'We're all wondering why, with all the events happening at the moment, that the oil price hasn't spiked due to speculator activity. After all those spikes have been a regular occurrence for the last few years. In the past
Brent Crude has swung from such extremes as $80 to $145 on the activity of speculators. This week, with everything that's happening in Iraq and Russia Brent Crude has fallen to its lowest point for a year at just over a hundred bucks. And that's due to two reasons. The first is high oil inventories due to an increase in US production, but the second is more worrying. There are around 30% less banks operating in the oil market today than there were last year and this has stabilised prices. THrough the recession years on 2008 to 2013, there was a heavy involvement of banks, commodity houses and hedge funds driving up the price of oil due to speculation and long and short bets on falls and rises in benchmark prices. This, as we're seeing now, distorted prices significantly and created a herd mentality in the oil market which caused prices to swing upward on the slightest shift in bulk buying patterns.
And this poses a serious question. Should those banks and financial institutions who bullied up the price of oil during the period of their involvement be responsible for the enormous costs they made consumers pay by their speculation, or should we just move on and give thanks that they're no longer using the oil market as a major speculative revenue stream? There's an important moral and ethical point here and one that needs to be clearly defined as we don't want to see such needless and expensive swings in prices ever again. And can we legislate against this activity to protect both our economy and hard working families and businesses in the future?
FairFuelUK made this point last year and asked the OFT for an investigation into oil prices. The OFT said there was no case to answer and avoided any investigation. But here's the empirical proof that prices were raised by the activity of financial institutions and we're seeing the market behave relatively normally without all that speculator activity. For the record I'd like to know just how much those financial institutions actual made out their activities in the oil market to confirm to everybody what's happened. Until we have clarity and transparency in this market, the same casino mentality could kick off again. This Government must look at the events of the last few weeks and compare it to the wild shifts in prices that happened over the last five years. They must draw the obvious conclusion that without these opportunistic financial speculators the oil market is a much more stable place, goods, services, prices and inflation are lower and GDP higher.
We simply can't have a posse of speculative operators, led by the big banks, playing games with our financial future. The recession in 2007/8 began when the supply chain buckled under the weight of the $145 barrel. We simply cannot ever allow that to happen again. In my opinion, the sooner we have legislation to stop opportunistic oil speculation by non physical trading activity, the better. Add your call for a full enquiry at our Road User Poll http://www.fairfueluk.com/fairfuelukpoll.html