Who's Speculating in Oil? You Are

In Asian trading this morning, oil pushed to a new record, above $143 a barrel, and gasoline prices didn't even wait for the latest milestone to hit their own record this weekend, at nearly $4.09, on average, across the country this weekend.

The record increase in fuel prices has had fingers pointing in all sorts of directions. But the vision of legions of Wall Street investors betting that the price of oil would go higher and in the process, making oil prices go higher through some greedy alchemy, has taken ahold of the popular imagination.

Well, shame on you (and shame on me). We are those greedy investors, at least we are by proxy.

According to an Associated Press report this weekend, when we hear the word "speculator" we should imagine the diligent folks trying to make sure our retirement accounts stay fat. It is pension fund managers, and those who keep 401(k) investment funds growing, who are investing in oil, just as much as any rogue profit-seeker.

That doesn't make it a good thing. Until recently, the AP reports, those who invested in commodity markets like the oil and grain markets really bought things like oil and grain. Buying at a future price was a way of hedging against future price increases, the way folks in the Northeast can lock in a price for heating oil months ahead of delivery. Now, it's like legions of Southerners who won't fire up a furnace this winter are betting on high fuel oil prices, driving up the price for those earnest northerners who actually buy the oil.

And while we might take some comfort that the extra pennies, nickels, dimes (okay: quarters, half dollars, silver dollars) we spend on gas today will fatten our retirement accounts, we might not enjoy those savings as much. The Los Angeles Times recounted a litany of misery that would result from oil at $200 a barrel, starting with bankruptcies and store closings to the extinction of the out-of-season strawberry and other goods that travel the world before reaching American stores.

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