A new study authored by IER economist Robert Murphy , Speculators Fixing Oil Prices? Don’t Bet On It , sheds some much needed light on the role speculation plays in the global oil market.


  • Record-high oil prices demand a target, and some politicians are increasingly pointing the finger at speculators in the commodities futures markets. But high oil prices are due to restricted supply, booming demand, and a weakening dollar.
  • There is no hard evidence that speculators are responsible for high oil prices. If the price of oil truly were above the level that the fundamentals could support, we would see growing inventories of crude. But inventory levels show no such pattern.
  • Speculators provide a vital function. By buying when prices are low and selling when prices are high, they actually make oil prices less volatile. Large investment funds provide liquidity to the commodities futures markets, and allow producers and consumers to concentrate on their core businesses.
  • Government restrictions on investment in the oil futures market will only hurt consumers by making the oil market less efficient. New regulations will do nothing to ease oil prices in the long term.

Click here for Murphy’s complete analysis. (60KB PDF).

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