General anti Wall St. sentiment is not a very potent argument. It's difficult to deny that higher prices increase supply and/or destroy demand. Wall St. didn't invent this logic.
I'm not anti-Wall St. But I am anti-recklessness when it means wreaking havoc on our national (and by extension entire world) economy.
It's difficult to deny that higher prices increase supply and/or destroy demand.
No, it's not. Actually, higher prices usually mean there is decreased supply and increased demand. That's in a normal market. But we don't even have a normal oil market. That's the entire point. When oil prices skyrocketed to record levels above $145/barrel in 2008 it wasn't because of increased demand, and those astronomical prices didn't mean an increased supply of oil either.
Both are true
But that's not the cause of our higher prices. Listen, I can't keep arguing this. Do me a big favor and just read the first 3 paragraphs here:
http://useconomy.about.com/od/commoditiesmarketfaq/p/high_oi...
As a consequence, suppliers now want to supply more and consumers want to consume less.
Suppliers want to supply more. So, if you're some Saudi Arabian sheik witnessing these astronomical oil prices you really want increase oil production and supply more? What will that do to oil prices? Think about what you're saying.
Of course prices are not just influenced by supply and demand. They are also influenced by speculation. I never denied that. What I'm saying is that speculation changes the timing and increases the volatility, but it cannot decouple from supply and demand indefinitely.
So if we're running out of easily accessible oil in, say 20 years, and speculation increases today's prices in expectation of that, that's a good thing. Of course it is a double edged sword. Sometimes future expectations never materialize and speculation ends up destroying value.