Which is having the greatest impact on rising oil prices?

Set as news: False

Set as news: True

At an OPEC meeting last November, Hugo Chavez and Mahmoud Ahmadinejad both said the weak dollar was to blame.

RIYADH, Saudi Arabia, Nov. 18 — A rare meeting of the heads of state of the OPEC countries ended here today on a political note, with two leaders — President Hugo Chávez of Venezuela and President Mahmoud Ahmadinejad of Iran — blaming the weakness of the United States dollar for high oil prices.

Think we need to add "the weakening dollar" to the list of options.

Okay, we're going to try and make this work. Can you help with the current wording?

A good BusinessWeek piece also

quick tally:

speculation vs. not speculation debate: 4 (spec) - 13 (not spec)

comprehensive debate: 6 (S/D) - 4 (spec) - 1 (geopol) - 5 (other/all)

personally, i think the second one is a richer debate and will give users more room to weigh in. there are certainly flaws from an issue structure standpoint, but i think its a more interesting debate

let's look at all the sample evidence provided from top to bottom if we were to stick with "which is more to blame?" and include value of the dollar.

Reason Mag - value of dollar, instability in the Middle East
MarketWatch - equal weight
The New Yorker - not speculators, blames supply/demand, instability in Middle East, value of dollar
The Economist - not speculation
Buffett - supply and demand
NY Post - supply and demand, not speculators
Bloomberg - U.S. senators say speculators
TimesOnline - speculators

Here's more:
'Airlines to passengers: Blame oil speculators'
Ben Stein: market speculation
SFGate: Supply side to blame for high oil prices
New Zealand Herald: Supply and Demand
Institute for Energy Research: Supply and Demand and Weakening dollar
BP Chief Lays Blame: Not speculators, lack of investment
U.S. Treasury Secretary: By far supply and demand
Oil CEOs say blame supply and demand
Robert Scheer: Bush foreign policy, aka Middle East instability

Sorry, the link for that Reason Mag article is here...

I know we have what effect the weak dollar has... but it's clearly a reason we aren't including in Brian's wording suggestion... and again it's still too open ended for people who are saying multiple reasons equally contribute...

From Reason Magazine writer Ronald Bailey:

So supply is up; relative demand is down and yet, the price of oil is soaring. What's going on?

Let's start with geopolitical uncertainties. Last year, oil consumers watched warily as unrest in Nigeria's oil fields, the possibility of war between the U.S. and Iran, and the antics of Venezuela's Hugo Chavez threatened to disrupt oil supplies. That analysis may have once made sense, but most of those tensions have abated in recent months. Nevertheless, it remains true that most of the world's oil is produced in volatile regions and by erratic governments, so the price of crude must still include some kind of political risk premium.

What effect does the falling dollar have on the price of crude? Most oil price contracts are denominated in dollars. The dollar has fallen in value by more than 30 percent against a Federal Reserve index of major currencies since 2002.

Continuing U.S. trade and fiscal deficits along with lower interest rates are stoking inflationary fears.

That brings us to speculation.

Investors are treating oil as a hedge against inflation and a falling dollar. Oil markets are part of a negative positive feedback loop in which higher oil prices contribute to higher inflation, which in turn lowers the value of the dollar, which boosts oil prices, and so forth. In other words, the oil market is coming to resemble the gold market (which has also been soaring).

He argues a weak dollar, speculation, and geopolitical instability too as all having an impact...

Should we not separate supply and demand? Someone who argues that China/India demand is responsible for high prices should be separated from someone who thinks the main issue is that we arent doing enough to get at the oil deposits that we have (more drilling, more refining capacity)...

Exxon Mobil CEO said it was Speculation, Geopolitical Instability, AND a weak dollar:

CEO Rex Tillerson said the record run in oil prices is related more to speculation and a weakening dollar than supply and demand in the market. "It's pretty crazy," Tillerson said at a press conference at the New York Stock Exchange after oil hit a fresh record of $104.56 a barrel. A weak dollar accounts for about a third of the recent record run in oil prices, another third on geopolitical uncertainty and the rest on market speculation, he said. Despite the concerns about political instability hurting oil supply, history suggests that supply disruptions are actually quite rare, he said. "In terms of fundamentals, fear of supply reliability is overblown," he said. None of Exxon's energy development projects are based on $100 a barrel oil, he said.

He broke it down into "thirds"... meaning all three reasons have equal weight, right?

