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Lovin' Those Villainous Oil Speculators

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The Tampa Tribune

Published: September 10, 2008

Nothing stokes our anger better than a convenient villain who probably drives a cool car. So it was that, through much of this summer's understandable angst over gasoline prices, flailing politicians tried to help the rest of us - hey, it's an election year - point the blame gun.

Their target: oil speculators, less menacingly known to their children as commodities traders. This scapegoating appealed to many Americans - even if it was about as logical as fearing that, during daylight-saving time, that extra hour of sunlight will ruin the crops.

Presidential candidates John McCain and Barack Obama tried to out-populist one another in their denunciations of those evil traders. Members of Congress - keen economists all - tripped over one another to do what many of them do best: introduce legislation that doesn't get past the press release stage. As oil prices approached the July 11 peak of $147.27 a barrel, even Saudi Arabia's King Abdullah joined the posse. House Speaker Nancy Pelosi synthesized the victimization: "The American people should not be punished at the pump for the actions of oil speculators."

So we're puzzled that, as oil prices now have plummeted by close to 30 percent, all the politicians (kings included) haven't bought air time to serenade traders who supposedly drive the numbers. Where is Obama's "Oil Speculators Appreciation Act of 2008?" Where is McCain's call for a monument shaped like a derrick on Washington's National Mall?

Let's be charitable: Maybe the pols who were caterwauling this summer blessedly wound up hauling an Econ 101 text to the beach. That exercise would help them identify a player more important than any speculator in driving oil prices: the American consumer. Also the Chinese industrialist, the Indian businessman and whoever at big airlines buys the fuel.

People who use petroleum are, as a group, using less of it. The pressure of the marketplace is working. The oil speculators? Some are getting richer, some poorer. Remember, commodities trading matches a bettor who expects higher prices with a bettor who expects lower prices.

Yes, traders do influence oil prices. So do fears of Louisiana hurricanes, wing-nut despots in South America, limits on drilling in some 85 percent of America's offshore territory - and whatever crisis du jour has Nigerian production of crude in its clutches.

In recent weeks, though, nose-diving demand from consumers here and overseas has been a more powerful source than any of those force vectors.

Oil dropped Friday to $106.23 a barrel. Can we push it still lower? Yes. Will we? That's a matter of speculation.

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