We hear all the time about evil “speculators” driving up the price of oil and other forms of energy. But there is little explanation of what ”speculation” actually is. Yet understanding speculation is not only crucial to understanding these accusations and whether they hold water, but to understand the whole world of energy today. Therefore, the goal of this month’s Power Hour is to demystify speculation and debunk some popular myths about the practice.
To give us clarity on speculation, I brought in an expert on financial markets and speculation, Dr. Eric Dennis. Dr. Dennis was actually trained as a theoretical physicist at CalTech, Princeton, and Santa Barbara—but now works as a high-level executive at a major financial institution, using his mathematical skills to build complex models of financial markets. I have been fortunate enough to know Dr. Dennis for several years now, and he is my go-to person whenever I have a question about speculation or financial markets, since he knows them inside out and can break down the issues in plain English.
Listen to the episode and learn:
- What exactly is speculation?
- Is it a problem that speculation is growing in oil markets—or a good thing?
- Does speculation really drive up prices?
- Do speculators have undue influence over prices?
- What is hedging, and how do speculators make it possible?
And much more!
(By the way, if you want an easy way to fit Power Hour into your schedule, download it to your MP3 player and listen to it during your commute.)
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