In a recent article by Jad Mouawad “Crude Oil continues Declines” 2008, Mouawad notes that the price of oil has dropped $10 a barrel and in New York, oil futures fell as much as 5 percent below $91 a barrel in morning trading, their lowest level since February. The price of oil has declined by over 37 percent since it peaked in early July at $145.29 a barrel mainly because of two reasons: slowdown of the economy and falling consumption in Western economies. In particular, Mouawad notes that the decline in oil price was sharp after Lehman Brothers filed for bankruptcy protection, signaling further slowdown in the economy. Moreover, OPEC has lowered its forecast for oil demand this year because of slowing economic growth. However, as oil prices fell, gasoline prices increased because of refinery disruptions caused by Hurricane Ike. Earlier, Paul Krugman in the New York Times pointed to the fact that oil prices have often been unpredictable. When oil prices were $50 a barrel in 2004, it was predicted to collapse but ten months later, oil price increased to $70 a barrel”. Oil prices have undergone a continuous price surge for five years taking it from $25 a barrel to above $125 (Krugman 1). Many people have attributed the price increase to speculators but then, if that were true, Krugman says there would not have been consistent rise in prices. If prices rose suddenly because of speculation alone, Krugman says it would be accompanied by a decrease in consumption and increase in production, resulting in excess supply which would drive down prices. He further explains that speculation can affect oil prices consistently only if there is physical hoarding of oil. With inventories remaining more or less at normal levels, Krugman proves that rise in oil prices is not due to speculation but due to basic factors such as increasing difficulty in finding oil and the rapid growth of emerging economies like China. The rise in oil prices, Krugman says, was essential to keep demand growth from exceeding supply growth. Even if there is a decline in price, he says it could only be due to a pullback in demand (Krugman 1). Diana B. Henriques in a recent article in the New York Times (2008) reveals that federal regulators are checking several trading records from Nymex traders as part of their investigation into the sharp oil price rise. The investigation is aimed to find out if anyone is trying to illegally manipulate the settlement price for the Nymex crude oil futures contract for October delivery which jumped as much as $25 a barrel — its highest one-day surge ever — before settling up 16 percent higher at $120.92. The sudden increase has caused analysts and traders to suspect that one or more traders holding short positions (bets that oil prices would fall) were scrambling to cover their bets in a rising market. The oil price had jumped in a day to $130 a barrel – an increase of about $40 a barrel from last week’s low. Javier Blas and Chris Flood, in the Financial Times say that the sudden jump in oil price was mainly due to the weakening US dollar, weaker supplies from Mexico, Nigeria and Saudi Arabia in recent weeks and surging imports by China. Paul Craig Roberts cites the weakness in the U.S. dollar’s exchange value and the liquidity pumped