Free Markets, Free People

Daily Archives: April 18, 2012

Scapegoating oil speculators–Obama counts on public’s economic ignorance to shift blame for high gas prices

Icould pretty much stop there and say the title tells you the story.  Obama knows high gas prices are not good for his re-election campaign.  He also knows his energy policies have actively worked against ameliorating or lowering the price of gas.

Therefore, it is necessary to find a scape-goat.  Someone or something he can shift the blame too and demonize.  In other words, the usual disingenuous attempt at distraction.

David Harsanyi explains what “speculators”, otherwise known as commodity traders, do:

Let’s start by being thankful for oil speculation — no matter what the motivation of those involved might be. To begin with, speculation allows companies with exposure to fluctuating commodity prices to hedge against rising costs by locking in. Sometimes the bet pays off; other times it doesn’t. But risk and profit are not yet crimes.

Oil speculation also offers consumers and investors information about the future that can help them make informed long-term decisions. Speculators trade commodities based on the information available in the marketplace. They reflect reality; they don’t create it.

But sometimes, unfortunate as it is, prices will rise. "Gouging," the close scaremongering cousin of "speculation," helps persuade consumers not to use what they don’t need. It incentivizes to modify behavior — our driving habits or the size of our cars. We conserve more when prices are higher, so we avoid shortages, and producers intensify their production. (Funny how Democrats get this concept when writing energy policy designed to artificially spike fossil fuel prices.)

In reality, this sort of trading helps moderate the market.  And, being a zero sum game – i.e. if you make money someone else loses it – it is done carefully.  As Harsanyi explains, they “reflect reality; they don’t create it”.  In essence you’re seeing a relatively free market work as it should.

Of course, what Barack Obama wants to do is have government intrude on that market because politically he doesn’t like the reality it is reflecting because it is politically damaging to him.  So:

Speaking from the Rose Garden, the president announced a proposal to spend $52 million to fund increased government oversight of oil futures market trading in addition to harsher civil and criminal penalties for manipulation in energy markets. “We can’t afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick,” Obama said. “That’s not the way the market should work.”

Or, said another way, if you make a profit based on your foresight, you’d be considered a criminal.  If you lose money, I suppose, that’s ok in Obama’s world.

Of course, it’s all nonsense (I mean how would Mr. Obama regulate oil trading in foreign exchanges?).  It is a calculated attempt to use ignorance of how these markets work to cause voters to shift their rage from him to his designated target.  Successful scapegoating means one less issue the opposition has to use against him (not that he doesn’t provide a target rich environment anyway).  He’s counting on this sort of populism to work.

David Kruetzer asks some questions I’d like to see the press ask:

If speculators are making unconscionable profits on energy, why are they only doing it occasionally and not all the time? Why are there only speculators in oil, not natural gas (whose current price is about half of what it averaged over the last decade)? And given how the petroleum market works — for every speculator who makes money on a trade, somebody else will lose money — the president’s theory “requires an endless string of chumps to take the other side of the speculators’ deals.”

And Kreutzer points out the basics of any commodities market, again something of which Obama banks on your ignorance:

For speculation to drive up prices, the speculators must either cause oil production to slow down (which they haven’t) or to pull oil off the market. If the flow of petroleum and its products remains unchanged, the price at the pump will not change. If petroleum is pulled off the market, which can happen even though there are limits to what can be stored, it will eventually come back on the market.

The question becomes, ‘When the oil comes back on the market, is the price higher or lower than when it was pulled off the market?’ The price will only be higher if the amount supplied at that time is lower or the demand is higher. In either of those cases, speculators have helped moderate price fluctuations and will be rewarded with profits. If the price is lower, then the speculators did a bad thing and will be punished by losing money.

So those are the basics of the issue as it concerns such trades and markets.

As can plainly be seen, Obama hasn’t a leg to stand on.  But that doesn’t stop him from claiming that government is the answer to this made up problem. 

Why?  Well other that it is his political nature, he can’t sell the nonsense without some sort of “action”.   It becomes much more believable to those who don’t know better if he’s going to spend millions to regulate the contrived problem out of existence.

Of course he knows his actions will not have any positive effect on gas prices, and, in fact, may actually have a detrimental effect, which is why he couches this attempt at scapegoating the problem via government with “none of these steps by themselves will bring gas prices down overnight”.

But he can claim to be taking action while continuing to blame speculators for the problem and counting on general economic ignorance to carry the day for him. 

Pretty typical of the man, I’ve come to learn.

~McQ

Twitter: @McQandO

The GOP has a chance to take the White House if it can discipline itself to stay on message

Pew Research as a survey out today that is one taken after Romney became the presumptive nominee for the GOP.  It compares its numbers to a survey taken while the GOP’s nomination was still contested.

