Wednesday, April 18, 2012


Never underestimate the administration's ability to turn something around to punish their enemies. Yesterday the president stepped outside the Oval to announce a proposal to limit oil speculation from Wall Street, which was designed to once again take the onus off his policies and put them on 1 percenters. Even analysts on CNN were left a little surprised.

But Dick Morris should not be surprised. Here's what he said back in 2008:
The Democrats are pushing legislation to restore the status quo ante and stop the brokerage firms from playing the oil futures game. Their bill would apply the restrictions on oil futures’ purchases to domestic American companies even if they trade off shore.

If there is any doubt that it is speculation, not the supply and demand for oil, that is driving up the price, look at this week’s history of oil prices. After Bush announced that he was rescinding his father’s executive order and permitting off shore drilling and after OPEC announced a weakening of oil demand, the futures market price dropped $15 per barrel. No new oil gushed through the system. The speculators just switched their bets from up to down. With the Democratic bill, they will just have to double their bets on horse racing and leave oil futures alone!

Some Republicans are reflexively opposing the Democratic proposal, citing the sanctity of free markets. But even Reagan didn’t want to allow unbridled gambling in oil futures. There is nothing wrong with letting the free market in oil determine the price of the product. And there is a lot right with letting it do so. But it is insane to let gamblers magnify the effect of anticipated changes in supply and demand, that may not materialize, by buying and selling oil futures. Oil is just too important strategically and economically to allow that kind of speculation.
Emphasis added to point out how the Obama people will be ready and waiting to pounce on the pushback. They don't throw this stuff out haphazardly. Caveat emptor, GOP. But the same can be said to some of these too clever by half Democrats, as will be pointed out shortly.

Everybody suffers when oil is speculated upwards. Not surprisingly many airlines are in favor of reforming the market back to the pre-2000 conditions, evidenced by this lobbying effort. Obama is trying again to deflect blame by bringing this speculation problem to light, perhaps thinking that nobody in the friendly mainstream will recall that neither he nor Pelosi bothered to make this case in 2006 or 2008. Back then the spikes were conveniently attributed to "oil men in the White House". With a community organizer in the White House it's now Wall St speculators causing the problem, so we need more "cops on the beat". What a tangled web they weave.

By the way, Obama referred to the 2000 reform having to do with Enron; how many people know that Paul Krugman was an advisor to Enron? How many know that Commerce Secretary Brown was accompanied by Enron officials when his plane went down in on his fatal trip to Croatia? Obviously Bill Clinton signed the reform that led to this campaign card--will anyone bother to make that point with Mrs. Clinton right there in the cabinet? Chances are if we hear anything about Enron it will be about Ken Lay, Bush, and Bush. Or Cheney. But those will be words, just words. The peeps will still be paying at the pump no matter what the clowns come up with, just as the Saudis and OPEC want it.

1 comment:

LA Sunset said...

Doesn't matter who is in the WH, does it? Obama is in the pockets of big oil just as much if not more so than Bush. The difference is he seems to favor foreign oil over domestic.

Whatever penalties he can dream up to punish the companies who refine and sell gasoline (for reaping record profits) will get passed right onto the consumer. Bottom line gas goes up, and that is who gets punished.

It is a mess, for sure. And speculators do not help the price much. But with demand being at an all-time high and the foreign oil firms cutting production, it may have been the only thing that has prevented one country from making a power buy and having shortages every where else.