Energy Outrage: Speculators Or Supply?
Speculators. They’re the villains in the on-going energy saga. Right? They’ve been pocketing millions on high-risk trades while you struggle to fill up your car.
You’ll find some on the floor of the Nymex, others working behind the doors of some mysterious hedge fund, but all have been making a mint from $130 oil.
But oil has gone so far so fast, cash strapped drivers as well as the U.S. Senate are demanding answers.
The question is simple. Are oil prices an issue of low supply and high demand? Or are the energy speculators manipulating the market via sinister means and driving oil prices to line their wallets?
To find out answers Fast Money spoke with Robert Hirsch, Senior Energy Advisor at Management Information Services Inc. He used to run oil exploration for Exxon.
Are speculators to blame?
It doesn’t seem to me speculators are playing a major role, says Hirsch. It seems like a supply and demand situation.
How much higher do you see oil going?
Fundamentally we’re on a production plateau, replies Hirsch. And the demand is robust in countries with a lot of expansion such as China, India and the Middle East. We could be in trouble.
Will the reserves in Brazil and Iraq ease the problem?
We have to wait and see what drilling actually produces and how much is actually there, says Hirsch. Considering the time it will take to bring that oil in – I think we’re in trouble and it’s inescapable.
> Energy Outrage: Ethanol
> Energy Outrage: Iraq
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Trader disclosure: On May 29, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Adami Owns (BTU), (C), (AGU), (NUE), (GS), (INTC), (MSFT); Finerman Owns (GS); Finerman's Firm Owns (MSFT), (SUN), (TSO), (VLO), (AAPL); Finerman's Firm Owns SPX Index Puts; Finerman's Firm Is Short (BIG); Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm And Finerman Own (GLNG); Finerman's Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY Pete Najarian Owns (AAPL), (ANR), (BHI), (TSO), (XTO), (XLF), (HPQ), (BKC) (MAS), (ENER), (SYMX) (SVNT); Pete Najarian Owns (BAC) Puts