It is a rather interesting question raised by this article in the Houston Chronicle.

With American motorists struggling to pay record-high gasoline prices, a debate rages in the halls of Congress and across the Oil Patch over the role speculators may be playing in driving up oil prices.

Crude prices have rocketed nearly $70 a barrel in the past year. Some energy experts suggest speculation could account for $20 to $30 of that run-up.

Desperate to help angry constituents, lawmakers have been scrambling to find solutions. They have voted to close the so-called Enron loophole by regulating electronic trading, and they've given the Federal Trade Commission more authority to guard against market manipulation.

Now some energy and trading experts are calling on lawmakers to focus on the pension funds, endowments and other institutional investors — including the University of Texas and the state's teacher retirement system — that have poured billions of dollars into the commodities futures market in the last few years. The trend has exacerbated the crude price run-up, these analysts say.

Institutional investors' interest in oil "is accelerating and emboldening the price rise," said Mark Lapolla of Sixth Man Research, an Atlanta-based financial research firm. "We just can't quantify it."

I'll be honest -- according to the article, my pension fund has $4.4 billion dollars invested in commodities -- and the limits placed on speculators under federal law don't apply to it or other institutional investors. And with Pension funds buying almost as much oil on the market as China does, that has to have an impact on prices.

Posted by: Greg at 01:27 AM | Comments (13) | Add Comment
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