Weekend reading: The investors’ role in the oil price spike

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If there’s one issue in the commodities markets that can start a bar brawl, it’s the question of whether investors and speculators are partly, mostly or not at all responsible for the run-up in raw materials prices -- particularly oil -- the last few years.

My weekend column in The Times jumps into the fray. You can read it here.

Based on how commodity-futures investment by pension funds etc. has mushroomed, and the strategy of many of these investors to be exclusively long, I don’t see how anyone can argue that they’ve had no effect on prices.

No question that basic demand from actual commodity users, and tight supplies, lit the fire under prices. And yes, Peak Oil Theory is gaining more believers by the day. But does anyone really believe that the pile-on effect from investors and speculators isn’t a meaningful factor in driving prices now -- as opposed to, say, 10 years ago, before the institutional-investor crowd caught the hard-asset bug?

All of the testimony from the Senate hearing I reference in the column can be viewed here. If the issue interests you, I think you’ll find it all to be worthwhile reading.