Isn't one of the biggest drivers of oil prices caused by speculators? If there is uncertainty in the availability and flow of production/shipping, that affects the price. It seems to me the prices depend on world conditions as much as anything else. If Iran blocks the straight of hormuz, (which they threatened to do) and/or Venezuela refused to sell us their oil, watch what happens to the prices here. None of us would be able to afford it.
Speculation effects prices on many things, oil included. The causes and effects of oil speculation are easily explained.. Under normal conditions, the DEMAND for oil is reasonably predictable. One need only look at international energy usage by nations, and the rate at which each nation is adding yearly to its DEMAND. The SUPPLY of energy, however, is far less predictable! The example you gave of a blockade of the Hormuz Straits is a good one to demonstrate an action that would negatively effect the entire worlds SUPPLY of oil..... thus raising its price Your example of Venezuela refusing to sell "us" oil would effect the oil SUPPLY somewhat differently. In that example, the US would simply compete more aggressively for a larger share of the oil coming from Saudi Arabia, Iraq, Brazil, etc. Speculators are folks who look at (1) world conditions and (2) world DEMAND, and attempt to predict how/if #1 and #2 will effect world SUPPLY, and thus the world price of oil. If they predict correctly, they'll make money. If they predict poorly, they'll lose money. Note, however, that the actual effect of oil speculation is always temporary! Oil speculators are just as likely to "bet" that oil prices will go down as they are to "bet" they'll go higher.
If the worlds oil market and the oil speculators are convinced that world oil SUPPLY will increase, you can bet your life that the world price of oil will go down. If the US maximizes the use of coal energy, natural-gas energy, solar energy, wind energy, etc., our DEMAND for oil will go down. That reduction in DEMAND for oil will reduce the price of oil. If the US additionally increases its SUPPLY of oil and natural-gas by aggressive exploration and exploitation and additional refining capacity, we also increase the world energy SUPPLY! That's a double-whammy that will absolutely reduce all energy prices worldwide. Additionally, upon seeing that aggressive energy policy by the US, the speculators will be betting their money on one direction in energy prices....... DOWN!
Pathetic!
