Jfiquette-Your argument it schizophrenic. On one side you are arguing that it is lack of supply that is driving prices i.e. “the liberals” not allowing exploration. On the other side you are arguing that it is all speculative. Ok, so which is it? You can’t just “shotgun” conflicting theories of why oil prices should not be so high. It’s just silly and wreaks of desperation. Desperation of what, I don’t know.

BIG PICTURE

Let’s looks at some fundamentals for a big picture. And the fundamentals are roughly flat production over 4+ years (maybe 1.5 mbpd max more in certain quarters) now versus a near 8 mbpd increase in consumption by China and India. If we subtract out that 1.5 mbpd occasional bump up in production, that means China and India combined are taking 6.5 mbpd away from someone else who was consuming that oil in 2004. And that doesn’t account for increases in consumption elsewhere in the world, which have been documented.

DECLINING NET EXPORTS

On top of the 4 years of flat production we have also seen oil exporting countries demand increase dramatically. What this has caused is less and less oil for oil importing countries. So one could conclude that oil importers are bidding up declining net exports thus at least driving the trend. Net exports are actually down 4% from 2006.

ELASTICITY OF OIL

Elasticity of oil by most studies is measured at 15-20%. This means that for every 1% decline of supply or 1% increase in demand the price will move 15-20%. I would are argue that as forced conservation moves up the food chain it becomes more inelastic due to the fact that the buyers bidding up oil having more buying power.

SPECULATION

I don’t think you can accurately show that as a specific number, and since a large part of the speculation is in shorts I do not think you can even argue clearly what effect speculation is even having in this market.