"It is a self-fulfilling prophecy. They can invent reasons why oil prices go to $130 or $150, but history shows that these people are capable of moving markets. It is not Exxon or BP or Shell that moves the oil markets. It is the financial players. It is the Goldman Sachs, the Morgan Stanley, or the other guys. It is a shame on the government that allows them to get away with that." —Oppenheimer oil analyst Fadel Gheit, Bloomberg TV, May 25, 2011
I recently explained here how excess liquidity lent to investors by the Federal Reserve at virtually no interest—helping investors use leverage as never before—created a maelstrom of activity in the commodities market. All that cheap money has pushed oil prices much higher than actual supply and legitimate demand would dictate. Covered also was the fact that during the campaign of 2008, when oil was nearing a new high of $147 a barrel, Presidential candidates Barack Obama and Senator John McCain (R-Ariz.) knew why and promised to fix it.
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