This from another blog:

"There is no oil shortage, not yet at least. That doesn't mean we're not quickly sliding towards Peak Oil. We probably are, but that has nothing to do with today's gas prices. The reason oil has skyrocketed to nearly $140 per barrel is because of speculation; rampant, "unregulated" speculation. The peak oil doom-sayers are simply confusing the issue. This is not about shortages or scarcity; it's about gaming the system to fatten the bottom line. The whole scam is being executed by the same carpetbagging scoundrels who engineered the subprime fiasco; the investment bankers. The Wall Street Goliaths are using the futures market to recapitalize their flagging balance sheets after sustaining massive losses in the mortgage-backed securities boondoggle. That's the whole thing in a nutshell. Now they're on to their next swindle; distorting the futures market with humongous leveraged bets on food and oil."

If you want to read more of this the link is at the bottom.

Here's just a bit more:

"There's no shortage, no scarcity.(Not yet, at least) In fact, oil is being deliberately kept off the market to keep prices high. Consider this: if supply isn't keeping up with demand then why aren't there any lines at the gas stations like there were during the '70s?

Because it's all a fabrication. Prices are up because of speculation, that's all."

If this is all true (and he devotes much of his post to citing numerous sources, including King Abdullah, saying the same thing), then this is basically another "bubble" which will eventually "burst". When it does, "investors" holding futures contracts will be obliged to pay more than current market price to meet their obligations, they'll have to pay, say, 140 dollars per barrel, but they won't be able to sell it for more than, what? 90 dollars per barrel? It was much less than that fairly recently (sorry, I have no numbers, or maybe I should say, you're welcome). And they're already over-producing and withholding product.

Commodities investors can't really sit on product, can they? At the time that the "call" comes, in addition to paying, don't they have to accept delivery? So they have to sell, right? Or pay somebody to store it (adding even more to the cost, which they already can't recoup because the price is down).

This will suck, for them. There are probably some super-shrewd bastards that have a way to insure themselves against this, at someone else's expense of course, but much money is going to be lost here. You don't suppose that these investments (oil futures contracts) have been packaged and sold as "securities" to some poor unsuspecting schmucks, do you?

The question is, what does this all mean for, well, me? If people can't pay will the flow be interrupted?

One more question. If there is already surplus production and an artificially high price, what happens if we reduce consumption/demand by, say, 15%? Or even ten?

And how 'bout let's.

Could be interesting.

Link: http://www.smirkingchimp.com/thread/15474