U.S. motorists searching for someone to blame for the highest gasoline prices ever at this time of year have an easy target: hedge funds who have been quietly amassing winning bets on hundreds of millions of barrels of oil.
At a filling station in Midtown New York last week, several people were prepared to blame traders on Wall Street as they paid more than $4 per gallon to fill up their cars.
"It really is not supply and demand. It's definitely speculation," said John Keegan, an exterminator with pest control company Terminate Control, who was filling up his van. A cab driver said he was convinced the price would be just $1 a gallon if the government "stopped Wall Street trading oil."
It is all very reminiscent of the anger in 2008 when gasoline prices were sent surging by a massive oil spike - also a time when there was a lot of speculative interest from investors.
And yet five years on, there is still no consensus among traders, analysts, and regulators over how big of an impact speculators have on the market - and what, if anything, should be done to limit their participation in oil trading.
Stories about booming U.S. oil production help create expectations among consumers for lower prices. But it remains a global market and the United States is still reliant on around 8 million barrels of crude imports every day.
Hedge funds say they are just an easy target and blaming them ignores global reasons for higher oil prices and the benefits they have brought to the U.S. economy.
"Consumers shouldn't complain," said a London-based manager of a commodity hedge fund who declined to be named. "Sustained higher prices led to a massive increase in U.S. production and decreased U.S. demand, which is helping the economy in a big way."
Hedge funds have almost doubled their bets on higher oil prices since December 11, regulatory and exchange data in New York and London show, taking their total position close to the highest level ever reported.
As of last week, speculative traders held paper contracts equivalent to almost 420 million barrels of oil. That's more crude than the United States consumes in three weeks.
At the same time, lower oil production from Saudi Arabia and stronger Chinese demand are just two factors that have boosted the price of the world's most important commodity. U.S. sanctions targeting Iran's disputed nuclear program have further cut supplies.
The way things are going, Americans could spend more on gasoline this year than ever before. The average U.S. household is already spending nearly $3,000 a year on gasoline expenditures, according to a recent government estimate.
That could become a political hot potato for President Barack Obama's administration ahead of the summer driving season, which officially starts on the Memorial Day holiday weekend at the end of May.
Plans by U.S. regulators to curb the number of oil contracts hedge funds can hold are currently on appeal. A judge ruled last year they had failed to demonstrate position limits are necessary because there was not enough evidence linking speculation to big price swings.
On Tuesday, U.S. crude oil traded above $97 a barrel, up from $85 a barrel in mid-December. Brent crude was near a 5-month high above $118, having risen from near $108 a barrel two months ago.
U.S. gasoline prices have closely followed, surging 28 cents to $3.60 cents per gallon on average since December 11, according to data provided by the American Automobile Association (AAA). Gasoline prices can vary widely by region due to local taxes.
"Motorists are paying more for gasoline at this time of year than they've ever paid," said AAA spokesman Michael Green. The average price could rise as high as $3.73 a gallon in May of this year, the U.S. Energy Information Administration said on Tuesday.
The extent of speculators' impact on oil - and, by extension, gasoline prices - is complicated by the way the commodity is traded.
Unlike stocks or bonds, which are issued by a specific business and only available in limited quantities, companies all over the world can produce oil and sell it against U.S. and European benchmarks.
So even though U.S. production is expected to grow at the fastest pace on record this year, according to the Energy Information Administration, the market is also taking its price cues from elsewhere, analysts say.
"The market is looking at the potential for supply disruptions around the world, not just the U.S.," said Andrew Lipow of Lipow Oil Associates, a Texas-based crude oil consulting firm.
Alongside lower output from Saudi Arabia and growing demand from China, both potential and real supply disruptions in Venezuela, Nigeria, North Africa and the Middle East have also put markets on edge, said James Williams, energy economist at WTRG in London, Arkansas.
"I think in the last three months we've seen certainty about uncertainty," Williams said.
That uncertainty is attractive to speculators, who want to be ready should a big supply disruption hit. Some analysts say that can lead to even more buying as funds don't want to be left behind by their peers.
"The market's going up because (speculators) are buying it and they're encouraged to buy it because the price is going up," said Tim Evans, energy futures specialist at Citi Futures Perspective in New York.
Ultimately, the big bets can backfire.
The rush of funds into the oil market at the start of the year mirrors moves seen in early 2011 and 2012, when speculators' paper bets topped out at 444 million and 422 million barrels' worth of crude oil, respectively.
In both 2011 and 2012, prices rose into the second quarter before collapsing. After topping $110 a barrel in March of last year, U.S. crude oil plummeted below $80 a barrel by late June. Brent fell from above $125 to below $90 over the same period. Gasoline prices followed the market lower.
Many funds booked huge losses when they were caught by the rapid sell-off - especially in 2011 when oil prices dropped $10 during just one day in May.
"It's a wonderful party," said Citi's Evans. "Just don't be the last one to leave."
(Additional reporting by Barani Krishnan in New York and Douewe Miedema in Washington; Editing by Tim Dobbyn)