My Diagonal Life

29th July 2009

Link reblogged from Soup

Traders Blamed for Oil Spike →

soupsoup:

Ianthe Jeanne Dugan and Alistair Macdonald at The Wall Street Journal

The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices — a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on “deeply flawed data,” Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

Matt Taibbi pointed this out in his infamous Rolling Stone article about Goldman Sachs.

I may be completely ignorant here, but wouldn’t the speculators have lost all their money when the oil prices crashed? What’s the big deal? Anyway, oil NEEDS to be more expensive because the social costs of burning fossil fuels aren’t being taken into account in the price, leading us to a socially inefficient economic outcome, where we’re using more than we ought to. If the government refuses to tax it then maybe the speculators can save us from ourselves? More likely, this is just a bunch of crazy talk, but honestly, I really think all this vilification of “speculation” is a little over-the-top.

Tags politicsoil pricesspeculation