The price of oil per barrel has gone up for everyone. The price it's sold in gasoline depends on many factors per country and per state if we're talking about the U.S. We have sample evidence of people singling out one of my answers as the primary reason the price per barrel is up, so I don't see how it's so open ended. There are three options, so if you want to add a fourth that says, "all have equally contributed" then fine.

On second thought... I detest my "driving up the price of oil" phrasing for the question, though it would sound better than the current wording in terms of the affirmatives.

I sort of agree with Geoff here... you can't have it open ended because people who say two of the three options you listed are equally impacting prices wouldn't fit anywhere... same with people who feel that it's attributed equally to all three...

This isn't the SATs... there's no way to do options like:

D) All of the above
E) A & B
F) A & C
G) B & C

If we stick with the current wording and leave it yes/no then my phrasing suggestion is:

Are U.S. speculators driving up the price of oil?

Remember, oil isn't nearly as expensive everywhere... and in other areas it's more expensive... so it seems too hard to make this more than just a U.S. specific debate.

i think that if we make it an open-ended question like that you're setting the issue up to be flawed.

I think we're headed in a boring direction.

"Should speculation in oil markets be limited?" is a snoozefest.

The current wording works fine in my judgment. There are people out there debating both sides. Or we can go with...

Which is more to blame for rising oil prices? Or Which has the greatest impact on rising oil prices?
-Instability in the Middle East
-Market specualtion
-Supply and Demand

People are really angry about oil prices but no one really knows exactly why they are so high right now. I think this could be a very debatable and informative way to talk about this issue. There will be evidence for every option as well.
 

I like this version if we can say that any PF who thinks oil speculators are or arent responsible for high prices think speculation should/shouldnt be limited. there has to be a way to incorporate both members of congress and PFs who dont have an opinion on the role of government but think speculators are/arent to blame. if that makes sense. also, thank you jas225 for proposing a problem but no solution...

I like this version if we can say that any PF who thinks oil speculators are or arent responsible for high prices think speculation should/shouldnt be limited. there has to be a way to incorporate both members of congress and PFs who dont have an opinion on the role of government but think speculators are/arent to blame. if that makes sense. also, thank you jas225 for proposing a problem but no solution...

How about 'SHould speculation in oil markets be limited?

I get the feeling that most people wouldn't say definitively that speculators are to blame...or even that they're purposely driving the price of oil up. But Congress is trying to limit speculation...so we'd get politicians saying it should be limited.

from The New Yorker

When bad things happen, it’s always nice to have a scapegoat. So, with Americans furious about soaring oil prices, Congress has gone in search of someone to blame. There are a number of usual suspects to choose from, depending on your politics—OPEC, greedy oil companies, lily-livered environmentalists opposed to oil drilling—but now Congress has seized on another set of villains: commodity speculators.

...

 Speculators, by contrast, mostly use futures contracts to gamble on oil prices, and have no interest in buying or selling real barrels of oil. These gambles can be tremendously lucrative, but they don’t directly determine the real (or “spot”) price of oil. That’s set by the people who are buying and selling actual barrels of petroleum. Although speculators could directly distort oil prices by turning their futures contracts into oil and then taking it off the market to drive up prices, a look at oil inventories shows no sign that this is happening.

From the Economist:

Despite their dismal reputation, the oil speculators provide a vital service. They help airlines and other big oil consumers to hedge against rising prices, and so to reduce risk—a massive boon amid the economic turmoil. By the same token, they provide oil producers with more predictable future revenues, and so allow them to expand more confidently and borrow more cheaply. That, in turn, should help to lower the price of oil in the long run. Any attempt to curtail speculation, by contrast, is likely to make life harder for firms and oil more expensive.
 

I think the best issue is "Are traders/speculators most responsible for high oil prices?" From an interview last week on CNBC with Warren Buffett:

It's supply and demand. I mean, if somebody buys a thousand forward oil contracts and somebody sells a thousand forward oil contracts, somebody's speculating on the downside and somebody's speculating on the upside. The only way you could have speculators having a big impact is if you had a huge amount of storage where they started actually withdrawing actual, physical oil from the system. But it's not speculation, it's supply and demand and the situation is that in my adult lifetime, up until the last year or two, there's always been a huge amount of excess supply available.

I dont think this argument is so one-sided, check out this article:

http://www.nypost.com/seven/06202008/postopinion/opedcolumnists/scapegoating_the_speculators_116339.htm?page=0

Bloomberg.com

Congress Should Take on Oil Speculators, U.S. Senators Say

 

Democrats and Republicans should work together in the U.S. Congress to attack oil and gas speculators as part of a strategy that includes increased production to bring down energy prices, North Dakota Senator Byron Dorgan said.

