Investment banks and mutual funds are investing in oil futures in the same way that they invest in stock index funds. Seventy percent of the NY oil futures market is now money from entities that do not have the ability to deliver or take delivery of actual oil. While speculators do provide liquidity in all markets, it is obvious that things have gotten out of hand in oil.

I hate to tell you this, but Nigeria is one of the top three oil importers from OPEC. Some months it is second to Saudi Arabia, and some months it runs third behind Venezuela. A pipeline bombing in Nigeria used to bump oil up at least two or three dollars back when supply and demand ruled.

I would also remind you that our two biggest oil importers are right next door. We import the largest amount of oil from Canada, and Mexico is second. Saudi Arabia runs third.

Blow up a pipeline in Saudi Arabia and then you’ll see a price disruption.

No one argues that supply and demand are the sole factors in efficient pricing (except in a perfectly competitive market, which seldom exists). I do stand by the argument that heavy subsidy by large, and growing, consumers of a product queers pricing on multiple levels.