Petroleum-based fuels are going up in price, so naturally people start looking for someone to blame. Call up the Usual Suspects:
- Speculators. These futures market folks never get credit for lowering the prices of gas, but they can always be counted on to serve as easy “bad guy” targets when prices go up. Same this time. You’ve heard the rumors, the rancor. (It’s nuts.)
- President Obama. You know, for not allowing drilling and pipelines and such. Go to a meeting of conservatives and you’ll hear someone yell out “Drill, baby, drill!” Now, I’m all for drilling, and it’s stupid to clamp down on future supplies of oil — indeed, investors in the futures market for oil see these political and bureaucratic restrictions on exploration and mining and refining, etc., and no doubt bid up the price of oil — but really, don’t blame just Obama, blame, also,
- Romney and Santorum and Gingrich. All these presidential candidates have engaged in hysterical, belligerent rhetoric about Iran, threatening warfare in the Persian Gulf region. War is bad for supply lines. Compromising supply lines means compromised supplies. Which means less oil. Which means rising prices.
So of course futures traders will bid up those prices — they would lose money if they didn’t — and in so doing they make the likely future conditions palpable to contemporary decision makers.
That’s their economic function. Don’t blame the messenger.
So, if you think the U.S. should bomb Iran to prevent that country from bombing the U.S. in a few years (after which the U.S. could easily make the populous nation, full of innocents, a sea of irradiated glass), don’t gripe.
One consequence will be (must be) rising prices.
This is Common Sense. I’m Paul Jacob.