This article is very simple and instructive. Conservatives need to understand and defend free markets and their role in a successfull economy.
Speculation doesn’t drive up the price of a commodity when they don’t accumulate inventory. The Hunt brothers were speculators that horded silver in a vain attempt to corner the market and drive up prices. It worked for a while..but they ran out of bucks and the price crashed.
This isn’t likely in oil. In fact, it looks like US inventory has splipped a little. Speculative hording in not taking place.
The Hunts had limited funds and could not support their attempted corner.
Those speculating in oil prices have as a group essentially unlimited funds.
No, the Hunts did not run out of money — and they had lots of Arab backing; rather, the COMEX (thanks to the efforts of William Simon) limited the transactions on silver, margin sales, and the amount of silver that could actually be delivered to speculators. The Silver Bulls not only wanted to corner the silver market, they wanted actual possession of the metal itself.
Ah, but they do in a funny way. A producer has a choice. He can sell his barrel on the spot market for immediate delivery, or he can sell his barrel on the futures market with a promise of future delivery. For the future delivery he merely needs to leave the oil in the ground until he needs to deliver it. However, with growing long side only speculators, the amount of oil that is promised for future delivery has grown exponentially. So long as long side positions continue to grow, that is oil that stays off the market. Furthermore, as demand is growing, it is safe to accumulate supply.
If one looks at futures price action in oil there is nothing that would indicate that anyone needs to start liquidating his position anytime soon. In fact, the price signals are, if anything, "buy."