To begin with between 20 and 30 dollars or more a barrel and not the 15-20 dollars a barrel is what is in the market based on speculative trading of oil. The simple fact is oil should not be priced much higher right now than $80-85 dollars per barrel based on past oil supplies in fact there is now probably a larger oil supply and storage then there was during the last oil spike. The argument that Libya or other countries create price spikes in oil and other commodities at magnitudes 5 or 10X their actually world capacity is absurd. This is simply out of control trading on fear not based on reality of the situation.
1. The simple fact is the only way to stop rampant speculation is to have a ability to revive requirement to trade commodities especially oil,i.e. you can't bid to buy more than you can actually store in your silos or tanks.
2. There are a large number of speculative Hedge and investment funds out there that are simply trading enormous numbers of oil futures contracts without ever having an intent to receive the commodity they are biding on or having the risk of receiving an overpriced commodity, or expense of having to store or deal with the actual physical commodity. They are simply trading between the numbers sometimes even on margin, with downside hedge protection.
3.The claim that this type that if this speculation was stopped it would be bad for the market, end liquidity etc. Is false calm by individuals who profit from unless your driving prices of the commodity far beyond, what is reasonable in a supply and demand based market . The simply fact is if you were bidding to use the commodity people would buy it but just the people who intended to use it. Which if it is not what a commodities based trading is intended to be, it should be. People who are bidding simply to bid are not adding to price discovery but simply distorting it. Removing this price distortion from the market would greatly lower the prices of commodities and take this stress out of the economy at large.