‘Oil sharks sit off Brixham coast’. ‘Dear oh dear’ I thought as I passed the newsagent window. And like most of these things I yawned and resigned myself to that old saying ‘it’s like that déjà vu all over again’.

So is there any credence to the fact that bad boys are sitting off the coast ripping us off? I can’t believe I am even giving this space but here goes: Firstly, when oil was driven to $147 last year the resulting petrol price (which was blamed on oil) was less than it is today. Crude oil is priced at $77.07 today. (1) Explain that then.

Need I go on?

Secondly, this would only be true if we had a shortage of supply and/or an increase in demand. Neither is true, so I definitely could end this column here.

Thirdly, to my knowledge there are no product berths in the UK capable of taking vessels of this size and of course the real reason they are there is because this area of the coastline is one of very few places in Europe where ship to ship operations are actually permitted at sea.

Before I make my way to the real culprit you might like to consider how petrol prices are where they are. Currently VAT and tax represent just over 70p per litre and this will rise to over 72p when VAT returns to normal. (2). So forget the ‘sharks’, petrol without tax would be a mere 35p.

In any event, part of the blame offered for the price increase is the increase in demand, yet Mr Darling’s reason for increasing duty was detailed in his budget as: "Fuel duties in 2008-09 were £0.4 billion below their 2008 Pre-Budget Report projection and were lower than in 2007-08. Since fuel duty is charged on a per litre basis, this reflects a reduction in the demand for fuel."

So because demand is low he is saying he needs to charge more, yet we are being told prices are rising because of demand. Furthermore, the budget reveals that petrol will rise by 1p over indexation for the next four years! So I assume they believe that demand will still be low and can forecast four years ahead. Give me strength!

And so who else has their hand in your pocket? Last year oil prices were being blamed on global demand surging, blah, blah. Yet at that time, the reserves were all full and oil tankers sat in Louisiana and Iraq with nowhere to go.

Goldman sachs (who used to run the largest commodity index in the world) touted a $200 oil price which everyone fell for, except this column. However, very mysteriously, Goldman Sachs were ‘neutral’ on their oil stocks (i.e. they believed they were not worth investing more into).

How could they believe that the companies delivering the commodity would not benefit from the price of that commodity (oil) doubling in price? Their share price should have been tipped to soar. Perhaps because they didn’t believe it?

And so I decided to research the reason. To cut a long story short the culprit was speculative investors in commodities and in particular a certain type of investor.

In 2003 the total amount of money invested into commodities via index traded strategies was $13bn. In 2008 if this had risen to $17bn it would have been a spike. The total however was $260bn. So we had $13bn in history and $247bn in five years!

In 1936 US congress passed the commodity exchange act with the understanding that speculators could not dominate the futures markets. Unfortunately, the CTFC took steps which have now allowed these speculators virtually unlimited access to the futures markets. Wall Street banks were given exemptions from speculative position limits (they are blocked from investing too much).

The CTFC have now met to decide how to regulate this area closely and to close off such speculative position limits. They do it for agricultural and other commodities yet they don’t do it for energy. Perhaps the current noise around energy prices will be something to do with a last gasp push to get invested before regulation changes.

If you would like to speak to an independent financial adviser call Peter on 0845 230 9876, e-mail info@wwfp.net Source.

(1) oil price.

(2) Tax payers alliance.