Numerous Congressional Democrats have attempted to blame speculators who bet on oil and gasoline futures for the rise in gasoline prices in 2008. Among these Congressional members are: Rep. Hill (Ind.), Rep. Larson (Conn.), Rep. Dorgan (N.D.), and Rep. Murphy (Conn.) Rep. Dorgan has stated that "as much as 20 to 30 to 40 percent could be taken off if you got rid of excessive speculation," and Rep. Murphy has made anti-speculation a central theme of his campaign for re-election.
Speculators who trade oil and gasoline futures are convenient scapegoats, but what effect do they really have on the price of physicals? It's plainly a question with no simple answer. Rep. Dorgan and the others appear not to recognize the complexity of this question. Do they understand that speculators bet both sides of the market? Do they understand that a long bet must be met by a short bet? And what about the obvious fundamental factors affecting prices?
Increasing oil prices has no doubt been a source of suffering for millions of Americans in 2008. But when members of Congress point their fingers at speculators, they are simply engaging in a political witch-hunt. This witch-hunt is distracting our government from achieving solutions to our energy problems.
Posted by Paul Malmfeldt on August 5, 2008.
