[Captain Rhino]

Thanks for taking the time to write this up. It obviously took some effort to do it and it offers true insight into financial operations that a lot of people (including yours truly) know very little about.

That said, all the wailing and gnashing of teeth about hedge funds these days is usually followed in the next breath with a rant about the @!#$%&^**!! high cost of oil on the futures markets and the effects of “rampant speculation” on the cost of gasoline at the pump. And, although there has been some easing in prices recently, there is still a lot of ill will toward traders. The actual fact of speculation in the oil futures market is, of course, being simultaneously both proclaimed and denied by various market "experts".

Overall, it is a bit confusing.

Can you offer an insider's opinion/perspective on the role (if any) that speculation may have played in the run up in fuel prices earlier this year?

[9YearLurker]

Seems to me that hedge funds attract envy and resentment against self-made rich guys because, well, that’s where so many self-made rich guys are.

[tcostell]

Sure ... speculation doesn't effect price, it only effects volatility. the same speculators that push up a price one day will be forced for lots of reasons to push it down the next.

There is also the issue of who and what is "speculation". United Airlines is speculating when it buys oil for delivery next year, and no one complains about that. (nor in my opinion should they)

My point is, if people are complaining about trading then it's unjustified because those people have a very short investment horizon, and will be pushing down tomorrow what they are pushing up today.

One good rule of thumb is that if the Democrats in congress say it's bad, then it's either good, or irrelevant.

In the specific case you mentioned, I think it was irrelevant.