Yesterday Forbes Reported that the OPEC president told reporters that OPEC wasn't to blame for high oil prices in the U.S. - that speculators were. He was half right.
OPEC has actually increased production by 2MM barrels a day year over year - and claims to have another 3MM barrels a day of capacity they can bring on-line. U.S. consumption isn't the problem either (at least in so much as what has changed since last year) - actually down on a year over year basis. Globally consumption is mostly flat - the spike in consumption we saw in the fall - and which precipitated the run up in October has eased - and we are back to flat with last year on a year over year basis.
Part of the run up is weak dollar... but the rest is non consumption demand for oil futures (speculators) driving the marginal price of oil through the roof. If pre-October is stasis for the market (and thats a big if) after you adjust for the weaker dollar - oil is still too expensive relative to where it should be. The problem isn't the speculators however, its your government which has decided to make the oil market a haven for that behavior by contributing significant market demand (of questionalble value to our security) at the margin through its Strategic Petroleum Reserve policy.
So what can be done about this? Well, surprisingly, a lot. The government has been exascerbating the marginal pressure on oil by continuing to stock the Strategic Petroleum Reserve. This is sheer lunacy and financial recklessness - they are buying significant quantities of oil in a market where marginal pressure is encouraging speculation and driving prices beyond what supply and demand for the underlying commodity would dictate.
In doing so they are wasting taxpayer dollars buying oil at inflated prices (giving that to speculators) as well settting the environment that encourages the massive amount of speculation in the first place - perhaps even being the single difference between $130 oil and $100. Even worse they are passing up on a big opportunity to sell oil out of the SPR at a massive profit for the treasury while easing oil price tensions over the short term. Were they to either a.) stop stocking the SPR, or b.) better - sell out of the SPR) - speculation would get a lot riskier and speculators would be driven out of the market - allowing more rational oil prices.