Today’s inflation number may contain a clue as to the next populist backlash initiated by desperate politicians.

Speculators must surely be next in line for the pre-election chopping block. Oil traders in particular can surely not be spared from growing public anger over petrol prices.

There is, I’m told, a glut of oil and petrol products in the markets. There is most definitely a glut in spare capacity from producers such as Opec. In fact Saudi Arabia alone has capacity of 4.3 million barrels per day lying idle. Spare capacity is at a peak. A glut should mean low prices, but in the strange world of oil futures and derivatives, it has not.

Today the motoring organisation the AA came out against speculators, telling Channel 4 News that there “absolutely” needs to be government action to rein in speculation. I have been told by one of the UK’s most senior oil executives that last year’s spike in the crude oil price to $147 (and subsequent crash to $34 by Christmas) was the result of speculation.

But what can be done about it, I hear you shout. Speculation increases liquidity in markets, doesn’t it? Helps them make markets more “efficient”, guv. As the FSA were recently quoted as saying, speculation is not manipulation of the markets.

Well next month the US regulator, the CFTC, is likely to adopt limits on the size of bets that any single commodities trader can make in oil and other markets. There had been some frustration in the US that much of the damaging speculation was routed through London, the so-called “London loophole”.

The FSA has denied this, but did sign an information-sharing agreement to share trading data between UK and US exchanges in August. And despite pressure from the G20 the FSA has so far played down the prospect of a US-style clampdown.

It’s worth noting that no one in the London has ever been prosecuted for manipulation or market abuse in the commodities markets. Perhaps it really doesn’t happen in London at all.

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