Wall Street bets on oil, again

Stock indexes and oil prices hit new 2009 highs. Investors are feeling their oats. Too bad for the rest of us

Published August 21, 2009 9:24PM (EDT)

U.S. stock indexes and oil prices both recorded their high marks for the year on Friday, in a display of mutually reinforcing symbiosis that is giving HTWW the jitters.

The stock market exuberance supposedly represents investors pricing in the likelihood of an economic recovery, which would mean rising demand for energy, which naturally places upward pressure on oil prices.

But as has already been noted this week, rising stock prices aren't all that helpful to lower- and middle-class Americans who have lost their jobs, taken pay cuts, are facing foreclosure or simply sitting on a home whose value is rapidly depreciating. You might be taking heart if your retirement or kid's college fund has rebounded in value, but not if you're wondering how you are going to pay your mortgage. And in that scenario, a boost in oil prices, which would inevitably lead to higher gas prices would be no fun at all.

But what to make of this comment, tucked into a BBC News story?

"The significant rise in the oil price in the first half of the year is due in large part to a recovery in investment by financial investors," said Eugen Weinberg at Commerzbank.

That's just wonderful. While I remain in the camp that long-term supply-and-demand factors still ultimately determine oil price trends, there's something really unsavory about the fact that precisely the people who are profiting the most from Wall Street's rebound are helping to fuel an oil price spike that will hit the rest of us the hardest.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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