Tim, what do you think is a boom is, it is a lot of short term upward price movements over a sustained period of time.
Short term manipulations for profit, are likely to be in both directions. You manage to move the price up 10 cents per barrel, and your leveraged holding of many barrels goes up in value, then you sell, and try to move it back down to buy back at a lower level. Later, rinse, and repeat...
Even these short term manipulations are often difficult because the act of selling brings the price down as you sell, and vice versa for the buying back, but difficult doesn't mean impossible, and arguably under some circumstances it may not be very difficult.
You get a sustained drift upwards when people see supply decreasing relative to demand either currently or in the future. That's a real shift in demand, a change in investor/trader psychology, or both, but it isn't market manipulation, and isn't traders deciding and consciously setting a price.
You seem to be conflating three things that are really different.
1 - Market manipulation and cornering.
2 - Speculation
3 - "Animal spirits"/"irrational exuberence"/"bubbles" in the market.
The first really would be some traders trying to control the price.
The 2nd is beneficial when the traders are correct, and painful to the traders when they aren't. By itself its unlikely to be a strong factor in moving prices strongly up for the long term. If the supply and demand are shifting towards higher prices anyway, speculation can cause the shift to happen sooner, but that's not really a bad thing in many circumstances.
3 - Well you can have bubbles that last quite awhile and raise prices by a lot. But I don't see any way to avoid them that isn't likely to do more harm than good. Well avoiding too easy of money can help here, and help control inflation generally, but other than that if people start thinking that prices will be higher they will bid up the price, and as temporarily irrational speculative bubbles can be, the market does a better job of pricing than any alternative.
Also I don't see the current oil price as being all that irrational? Do you? Why?
Right, but it does not guarantee that usage targets will be achieved, which is the objective in the first place.
Well that's some people's objective...
In any case imposing it that way certainly does involve more |
