> I don't doubt they could screw around with the price a bit, but I can't
> imagine they could move it more than a few bucks either way. I'm too lazy
> to do the research, but I'd bet that the California electricity market is
> no more than a thousandth the size of the oil market, and Enron was a
> very big player in that relatively small market.
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The big run-up in oil prices was driven in part by the explosion in the
number of hedge funds which, along with other institutional investors,
rushed into energy and other commodity futures on the back of Chinese demand
and political instability in Iraq, Iran, Venezuela, Nigeria, and other
oil-producing regions.
Now that there has been some cooling off in these world hot spots - notably in relation to the fear of war with Iran - the speculators have turned on a dime and bid the price lower, closer to the higher floor which demand from China and other rapidly-developing nations have built under it. As Doug suggests, the growth and diversity of the market has, if anything, has made it less easy to manipulate. If the Bush administration had pressured the Saudis and other producers to to boost supply, I might be more convinced something was afoot this election season, but that hasn't happened. Nor has there been any talk of a politically-transparent drawdown on the SPR; the release from the reserves last year was the result of Katrina, and had only a modest and temporary effect on rising energy prices.