Oil: of rigs and gerryrigs

There are many who continue to insist that the price of oil, and other commodities, is based on "fundamentals" like supply and demand and the basic issues that affect that equation, such as availability of oil rigs.

Note this comment from 'Exhibit B', below:

"Just as weather forecasters have no effect on the weather, energy speculators have no effect on the price of oil," said Scott Talbott, a lobbyist for the Financial Services Roundtable, which represents investors. "His fallacy is that he ignores the laws of supply and demand, which determine the price of oil."

Guambat does not take issue that such prices may in a very loose sense be "based on" such notions, but continues to believe that it is the financial gerryrigging of the instruments and markets by and in which the commodities are traded that has led to the volatile and extreme reaches of commodity prices over the last several years.

Exhibits A and B:

RK Capital [and other] Hedge Funds Lost Up to 30% in August as Metals Fell

Oil Investors Pulled $39 Billion in Futures Contracts