Yes, I know, we shouldn't expect much in the way of intelligent discourse from grandstanding politicians on Capitol Hill and windbag pundits on cable news. But is it really too much to ask that their bloviations have at least some connection to reality, however tenuous that may be?
What is sticking in my craw is the utter stupidity of blaming speculators for the high price of oil. These blowhards are railing against traders of oil futures because their alleged speculations are bidding up the price of crude. First of all, let's get straight what a future is.
Second, the oil futures market, like all futures markets, is a zero-sum game. That means for every oil futures contract sold, one has to be bought. There is nothing mysterious about this. It is as obvious as it sounds. Once a contract exists, it can be traded again and again until it expires. So that contract to buy oil at a set price has its own price that will go up and down. Thus, an oil futures contract acquires a market dynamic of its own that can closely track or wildly deviate from the actual price of oil depending upon the objectve, insight, mood, or, often, folly of traders. Whatever the case, this trading remains a zero-sum game, so that for every trader making a bet that the price will go up, there is another betting that it won't. In other words, these "evil" speculators are collectively placing as much money on one direction as the other -- and even then, it is on the direction of the oil futures contract, not oil itself.
Third, is everyone making trades in a futures market a speculator? No! Futures markets are an efficient way to trade risk for certainty. For example, a farmer wants to lock in the price he will sell his wheat for at harvest. A baker wants to lock in the price he will pay at that time to buy wheat. They both want to eliminate the uncertainty of their revenues and costs in the future. With a futures market the farmer and the baker do not need to find each other to make this transaction. The futures traders will do that for them. More importantly, they will do that when there is an imbalance between buyers and sellers of commodities. In that case, they will speculate. But their speculation comes with the risk the farmer and the baker traded away for certainty. That risk means, if they are wrong, they will either have to buy or sell the commodity contracted for at a loss or, as is usual, settle the difference in cash.
Finally, all of the above is the reason why an oil futures contract is called a "derivative". It exists only because there is a market for the real thing, crude oil. Thus, the futures market is parasitical to the actual market for oil. It can not and does not drive that market. The actual market is driven by the fundamental law of supply and demand (except for the periodic self-correcting euphoria and panic to which all markets are subject), and so the price of a futures contract for oil merely bounces up and down around the actual price for oil. For the futures market to drive the actual market would be a defiance of the law of supply and demand, a law which not even the most vociferous demogoguery from Capitol Hill and cable news can repeal.