Let's gang up on energy speculators

Another story on blaming oil speculators and the futures markets for the spike in oil prices last year. Dresdner/Commerzbank blames oil speculators is the topic of an FT Alphaville blog entry which states that the bank places the responsibility of excessive price moves at the feet of the NYMEX WTI futures market. The futures, which represents a small portion of overall production distorted the oil market. Of course, the bank provides limited evidence on how the futures market caused this distortion. It is the old argument, "it is clear to everyone", that speculators caused the distortion. If it is that clear, where is the empirical evidence?

There may be a case here but there is no evidence to support the argument. Those same speculators are still in the market so why has the market fallen? They must have driven it lower given their expectations just like they drove it higher given their expectations. I is not the speculators but those pesky expectations which drive markets. If we could get speculators to all believe that the price of oil should be stable, then we would have less volatile oil prices.