Why We May Never See $80 Oil Again

I received an email a few nights ago from a coalition of airline companies with the tag line, "You can help keep travel affordable." Curious, I read on. The email began with the obvious conclusions: High oil prices exacerbate economic pain, and the airline industry is being suffocated by the continued rise in fuel cost. Fair enough. As I continued reading, the letter proclaimed in bold type:

Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

Unfortunately for us, we are not sure who these "experts" really are. While I am certainly no expert either, I do understand basic economics, and to suggest that mere speculation could be inflating the price of oil by $60 a barrel is absurd.

While it's certainly true that Wall Street always loves too much of a good thing -- Internet stocks, securitizations, etc. -- which almost always leads to speculative bubbles, it's a fantasy to think that without "speculation," oil would be around $80 a barrel. The basic supply and demand laws suggest that we may never see $80 barrel oil again. ...