Reply #23: Even without speculation a small inbalance of supply & demand results in larger price swings.

[Statistical]

Look at the fall. Demand fell roughly 7% however prices fell 66%.

Lots of speculators got destroyed on the decline. Even major companies. Southwest airlines used oil contracts to hedge rising oil prices and it help protect profits (hard to guess what price of oil will when plane actually flies when you sell tickets in advance).

Then the fall came and Southwest took a loss on their oil hedges.

It doesn't take much for commodity prices to move a substantial amount.

DOE estimate is oil will exceed $100 consistently by 2012 and exceed $150 (inflation adjusted) by 2020 (that $250 if inflation is 3%).

Higher and higher oil prices are coming. There is no new supply to meet rising demand. Either accept that reality or roll around and gnash your teeth when "speculators" drive price of oil to $150 then $200 then $250.

You will see $10 a gallon gasoline in your lifetime if you are under 50 years old. The question is will you prepare or will you just curse speculators.