It is getting hard to keep track of all of the disgraceful things Barack Obama is doing, but we shouldn't overlook his effort to blame high energy prices on "speculators." In fact, the high price of petroleum, which in turn raises the cost of everything else, is due to a combination of market forces and the Obama administration's terrible energy policies. When you have an administration that openly wishes for higher energy costs, it shouldn't be a surprise when prices go up.
But Obama doesn't want to take the blame for the consequences of his policies, so he follows his usual Alinskyite policy--fabricate a villain and demonize him.
The Department of Distraction Swings Into Action - The Professor
It is becoming clear that Obama’s criticism of speculators was not a one-off. Instead, it is part of a broader campaign to demonize them. Today’s installment of the Two Minutes’ Hate came courtesy of the Justice Department (so tempted to use quotes around that). Eric Holder announced the formation of an Oil and Gas Price Fraud Working Group consisting of Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture and Energy. The Group’s charge is:In March 2011, President Obama asked the Attorney General to work with federal and state agencies to monitor oil and gas markets for potential wrongdoing. In response to the President’s call for action, Department of Justice leadership consulted with federal agencies and state attorneys general and discussed pending inquiries in some states, the most effective legal tools and areas that require additional exploration. As a result of this examination and to further the central mission of the Financial Fraud Enforcement Task Force, the Attorney General formed the Oil and Gas Price Fraud Working Group.
Are Speculators Responsible for Today’s Higher Oil Prices? - Warren Meyer
There are two checks on current commodity values that make sustained speculative bubbles much less likely. First, physical commodities are really expensive to inventory. I can hold futures contracts on a million barrels of oil in my desk drawer; a million barrels of physical oil requires a container the size of 63 Olympic swimming pools. Second, the demand curve for oil futures is based on expectations and predictions and hope and fear. The demand curve for physical oil is grounded in the real economics of electricity generation and powering factories and driving trucks.
So lets consider speculation in this context. We start from a market in oil for current delivery that is in balance, where the price is such that supply and demand are roughly equal. Now, enter speculators. They supposedly drive the price up above this “natural” price. As the price rises, we know producers will seek ways to bring more oil to market, and consumers will reduce their consumption. The result is a glut – an excess of supply over demand. Here is the real question to ask if one suspects that speculators are driving the price of oil for current delivery above and beyond the market clearing price: Where is all the extra oil going?
More White House Demagoguery on Gas Prices - John Hinderaker
It is easy to show that Obama's attack on the oil companies is baseless. To begin with, what do "subsidies" have to do with high gas prices? I assume that by "subsidies" Obama means that there is still some oil company income that the government doesn't tax. But the effect of a tax break is to lower prices, not raise them. On the other hand, the government does raise the price of gasoline, very significantly, by levying massive taxes on gasoline at both the federal and state levels. In fact, the government profits much more from the money you pay at the pump than any American oil company does.
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Many people do not realize that the American oil companies are relatively minor producers on the international scene. Because of our restrictive drilling policies, they do not have access to substantial quantities of oil in the ground. They are major refiners, but relatively small producers of crude oil. The largest American oil company, Exxon-Mobil, barely registers in terms of control over supplies of crude oil. You have to hunt for it on this chart, which we wrote about here.
