Joe Braddy

Joe Braddy is a retired newspaper editor and longtime resident of Winter Haven, Fla. He continues his writing, editing and media work on a personal and freelance basis. He launched this website on Sept. 11, 2011. He can be reached by e-mail at joebraddy@earthlink.net.

 

 

Targeting so-called oil ‘speculators’
doesn’t fix bad U.S. energy policy

Monday, March 5, 2012

Continued from this page

By JOE BRADDY

“Speculator” is the derisive word anti-capitalists use to describe what most of us would call the commodity trader — someone who trades in goods like wheat, corn, orange juice, cattle and poultry on the open markets and tries to project, based on all available news, information and conditions, the future cost of those items. The work of commodity traders contributes, in part, to the cost consumers pay for goods at the grocery store or, in the case of oil, at the fuel pump.

Currently, the major reason for rising U.S. fuel prices is the saber-rattling by Iran’s crazy Islamic leaders over the Strait of Hormuz, an important chokepoint in the distribution channel for crude oil from the Middle East. Also in the mix are growing tensions between oil-exporter Iran and the West, particularly between Iran and Israel, over Iran’s nuclear ambitions and, ahem, speculation about an Israeli military strike against Iranian nuclear development targets.

While Nelson gives lip service to the need for America to wean itself off foreign energy sources — in the hip pocket of environmentalist political donors, he won’t support practical and beneficial proposals (such as the originally proposed Keystone Pipeline oil project) to do just that — he goes off on “a new brand of oil trader who has emerged in the last decade, a middle man of sorts, who’s also driving up the price we pay at the pump.”

“Many experts agree we should not allow these traders to bid up the price of oil and flip futures contracts like condos,” Nelson writes. “Yet in the last 10 years the share of the oil market controlled by investors and speculators has more than doubled.”

Oh, they’re so evil, these “investors and speculators,” Nelson warns in so many words.

What the senator doesn’t say is that these “speculators,” these commodity traders, are doing what commodity traders have done almost since the day the nation was founded, and that is to look at current news about and current conditions regarding a commodity and try to determine where the price of the commodity is going to go.

Discussion about this issue with a wise and learned friend, a former investment executive in New York City’s financial district, led to this conclusion: The traders who today are setting higher crude oil futures prices, based largely on the trouble Iran is stirring up in the Middle East, are the very same traders who would bid down oil prices dramatically if, suddenly, the administration would do what it is loathe to do: Boldly announce the truth, that oil is the lifeblood of our economy, and support an aggressive oil exploration, drilling and refining policy here in the United States.

That sure would beat Nelson’s timid and voter-pandering answer to quickly rising oil and gasoline prices: Legislation, introduced by him, “that aims to drastically limit the ability of speculators to artificially drive up energy prices” and more government regulation of the economy, “the first-ever limits on how much of the oil market speculators can control.” The legislation is called the Anti-Excessive Speculation Act of 2011.

Nelson has tried at least once before to go after the “oil speculators.” It was the last time gasoline prices were up around $4 per gallon. But that effort stalled when the price of a gallon of gasoline fell back toward $3 again.

Nelson’s approach to gasoline prices is superficial and is aimed squarely at the voter — the senator is up for re-election this year — who makes decisions based on emotion rather than on research, facts and common sense. Nelson’s proposal treats a symptom of bad — not just bad, but irresponsible — energy policy and not the root cause. It’s akin to a doctor treating a badly infected finger with a bandage rather than with antibiotics.

Nelson is correct when he writes that “Nothing’s going to eliminate the volatility in oil prices like becoming less dependent on foreign energy sources.” But, he is wrong to suggest that the way to do that is to “curb the activities of speculators” and ignore highly efficient oil in favor of just-as-costly and less efficient “alternatives to gasoline.”

Nelson’s message invites readers to “let me know what else you think we could do to bring down gas prices,” so I think I’ll take advantage of the opportunity.

Solar-, wind- and battery-generated power are OK supplements to American’s energy needs, but they are not replacements — not for now and not for the near future — for the dirty but highly efficient fossil fuels of oil, natural gas and coal and for nuclear-generated power.

While we search for and do research on alternative energy sources — and we should and must do that — we do our economy a disservice and put our national security at risk by not aggressively looking for and pulling out of earth our oil, gas and coal, wherever they can be found domestically. These valuable resources won’t do anyone any good left in the ground — when we know it’s there — and left unused.

 

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