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Hey Vic. Great discussion. I was just writing about speculation in the oil market this morning. Here's the latest data from the very U.S. Commodities Futures Trading Commission that the geniuses on the Congressional pannel have referenced in their assertion that speculation is to blame for the high price of oil.

"The weekly CFTC data for the NYNEX shows spec funds are net long 12,712 contracts of crude oil. This amounts to less than 1% of the entire open interest in crude oil. In the aggregate, Spec. Funds are long 203,806 contracts vs. short 191,044 contracts for a net long of only 12,712 contracts.

I don't see how anyone can make the case that speculators are driving the price of crude higher when spec funds are net long less than 1 percent of the entire open interest. The CFTC report does not separate out Managed Funds and Index Funds for crude oil."

The government loves to blame the problems that their mismanagement has helped to create on mysterious speculators, but for the real cause of the problems they don't have to look any farther than the mirror.

But wait, I read that there is a bubble in the newspaper and my government told me that there is must be true right. Nope.

To me this bubble talk is absurd. Has oil gotten a little ahead of itself...probably. But the willingness to blame our problems on an evil cast of caracters and to assume that oil will just magically drop to say $70 per barrel if the government passes more laws is just contributing to the problem.

I am really curious to see how this whole story plays out over the rest of the year and 2009.

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