No sweat, Douger, I probably shouldn't take these things so personally.

I'm still inclined to agree with Ben Bernanke that curtailing speculation won't do anything to lower the price of oil.  The sharp rise in oil futures investment isn't that big compared to the overall global oil trade.  The value of index funds that always bet long are only equal to about 2% of yearly oil consumption worldwide.

The argument that speculators never take delivery is an argument against futures markets in general, because no oil is ever held back from the market.  I just read an online article on Economist.com that pointed out the fallacy of that logic:

The market for nickel provides a good illustration of this. Speculative investment in the metal has been growing steadily over the past year, yet its price has fallen by half. By the same token, the prices of several commodities that are not traded on any exchanges, such as iron ore and rice, have been rising almost as fast as that of oil.

Speculators do play an important role in setting the price of oil and other raw materials. But they do so based on their expectations of future trends in supply and demand, not on whims. If they had somehow managed to push prices to unjustified heights, then demand would contract, leaving unsold pools of oil.

The airline CEOs griping about speculators are the ones who have made bad decisions on how to manage their fuel costs.  United came out of Chapter 11 basing its reorganization plan on oil in the $50 per barrel range at a time when it was trading at around $60-$65 (and their CEO used to work for Texaco!)

I've only had a chance to briefly skim Masters' testimony, and some of the bloggers seem to think that Masters is playing "fast and loose" with the numbers.  I'll have to take a more in-depth look when time permits.