Read the Wayne Madsen Report if you want to know how trustworthy George Soros is.

"First, the increasing cost of discovering and developing new reserves, and the accelerating depletion of existing oilfields as they age. This goes under the rather misleading name of peak oil."

Come on, Soros, that IS peak oil. Finite planet, diminishing returns on obtaining a diminishing resource by an increasing population. How is "peak oil" misleading? A planet full of oil is scheduled to crash into Earth soon?

So we ARE drilling??? I thought drilling had all but stopped because judges were saying we couldn't drill.

Drilling in the U.S. has just about doubled since 2001, recently reaching a 22 year high. This is why the production decline rate has more or less halted in the last 2 years.

The recent fuss about "opening up federal land" is an albatross - land leasing has increased dramatically, but most of it remains unexplored. They want the land as collateral to secure more debt.

Got news for you bro. Speculators rarely operate in the front month contract of any commodity. You could argue that some of them haven't rolled back to July yet, but that gets into speculating on speculators.

Further, you seem to not understand commodities trading. I suggest you look into the definition of spreads, and in particular calendar spreads. Of all the front month futures that trade hands, most of those trade via spreads to other months (60-80%).

From Boone Pickens interview on Bloomberg:

``You've got to have a commodity market, because a producer has to have an opportunity to hedge when they feel like the risk is becoming too great for them,'' Pickens said. ``For every hedger, you have to have a speculator.''

``What you're trying to do is trying to find a scapegoat and place blame for it when what you have is demand that is greater than supply,'' Pickens said.

``We're using 400,000 barrels of oil less today than we did a year ago, but the Chinese are now using 500,000 barrels greater than they did last year,'' Pickens said. ``So whatever we kill in the way of demand, they pick up in their demand. You're going to bid for the oil, and the highest bidder's going to get the oil until you finally kill demand with price.''

For those making the arguement that oil is in dollars...well, the dollar did not double from last year to this year~ while Oil has. US demand is down, While China demand is up from 5mbd to 7mbd since 2003 their production has increased so that their importing is actually down 500kbd ~so where is the speculation. Oil is the new Housing. It is obvious.

Pull up the Nymex Spot Oil Futures site....Each future is for 1,000 barrels...this unregulated market sets the settlement price for oil at the end of each month. (Note: this market has a remarkable correlation to the electronic electricity exchange market in California from the days of deregulation when all energy trading companies were found to both withold, take offline, and otherwise manipulate available supply to raise the electrical rates. This resulted in massive fines by Dynegy, the death of Enron, and bond sales to pay for electrical bills from this time for the next 10 years by the state of California...but enough of the past

Fast forward to now: We currently have an unregulated Oil Futures market trading on the New York Mercantile Exchange (NYMEX), courtesy of Sen. Phil Gramm whose wife was on the board of the CFTC and at Enron) that allows for futures contracts, not cashed out each month to be pushed to the next month - hence, byt clicking on this site,

http://futures.tradingcharts.com/marketquotes/index.php3?market=CL

you can see that there is Open Interest for 335295 options, each for 1000 barrels...or 335 million barrels... so the speculation is on the front month because it sets the 'settlement' price for oil secureed for that month. It is this speculation othat what settles on the NYMEX is just 30 million out of the 7 billion barrels that are traded in a typical month and those 30 million barrels represent just a third of one day of total consumption so the "settlement" price is 1/100th of the actual global consumption. Just $3.9Bn to control the price of the $332Bn worth of oil that is sold each month. This is what the trading is about...

By speculating and overpaying byabout 1 billion on the Mercantile Exchange by traders to set the "settlement" barrels will pump an extra $65 billion into the production side. The correlation with outside, non-commercial users such as hedge funds, pension funds, and institutional investors screams loudly that by tying up the futures in the front month, with a trading volume of 300,000 futures (each day!) - you see this tremendous churn as everyone hopes not to be the one holding the bag when this plunges. Again....all funded by unregulated 'dark markets' ~ where the trading in the futures sets the 'settlement' price for oil that month...and though the CEOs of oil companies can plead that they are not doing this...they are the ones to profit, as well as the oil exporters...as the price doubles in a year. What is driving this....well, all that money out there has to chase something, and chasing housing and flipping subprime mortgages into worthless CDO has busted and the money has fled to the commodity markets....how this critical market that sets the equivalent of a global inflation rate got to be unregulated with have books written about. I agree, it is speculation and if you look yourself at these NYMEX numbers, and volumes of trading compared to the historic trading volumes, you can overlay the data on the current price for a barrel of oil and see the correlation in trading volume and current cost.

Not that George Soros should be considered to be an expert on oil or energy in general. Nor do we know what his personal interest is. He can be considered an expert on speculation. For another expert on oil, energy and speculation, check Boone Pickens and what he said at the AWEA Conference in Houston this week.

With regard to some of the comments here:

The actual cost of oil should be about $80 per barrel, which makes the current bubble about $40 a barrel. The actual cost of the oil is quite low, but market conditions dictate a doubling of the price.

So, who was this expert, what is the nature of his expertise, and how did he derive this figure? A bunch of hogwash if you ask me. Talk about your cherry picking. The actual cost of oil is whatever you pay for it on the market today. No more, no less. Anyone trying to argue that the market-settled price should be $80/bbl is engaging in theorizing at best.

If you have specialized expertise, access to leases with proved reserves, a rig, a crew, and all the other assorted necessities for extraction, perhaps your actual cost is far lower than $124/bbl. For most of us that is a non-issue. The marginal cost of oil has no bearing on the price that the market will pay.

With regard to price controls, as one letter suggested, this is the absolutely worst thing that Congress can do. You want to see shortages, just let them institute price caps. Historically, price controls are terrible and function mostly to limit supply rather than anything useful like lower prices. It is quite easy to find articles about the supply of gasoline in China today, where price controls are in effect. I read about lines where you queue up at 8am and are lucky to get your turn for a partial fill at 5pm. Do we really want to go back to 1970s style rationing, where your license plate determines which day of the week you can fill up? Terrible.

It's only a matter of time before shortages hit the USA, and fuel is rationed. Asking Congress to institute price controls is a sure way to hurry this up along.