The Wall Street Journal has a big scoop this morning that the Obama administration is set to report next month that speculation has been a primary driver of super-volatile oil prices.

That’s the exact opposite conclusion of a Bush administration report by the same agency, the Commodity Futures Trading Commission, last year, which one commissioner—a Bush appointee—now says was based on “deeply flawed data.”

The Journal doesn’t have any of the data from the report here, only an interview, so it’s impossible to tell just what the CFTC has, if it has anything at all.

But regardless, it could be politically explosive at a very bad time for Wall Street.

Speculators have been a lightning rod of criticism from politicians world-wide, who worry that rising oil prices could damp the recovery potential of their recession-hit economies. Many lawmakers and regulators say they want to ensure that speculators don’t make it more costly for consumers to access heating oil, food and other essentials.

It’s worth revisiting Matt Taibbi’s piece on Goldman Sachs for his theory on what happened last year to drive gas prices over $4 a gallon.

With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market — stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil. In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a “flight to commodities.” Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008…

But it was all a lie. While the global supply of oil will eventually dry up, the shortterm flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the shortterm supply of oil rising, the demand for it was falling — which, in classic economic terms, should have brought prices at the pump down…

So what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

Note that Taibbi’s hardly the first person to say that the money from the housing bubble moved to form the commodities bubble, which remember, not only sent gas prices skyrocketing but helped cause dangerous food disruptions around the world.

He is one of the first prominent journalists I’ve seen to report that the massive oil spike had little or nothing to do with supply and demand for the physical product. I’d like to see some more reporting on that. If he turns out to be right, the financial press is going to have an awful lot of explaining to do.

It seems clear the CFTC report will lend credence to Taibbi’s assertion that Wall Street and Goldman Sachs (an Audit funder) caused the oil spike, which he says wouldn’t have happened if trading were limited to those who had physical control of the oil, excluding those betting with derivatives.

But of course there’s never a consensus on anything, as the Journal is good to note:

These decision makers don’t present a united front. The U.K.’s Financial Services Authority has found no evidence that speculators are behind big oil-price swings, people familiar with the matter said Friday. This view, made by the overseer of one of the world’s biggest financial markets, contrasts with an opinion piece published in The Wall Street Journal two weeks ago, by French President Nicolas Sarkozy and U.K. Prime Minister Gordon Brown, who said governments need to act to curb “dangerously volatile” oil prices.

The paper reports that the CFTC will hold hearings next week on whether to limit commodities speculation.

And this is good context:

The debate over speculators underscores the shifting nature of commodities trading in recent years. Before the mid-1990s, these markets were dominated by entities that had physical dealings with the underlying commodity, and “speculators” who often took the opposite position, providing liquidity to markets.

But a new group of investors has emerged in recent years. Those who want to bet on commodities prices have increasingly put their money in indexes that track the value of futures contracts, in which investors promise to pay a certain amount in the future for oil and other commodities. As of July 2008, financial investors had about $300 billion riding on these indexes, roughly four times the level in January 2006, according to the International Energy Agency, a Paris-based watchdog.

Watch out for this story. It could get nasty.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.