It happens every time gas prices rise: Washington blames “greedy” oil speculators for arbitrarily driving up oil prices. But private individuals cannot “manipulate” prices. Only politicians can do that.
Oil prices, like all market prices, are determined by supply and demand. Speculators make money when they correctly anticipate future supply and demand conditions. If they try to arbitrarily bid up the price of oil, then the only thing that happens in the long run is that they lose boat loads of money.
The reason speculators are bidding up the price of oil today is because they foresee real problems with the future availability of oil—in large part because of government policies restricting future oil supplies. (See this Investor’s Business Daily editorial for a sad array of examples.)
It’s not Wall Street that’s manipulating oil prices—it’s Washington. Speculators are merely the messengers. And, as Eric Dennis explains in an old episode of Power Hour, having such messengers around is a tremendous benefit to everyone involved in the economy.
If we’re concerned about ensuring cheap and abundant energy—I know I am—then the thing to advocate for is the liberation of energy producers.