Oral question asked in the House of Lords, by Lord Bilimoria (Crossbench). It was answered on Wednesday, 25 June 2008.

Fuel Prices

Question: My Lords, what proportion of these extortionate oil prices does the Minister think is made up by speculation? Does he believe that there is an oil price bubble and will it burst?

Answer: My Lords, we do not believe that speculation is the most important driver of these increases. The most important drivers are changes in the underlying balance of the market. In other words, demand for oil is rising faster than supply and the market lacks spare capacity. The decline in the value of the dollar is another important factor in driving dollar-denominated prices. One should not forget geopolitical tensions in oil producing countries either. We do not think speculation plays the most important part.

Secondary information