Monday, July 28, 2008

bi-partisan pandering (or ignorance) by the Senate on "speculators"

From the AP's Andrew Taylor in the C-J, news that the Senate unanimously passed legislation aimed at those (supposed) b&*@#:*s-- the "speculators". And their solution? Drastically limiting the number of speculators-- in other words, giving the remaining speculators more market power. Brilliant!

The U.S. Senate is moving ahead with a Democratic plan to curb speculation in oil markets that has been blamed for some of the recent run-up in oil prices.

A 94-0 vote this past week cleared a procedural hurdle for the legislation, which would require the Commodity Futures Trading Commission to set limits on trading in oil markets by investors and speculators.

94-0! One more reason why Republicans are often little improvement over Democrats on matters economic.

Despite the big tally, however, the rival parties are bitterly divided on how to address high gasoline prices and an underlying stalemate remains.

To drill or not to drill? That is the only question with which they will apparently wrestle!

To take your money and subsidize energy companies? There's no debate there (except Republicans want to subsidize oil companies too)!

To continue devaluing the dollar and driving up oil (and other) prices-- by spending money and running up debt? No mention of that either-- because of their ignorance of its import or an unwillingness to take the appropriate steps.

The rapid increases in oil prices have coincided with big rises in trading on oil future markets and investment in oil by pension and hedge funds. Democrats say much of the recent increases in oil prices are due to speculation and investment by people who have no intention of taking possession of the commodities.

These Democrats are ignorant or pandering or both.

"The demand for 'paper barrels' ... has begun to swamp the price signals that are generated by the more traditional hedgers and the large producers and the consumers of petroleum products in tune to the real time dynamics of supply and demand," said Energy Committee Chairman Jeff Bingaman, D-N.M.

Bingaman is confused. Adding more "price signals" does tend a market away from equilibrium, but increases the competitive nature of a market and the likelihood that the market will better approach equilibrium.

But there is evidence to the contrary. A federal task force set up to examine the sharp run-up in oil prices said in an interim report that fundamental supply-and-demand factors are most likely to blame.

There's theory and then there's evidence...

"Nobody can say with a straight face that simply addressing speculation -- a very narrow part of the problem -- is a serious approach," said Senate Minority Leader Mitch McConnell of Kentucky.

Great quote. The Dems sure seem to have straight faces-- either they're playing political poker or they're ignorant...

For Republicans, the drilling question is one of the few issues where they have an edge with voters, and they're pressing it to the hilt. Even though new offshore leases wouldn't deliver oil to the marketplace for a decade or so, some Republicans say simply opening up new coastal areas to exploration would lower prices now.

Uhh, yeah...


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