The oil bubble

Please read this excellent article in Business Week, by Ed Wallace.

Congratulations, American consumer. You've done your part. You've stopped buying SUVs, resulting in a net drop in petroleum consumption in the US year-over-year. Unfortunately, speculators in oil futures (Goldman Sachs, for a very big one) don't get it - they're ignoring the fact that oil reserves are at their highest level in almost 20 years; supply continuing to grow and demand shrinking. All the while, they're profiting by making dire predictions for a continued rise in oil prices ($200 a barrel, anyone?) while investing more and more in oil futures. Wouldn't those practices be illegal if they were issuing reports on, say, a stock, while holding a huge position?

The administration, more interested in protecting the profits of oil futures speculators and Big Oil in general, isn't about to step in and regulate things in the interest of John Q. Taxpayer.

But sooner or later - like dotcoms, like housing... isn't this bubble going to burst? Keep on buying efficient cars and using less oil. Eventually, when refineries have to stop production because of the surplus already in the market, maybe a few speculators will get scared and begin the massive sell-off.