Pew entitles it’s piece about the survey, “With Voters Focused on Economy, Obama Lead Narrows”.  It subs it with “Social Issues Rank As Lowest Priorities”.

Hello out there GOP – are you reading this?  There’s your campaign.  What to stress.  What to avoid.

Any chance they’ll actually figure that out?

I mean so far we’ve talked about sluts, contraception, race, wars on women, stay at home moms, even about dogs riding on roofs (well at least the Romney’s didn’t eat the dog).

We’ve been distracted by the outrage of the week – Rush Limbaugh, Hillary Rosen, Ted Nugent, Bill Maher, etc. 

That’s the left’s game plan, for heaven sake – Obama has a dismal, in fact awful economic record.  Horrible.

And yet the GOP is walking into every distraction trap the left sets like they haven’t a clue.

As I’ve been saying for months, once the nomination is settled, regardless of who the nominee is, and the focus begins to turn on Obama and his record, there will begin a shift in voter preference that should (note the word) carry the GOP nominee to the White House -  if the GOP plays its cards right.

Should.

Here’s what I mean:

Obama’s lead over Romney has narrowed since last month, when he had a 12-point advantage, though it is comparable to margins from earlier this year. While Obama’s advantage has declined since March, there is little to suggest a specific problem or campaign event as having a critical effect.

While there have been debates over issues related to gender, the rise and fall in Obama’s support has largely crossed gender lines, with a fairly consistent gender gap over time. For example, since March, Obama’s support among both men and women has slipped five percentage points.

Independent voters remain up for grabs. In the current survey, 48% favor Romney while 42% back Obama. A month ago, it was 47% Obama, 44% Romney.

If anyone would not expect an incumbent president to have some sort of  lead at this point, I’d say you don’t know much about American politics.

That said, as you can see by the change in a month, the lead is at best tentative, soft and narrowing. 

But … there is still a way to absolutely screw up this chance at making Obama a one-term president and, unfortunately, I wouldn’t be surprised to see the GOP manage that.

That is, to concentrate on the wrong issues.  They have a track-record of snatching defeat from the jaws of victory doing exactly that.

I’ll make it as simple as possible.

Limit the main issues of the GOP campaign to three themes: the economy, jobs and the debt.  Talk about how to improve the first two and reduce the third.  Talk about getting the hell out of the way while giving business the green light to lead us out of this economic morass.  Declare the war on fossil fuel to be over.   Talk about exploiting our natural resources and the jobs that will bring.  Put confidence back in the business sector that expansion and hiring will be enabled and supported, not killed with more and more regulation.  Talk about repealing ObamaCare and draconian regulations.  Talk about bringing America back.

Once the incumbent has given his concession speech, talk about whatever else tickles your fancy then. But discipline yourself until then.  Until then narrow the focus and be relentlessly on message.  Refuse the distraction traps.  Just flat refuse them.

Do that and the GOP has a shot.  The numbers will continue to improve.

Fall into the distraction traps and kiss victory goodbye.  If the other side is allowed to frame the campaign and establish the narrative and avoid examining Obama’s record,  the GOP loses.

We’ll see which course they choose.

~McQ

Twitter: @McQandO

IRS to have power to confiscate passport?

Iguess we’ve moved into the realm of “guilty until you prove yourself innocent”:

The Republican House of Representatives may soon follow the Democratic Senate and give the IRS the power to confiscate your passport on mere suspicion of owing taxes. There’s no place like home, comrade.

‘America, Love It Or Leave It" might be an obsolete slogan if the "bipartisan transportation bill" that just passed the Senate is approved by the House and becomes law. Contained within the suspiciously titled "Moving Ahead for Progress in the 21st Century Act," or "MAP 21," is a provision that gives the Internal Revenue Service the power to keep U.S. citizens from leaving the country if it finds that they owe $50,000 or more in unpaid taxes — no court ruling necessary.

Note … “mere suspicion”.  Like the IRS screws up its audit and thinks you owe more than you do (and at least $50k), your passport is yanked without going to court.

Let freedom ring, eh?

And, as the lede points out, it isn’t just the Democrats.  Another attempt by both parties to shred the Constitution.

This is not the sort of power an unaccountable agency should be given.  Any idea of how many people will suddenly find themselves on the wrong end of a suspicion they owe $50k or more in taxes?  Whether true or not, with the power to grab your passport and only a suspicion needed (no court order), the IRS will likely “suspect” many people owe at least that much.

That’s certainly consistent with the history of such granted power. Go to the extreme quickly – there’s no reason not too.  No penalty for them, certainly.  Oh, you don’t owe $50k?  Here’s your passport. 

“Moving Ahead for Progress in the 21st Century”?

Since when is changing the IRS to a form of the KGB a “move ahead?”

~McQ

Twitter: @McQandO