Debates over commodities deepen

The long-standing arguments of whether rising oil prices are due to established and solid-rooted fundamental principles or simple speculation have analysts and economists up in arms.

Recent studies have been focusing on just how much of the market’s prices rising are based in sheer speculation. As a result, the International Energy Agency has made the drastic move of issuing a full rebuttal of the argument brought forth.

Like all things oil-related, these arguments are less academic and more political, especially as the U.S. strives to limit bank-trading, hedge funds and commodity indices anywhere from coffee to crude oil investments.

The new research has found its fair share of supporters, but the IEA is not the only one to remain skeptical. Several respected energy and commodity economists have also voiced concerns and mounted critiques of the research, blaming the research to be generally one-sided. Arguments have also been raised that as far as accusing the entire market of speculation goes, the research itself does not fare much better.

IEA representatives have issued statements that accuse the research of failing to grasp the issue from any other side but academic, rendering it more or less inapplicable in the actuality of the investment and trading worlds. They went on to state that countless research has been done over the past years to make surface the alleged speculations that drive the oil stock up, and that even at the height of the recession in 2008, such attempts failed.

The ferventness with which the IEA has been campaigning against the new research is a clear indication that the debate is far from being put to rest. As crude oil prices mount, the commodity will continue to raise concerns and defenses from both sides. At any rate, the volatility of the market in the face of the coming recession should only widen the divide.

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