Billionaire investor George Soros said speculators are playing a major role in oil's record price rise. He also argued that the sky-high $130 per barrel price looks like a bubble, The Daily Telegraph reported Tuesday.

Soros said "speculation . . . is increasingly affecting the price" and that oil now has "this parabolic shape which is characteristic of bubbles." However, he qualified his remarks by stating that the bubble would not burst "until both the U.S. and Britain were in recession, after which prices could fall dramatically."

Oil fell about $2 to $130.12 per barrel in mid-day Tuesday trading after data showed Americans are cutting back their gasoline consumption amid record-high gasoline prices approaching $4 per gallon in several regions of the country, Bloomberg News reported. U.S. gasoline consumption has fallen for about fourth straight months, on a year-over-year basis, according to U.S. Department of Energy data. Oil is up 100% in the past 12 months, and about 480% since 2002.

Soros' comments occur after several respected oil sector analysts, including T. Boone Pickens and Goldman Sachs' analyst Arjun Murti, issued bullish 2008/2009 forecasts for oil, with prices seen heading toward $150 per barrel in 2009 and possibly higher under certain market conditions.

Oil Analysis: It's difficult to assess Soros' evaluation of the speculator factor in oil's price rise, simply because there aren't enough longitudinal studies on the subject, and this oil era is unique: the use of oil futures contracts has increased considerably since the last oil shock, complicating era-by-era comparisons. In earlier interviews, Soros also noted the bullish impact of the weak dollar, Middle East supply issues, and increasing China and India demand, on oil prices. Further, while some would cite the increased use of futures contracts as prima facie evidence of speculator influence, that's a superficial analysis that ignores the small safety cushion between global oil supply and demand -- a cushion that, if eliminated, means oil shortages. And it's been the continual specter of an oil shortage, however remote, that has been the major driver of oil prices for more than four years. By extension, prices will fall if and when that safety cushion increases substantially.

What would negate the safety cushion thesis? If the safety cushion remains the same and the price of oil drops $60 or $70, with little likelihood of a recovery, then one can argue that some other factor, perhaps speculators, had artificially boosted oil prices.