The bulk of the money in the market is therefore not speculative by this definition. It consists of funds - ETFs - whose aim is not to make profit but rather to avoid loss.

These investors are 'hedging inflation' by are getting out of dollars (at the zero bound) and exchanging dollar risk for energy risk, which is the precise opposite of a producer hedging production (or simply monetising oil in the ground), and who is offloading energy risk in favour of dollar risk.

These funds are 'long only', hate volatility, and are routinely pillaged by the market professional intermediaries.

Producers are able to keep the price high - at the 'upper bound' of demand destruction, and therefore this is exactly what they are doing. Producers will ALWAYS do this when they can eg copper,tin, cocoa, coffee markets and so on.

The only solution is to reconfigure this completely dysfunctional market by cutting out the middlemen.


"Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky