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Lefty Rhetoric
Posted by: Dale Franks on Tuesday, June 17, 2008

Now that he's the presidential nominee, his Lefty credentials are now coming to the fore, and his moderation is diminishing. In talking about oil prices today, he said:
There is the further problem of speculation on the oil futures market, which in many cases has nothing to do with the actual sale, purchase, or delivery of oil. [...]

[W]e all know that some people on Wall Street are not above gaming the system. When you have enough speculators betting on the rising price of oil, that itself can cause oil prices to keep on rising. And while a few reckless speculators are counting their paper profits, most Americans are coming up on the short end — using more and more of their hard-earned paychecks to buy gas for the truck, tractor, or family car.

Investigation is underway to root out this kind of reckless wagering, unrelated to any kind of productive commerce, because it can distort the market, drive prices beyond rational limits, and put the investments and pensions of millions of Americans at risk. Where we find such abuses, they need to be swiftly punished. And to make sure it never happens again, we must reform the laws and regulations governing the oil futures market, so that they are just as clear and effective as the rules applied to stocks, bonds, and other financial instruments. In all of these markets, reform must assure transparency, prevent abuse, and protect the public interest.
Why is it that more regulation is always the answer?

We can't drill for oil in the Gulf of Mexico. Can't drill off the continental shelf. Can't drill in ANWR. Can't drill in Colorado in the oil shale fields.

But speculators are the problem.


Oh, by the way, the nominee who said that today was John McCain.

Hat Tip: Matt Welch
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Previous Comments to this Post 

I give that a rating of "The Village" on the M. Night Shyamalan scale of twist endings.
Written By: jpm100
URL: http://
Oh, by the way, the nominee who said that today was John McCain.
Shoot me. now.

I do NOT want to see what has become of us in 4 years...
Written By: Scott Jacobs
URL: http://
Speculators may be the problem, but so is the lack of enough domestic oil production.

Obama uses the same techniques for oil that got Bush in trouble with the Iraq War, trying to tie it down to one bullet point. The world is a lot more complicated than one bullet point.
Written By: Neo
URL: http://
Apparently I’ve lost my lefty training wheels entirely. Why should the government try to stop futures trading? How would the government do so?

These speculators will be clobbered when the bubble bursts—as it will, and the sooner we start taking action on our energy problems, the sooner the bubble bursts. The point is not to bail out speculators when that happens.
Written By: huxley
URL: http://
The point is not to bail out speculators when that happens.

But apparently there is a lot of pension money being used for oil futures speculation.

This somehow brings to mind those Seniors that were speculating with their pension money back when the market dropped/crashed/whatever back in Oct 1987. They complained the loudest, but were also the biggest idiots.

The only thing holding up having the Congress come in and spoil the picnic is that much of Wall Street is made up of Republicans and Democrats, if it were only rich Republicans .. I’m sure Congress wouldn’t wait for a second. My bet is that they just keep paying off Congress while the unwind their positions, but I bet they are still speculating figuring they can keep Congress at bay a bit longer .. and longer. It’s an addiction .. they’re all addicted to money. And you can’t tell me that Congress hasn’t know about this the whole time that they were beating up the oil executives for their meager contribution to the problem .. or were they just beating them up for contributions .. to Congress.
Written By: Neo
URL: http://
McCain? That was a dirty trick. I feel like Charlie Brown after Lucy pulled the football away.

I find it interesting to note that there’s apparently no logical reason why the speculators would wager on higher oil prices. (sarcasm)
Written By: Ronnie Gipper
The Saudis did crash the price before as was mentioned, but it literally took producing enough oil that they started running out of places to store it around the world. It took months for it to push back on prices.
Written By: jpm100
URL: http://
Speculators end up losing their shirts...just like the guy who was flipping condos lost his shirt. There is no need to "punish" them.
Written By: Harun
URL: http://
Idk. Speculators would never have the cash to initiate this level of speculation if there wasn’t a portion of them that usually benefit overall from the whole affair. My guess is that there are some ’professional’ speculators who tend to get out early more often than not, leaving all the newcomers holding the bag.

And oil is a bit different. Its not like a Stock where there isn’t an end consumer who is pumping money into the speculation. And it isn’t like stocks and many commodities where the end consumer can opt out of buying the product either. And it isn’t like many commodities like foods, that will rot waiting for a consumer. Essentially excess supply can be buffered via storage slowing immediate feedback on price. This could slow the price drop enough where some of the original speculators can get out with a profit.
Written By: jpm100
URL: http://
If you read Greenspan’s book, he believes the "speculators" have been good for the market by driving the futures price up, resulting in some groups stockpiling oil in hopes of seeing that price. He believes this will dampen future market shocks from price spikes caused by supply restrictions.

Greenspan isn’t necessarily right, but I’ll trust his instincts long before I trust most politicians. Let the market work.

Written By: GBW
URL: http://
Greenspan isn’t necessarily right, but I’ll trust his instincts long before I trust most politicians.
Any man who could fix what Carter’s guy broke is fine in my book... :)
Written By: Scott Jacobs
URL: http://
Interesting bit that was cut out, by way of explanation.
There is the further problem of speculation on the oil futures market, which in many cases has nothing to do with the actual sale, purchase, or delivery of oil. When crude oil became a futures-traded commodity in the 1980’s, the idea was to afford a measure of protection against the historic volatility of oil pricing. It takes several weeks to ship oil from the Arabian Peninsula to the offshore port of Louisiana. And for the buyers, it helps to know that the price will not suddenly fall while the oil is in transit. A futures contract assures importers that they can sell the oil at a profit.

That’s the theory, anyway.
But we all know that some people on Wall Street are not above gaming the system.
If the speculation game is a creation of Congress, then why shouldn’t Congress ensure that there’s no "gaming" going on that is artificially raising prices. I don’t know enough about that whole side of the equation to really comment beyond that.

And then there’s the REST OF THE STORY...
It takes a very short leap in logic to wonder why we produce less and less crude oil, while we use more and more of it, or why politicians talk so much about promoting alternative energy sources, but often do so little to promote these alternatives. A reasonable observer, presented only with these numbers of consumption and production, might draw the conclusion that America has accepted this fate because we have no choice in the matter, or because we have no resources of our own. But just the opposite is true: We do have resources, and we do have a choice.

In oil, gas, and coal deposits, we have enormous energy reserves of our own. And we are gaining the means to use these resources in cleaner, more responsible ways. As for offshore drilling, it’s safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston. Yet for reasons that become less convincing with every rise in the price of foreign oil, the federal government discourages offshore production.

At the very least, one might assume, America had surely been building new refineries to achieve a more efficient delivery of gasoline to market, and thereby to lower the prices paid by the American people — especially in the summer season. But the policymakers in Washington haven’t got around to that, either. There’s so much regulation of the industry that the last American refinery was built when Jerry Ford was president.


We have proven oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production. And I believe it is time for the federal government to lift these restrictions and to put our own reserves to use.

We can do this in ways that are consistent with sensible standards of environmental protection. And in states that choose to permit exploration, there must be an appropriate sharing of benefits between federal and state governments. But as a matter of fairness to the American people, and a matter of duty for our government, we must deal with the here and now, and assure affordable fuel for America by increasing domestic production.
In other words, Drill Here! Drill Now! Pay Less!
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