Originally posted by kevcvs57
I do not understand, you are obviously a pro free market person, nothing wrong with that, but apparently you do not understand the mechanism of supply and demand. It is the basic mechanism that governs the free market, it is what Adam Smith was referring to when he introduced the 'invisible hand' concept.
If enough people/investors demand oil then the pr ...[text shortened]... h their money; but it does raise the price of oil over and above our physical demand for it.
Supply and demand are not physically altered by futures trading. Demand is constantly rising, due mostly to the exponential growth of emerging economies (China, India, Pakistan). Supply is remaining constant, or increasing slower than the growth of demand. Prices increase, not due to futures traders being correct, any more than the winner, and the speed of the Kentucky Derby is dictated by how many people bet at the track.
What truly does drive prices higher is limitations on drilling, exploration, and similar restrictions on processing, transportation and sales. These restrict, prohibit, tax, and confound supply and demand.