bidding starts.

And if you think speculators raising gas prices is bad, consider what happened to Iceland. As I understand it, a bunch of hedge funds bet on its currency losing value and then did everything they could to drive it down. This is the currency of a country! I last read about it a while back, but some of the language I heard is that actions like that should be criminal. You literally have some people setting out to cripple an entire country because it'll make them money. But that's capitalism for you.

And Israel said that if Iran didn't stop its nuclear program it would have to attack. That also sent a chill up the spine of the energy markets and the markets generally.

Plus, the dollar took a mighty dump today, too, and when you're talking about a dollar-denominated commodity, that contributes quite a bit. Now, why can't some Morgan analyst say oil is going to $60, and have the traders try to make that one a self-fulfilling prophecy?

It's the speculators. I watched T Boone Pickens on the stock channel speculate that oil would hit 150 per barrel--as he spoke the market plummeted. True, the producer price index came in, but it was his speculation that drove up the price of oil, and continues to drive it.
Out of control: speculators who benefit from increased price of oil.
And blame the BUshies

Demand for oil in China and India is a huge part of it. The number of cars in those countries is skyrocketing every day. They're going through our 1950s car culture transformation all over again.

Those who claim to know that it's all about speculation should follow Ezra's advice and read more at the Oil Drum. The speculation is froth on top of a wave of fundamentals.

In Oil, we find two forces uniqe to American culture coming to an intersection. The first is universal tendency among Americans to believe they understand matters that they don't. The second is related, and has to do with the American tendency to believe that matters can be understood quickly, and easily.

I have spent the last 5 years of studying oil, the history of oil, the global oil markets, and the geology of oil, and supply and demand trends. As someone with an undergraduate and graduate degrees in other fields, let me say this: understanding of oil is hardly gained easily. Understanding oil to a high standard is even harder. And it takes Time. Yoru average financier on Wall Street with tons of experience in other markets will typically make the mistake of thinking they can transfer that knowledge to oil. It doesn't transfer. Oil is it's own unique universe.

99% of what you hear from our fellow Americans about what's going on is nothing more than ignorance. And, when you consider that we rely on the rest of the world for 65% of our daily consumption of liquid fuels (Oil--but not NG or coal), that's a heady and dangerous mix.

The Oil Drum is excellent, and I have been part of that community for some time.

Let me give the best advice I can give to my fellow Americans on this topic: Step way, way back. Pause. And allow that you likely have no idea what's causing this. Then, proceed from that point and start finding out. Finding out is a process available to all. But the "easy and quick gains" in knowledge (or wealth) that are a tradition in this country simply don't cut it. And won't cut it.