Well, thanks to Wikileaks, we now know that when the Bush administration reached out to the Saudis in the summer of ’08 to ask them to increase oil production to lower prices, the Saudis responded by saying they were having a hard time finding buyers for their oil as it was, and instead asked the Bush administration to rein in Wall Street speculators.
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All of this is significant because both the Bush administration and the Obama administration have denied this narrative to various degrees. The CFTC only recently admitted that speculation played a role in the 2008 mess, having originally (and stubbornly) blamed supply and demand issues. Subsequent analyses have shown that the Saudi position, that worldwide demand for oil never increased nearly enough to account for the gigantic 2008 price spike, was almost certainly correct.
More on this to come later. Given the surge in commodities prices in the last year (which may in part have caused the rise in food prices that led to disturbances in the Middle East) and the Obama administration’s seeming reluctance still to rein in speculators, it’s remarkable that this issue doesn’t get more press. It’ll be interesting to see how much ink these Wiki cables get.