 

``We ought to get at this,'' Democrat Dorgan, a member of the Senate's energy committee, said on ``Fox News Sunday'' today. ``There's an orgy of speculation going on in the futures markets, an unbelievable amount of speculation by hedge funds, investment banks and others, that are driving up prices.''

 

Legislation designed to limit speculation in oil markets was introduced last week by Senators Dianne Feinstein, a Democrat from California, and Ted Stevens, a Republican from Alaska. The bill would require the Commodity Futures Trading Commission to review trading practices of institutional investors and impose limits on how much those investors can hold in a given market.

Should Congress regulate/limit speculation in oil markets? 

seems like this may be a pretty one-sided debate. Looks like Congrss is bi-partisan on this one.

I don't think this will get to the root of the issue. it's certainly debateable so I don't care if it's approved, but there might be a ceiling to this.

great story about this in  the Times this morning;

A Bull Market Sees the Worst in Speculators
 

In Washington, financial speculators have fat targets on their backs.

 

They are being blamed for high gas prices, soaring grocery bills and volatile commodity markets, and lawmakers are lashing out at market regulators for not cracking down on them more vigorously.

 

 

Senator Joseph I. Lieberman, the Connecticut independent, said he was working on a proposal to ban large institutional investors from the commodity markets entirely. The same day, the Bush administration endorsed another Senate proposal to create a new federal interagency task force to investigate commodity speculation.

Although it is common in tough financial times to blame the speculators, this escalating hostility toward them is starting to worry people with years of knowledge about how commodity markets work. Because without speculators, they say, these markets do not work at all.

Speculators, people willing to risk their capital in search of high profits, are central to healthy commodity markets, they say, and broad-brush restrictions on them could damage markets that are already under pressure from rising global demand for food and fuel.

 

Even in Washington, there is widespread agreement that no single factor is responsible for rising food and energy prices.

 

The hungry, high-growth economies of India and China are fundamentally affecting worldwide demand, while uncooperative weather and government policies on trade and ethanol are among the many factors affecting supply.

I suggest you read the whole thing, but I pasted a lot of the main points.

Actually, if we go with Brian's wording... just changing "mostly" to "predominantly"... then this works fine.

In Geoff's example, someone saying that the real reason oil is so high is because "the U.S. refuses to explore oil reserves off the Gulf and ANWR" would be the same as saying that speculators are not where the blame lies. So, that evidence would fall in the "no" column.

depending on your agenda, another "factor":

- US refusal to explore oil reserves off the Gulf and ANWR

just sayin'

I can't see us getting this much evidence if we target just the speculators.

I guess I'd be fine with "mostly responsible" but couldn't we just say

"Are speculators purposely driving oil prices to record highs?"

There are a million factors that can be blamed the most.

-Cheney energy policy

-Instability in the Middle East

-Supply can't keep up with Demand

-Speculators

Are speculators mostly responsible for record high oil prices?

I often hear public figures, when ranting about high oil prices, refer to the fact that emerging markets like India and China, are creating a higher demand for oil, by which drives the prices up.

So, "supply and demand" should be considered in this issue...either in the wording, or as a position.

Which is more responsible for high oil prices?

 

High Demand, Low supply (or something like this)

Market Speculation

or...

Is high demand responsible for high oil prices?

Fox News:

Are high oil prices a result of demand and supply or market speculation?

The Organization of Petroleum Exporting Countries — which supplies about 40 percent of the world's crude — insists it's supplying more than enough oil.

Instead, many observers blame speculative traders for bidding up the price as a hedge against inflation and as protection from the sinking U.S. dollar. Some see that as evidence of a bubble.

OPEC

Crude oil prices react to the balance of demand and supply in the short term, and the rate of investment in the longer term...Sentiment is also an important factor: if traders in the oil market believe there will be a shortage of oil supplies, they may raise prices before a shortage actually occurs.

Based on marinaz's sample evidence, it seems the terms used are "responsible" and "blame"... could we ask this as:

Are speculators responsible for driving crude oil prices to record highs?

Reuters

WASHINGTON (Reuters) - The U.S. futures market regulator on Thursday told skeptical members of Congress that speculators were not responsible for pushing crude oil prices to record highs, but one lawmaker warned that commodity markets had become casinos.

TimesOnline

Shell chief blames speculators for oil price

A leading oil industry executive has blamed speculators for driving the price of oil to record highs.

There's certainly debate out there...

There are some that claim that the high price of oil is due in at least part to speculators, who have no interest in the physical product, bidding the price up for profit.