Tom Whipple debunks the speculation whipping boy:

The energy issue of the week is whether high gasoline prices are being caused by supply no longer being able to keep with demand or by speculators garnering untoward riches at the expense of hardworking motorists.

The facts, economic theory, and the most knowledgeable observers such as the U.S. Secretary of Energy are telling us that the problem is one of supply and demand. Speculators, however, make an irresistible scapegoat that few politicians can ignore. They are nameless, faceless (probably foreign) individuals that can be bashed with impunity without the slightest hint of political incorrectness.

Blaming speculators is now worldwide. OPEC officials routinely mention the role played by speculators as the chief cause of high oil prices. German leaders have proposed a worldwide ban on oil trading by speculators. The transport chief for Germany’s Social Democrats said his party will call on the G8 powers to prohibit leveraged trading on energy contracts, claiming that 25 percent of the current crude price is caused by speculators.

The fuel subsidy situation obviously is not going to get any better. Oil prices will continue to rise. In the advanced countries the solution to increasing oil prices will be to park the cars and planes and start riding on buses and trains, while continuing to outbid the poor countries for the remaining supplies of oil. Those living in the world’s new mega- and hypercities are going to have a far tougher time. Oil has built these monstrosities where 100s of millions will be trapped without direct access to food supplies and cooking fuel. Someday, the historians will note that the collapse of many megacities was among the first real tragedies of peak oil.