What is idiotic about trying to shut down the speculators if it will bring down the price of gas?
Persecute speculators ... take a few steps .... establish price controls.
I wish there was a Republican running for President.
The price of oil is high because of dollar devaluation, which is strongly correlated with interest rates set by the private Federal Reserve, and federal government spending. Commodities, including oil, are merely the latest financial bubble to work through the system.
Speculation is an important part of the capitalist system. It insures that when someone brings a commodity to market, they have a market price “locked in” therefore the commodity producer is assured that they will have money in the bank before they calculate production for the future.
Shut down speculation and the commodity producer does not have the assurance and must bring the product to market immediately and get paid what their product is worth at that given moment.
So say if you are producing soy beans and it cost you X dollars to put it in the ground. Before harvest, you are assured Y dollars, which covers the cost of planting the soybeans and makes you enough money to buy new harvest equipment for the next growing season. You can also decide, if soy isn’t making enough money at the moment, to plant corn on part of your plot. Speculation allows you to make informed decisions before harvest and plan for future production and investment on the production end.
McCain come along and takes speculators out of the equation because he thinks you make too much money growing soybeans. You plant the soybeans still costing X dollars, but so did your neighbor and his neighbor. You harvest the soybeans hoping that when you put it on the market that there isn’t a glut, lowering the price of the soybeans. Oops, there is a glut, so not only did you not make your money back for the harvest, but you have several metric tons of soybeans that you can’t sell at all. Too bad. You lose the farm.
Price controls will lower the price of oil, too. But as a young lad sitting in my parent’s car waiting for gas back in the 1970’s I decided that wasn’t a good idea.
Let the free market work, friend. End arbitrary and moronic domestic drilling policies and no one will have to monkey with the way the market works.
APf
Speculators only have short-term effects on prices, and in the long run a free market, with economic exchanges, is the most efficient way to price commodities.
I read a long an interesting article yesterday to the effect that it was actually five large firms who were SHORT oil futures who caused the recent pop in prices. Their bet turned out to be wrong, and they had to cover their shorts at a loss, which brought prices back up. But after these guys have taken a bath, oil prices will come back down again, since they are showing signs of topping.
The idea that some speculator has a big reservoir full of oil in his back yard that he is hoarding is just silly. And the same with the oil companies. They only have so much room in their tanks, and if they are full, so much the better.