It is easy for the speculators to blame demand in China as a “reason” for high oil prices. But what exactly did China do differently over the past 2 years that wasn’t being done prior when gasoline was $2.00 a gallon?
How do we explain a more than doubling of oil prices over a 2 year period? I think a lot of it was commodity speculators using borrowed money (margins) to run up prices to make a quick buck. When easy credit was no longer extended speculators could no longer bid up prices to cover their margins. When the margin calls were made it took billions of dollars out of all market and commodity trading. Many speculators couldn’t cover their margins because their wealth was paper and not tangible.
Same went for the housing market where investors were flipping property to make a fast buck. The market was saturated with excess capacity and fewer buyers who qualified for credit. Somewhere the top prices had to be reached and consumers couldn’t sustain the growth. Their pockets were picked by record oil prices and the inflation ripple that went through all consumer products, food, transportation etc.
I still see high oil prices as one of the main reasons for the bust. The Democrats out to be very proud of themselves for selling out Ameica to a bunch of rich Arab oil monopolies. They broke us. Now they are putting in the fix.
God help us all.
“It is easy for the speculators to blame demand in China as a “reason” for high oil prices. But what exactly did China do differently over the past 2 years that wasn’t being done prior when gasoline was $2.00 a gallon?”
Building a massive Olympic complex?