Senator Maria Cantwell says commodity investors are enemies of the state, because the price of oil went up. She decided that the run up in oil prices is due to an evil genus of people called speculators. Not due to the tight supply and rising demand in China and other developing countries.
In this case she might not be doing much damage. (In other cases she is.) She is blocking the nominations of three people to the Commodity Futures Trading Commission.
Cantwell ... and others think that speculators have driven up the price of oil and could be responsible for more than $1 of the cost of a gallon of gasoline at the pump.She should close down the NY Stock Exchange, NASDAQ, all of them. Because people and pension funds go there intending to sin: to buy and make a profit.
But she compounds this action with ignorance of basic economics:
Cantwell and most Democrats oppose lifting the offshore-drilling ban. They quote the Department of Energy as saying that offshore oil and gas wells wouldn't come online for seven to 10 years and the impact on prices would be insignificant.Notice that they never trust "Bush!" and his administration except when they can take administration statements out of context to advantage. Any increase in supply will tend to decrease prices, even one years in the future. See my unpublished letter to the SeaTimes on the same ignorance in an establishment spokesman.
Question for Senator Cantwell: I bought my house hoping to sell it at a profit. Am I a speculator? Are you proposing a law to prevent me from profiting on the sale of my home?
Question for Senator Cantwell: The price of oil went down 12% this week. Do the speculators get credit for this?
Hat tip to Orbus.
Posted by Ron Hebron at July 19, 2008 06:30 AM | Email ThisSouthwest Airlines is a massive "Speculator". Their speculation kept their ticket prices low when fuel prices skyrocketed. I guess Maria Cantwell wants higher ticket prices. Airlines that did not "Speculate" lost big time.
Lots of pension plans, mutual funds, etc. speculated that the dollar would drop dramatically over the past 4 years due to deficit spending, a massive trade deficit, and so they choose to put their money into gold, oil, and the Euro. I guess Maria Cantwell is against financial advisors from protecting retirees money.
Any country that rings up massive debt while refusing to allow production of energy, building of factories, building airports, that bans 1000's of industrial chemicals, puts years of regulation in front of so much business activity is going to suffer badly.
Environmentalist don't realize that people with no money can not afford to protect the environment.
Posted by: John McDonald on July 19, 2008 08:19 AMPersonally, I think the truth is somewhere in the middle. We talk about rising demand and all that, but the fact is that due to much higher prices, demand in the US has been down for weeks.
In a true, market economy, the reduced demand; reflected in, among other places, reduced revenue to the state; SHOULD have resulted in reduced prices.
But that reduced demand has resulted in.... nothing.
Oil companies will instantaneously raise gasoline prices when oil goes up, even when that price increase takes place after the fact. Do they do the same when prices drop? No.
More than one talking head has indicated that oil makes up 60% of the price of gasoline. So, what about the other 40%?
Of course, Cantwell would rather open a vein than advocate for offshore drilling or the opening of ANWR, even if 70% of her fellow democrats now demand the practice.
That said, the idea that the oil market is beyond manipulation by commodity traders (can you say, Enron?) seems just the tiniest bit simplistic and untrue.
I don't give Cantwell any credit for anything, of course. Her political machinations are just like that cow Murray's; a great deal of motion, but no real action.
There are some things the democrats could do NOW to impact these prices, their own rank and file WANTS to do them, but they refuse. And that refusal DOES impact the higher prices we're paying for gasoline now.
But the issue (excuse?) of "increased demand" is nonsense. We do NOT have a shortage of oil... ANYWHERE.
So why are we paying shortage prices?
In the end, Cantwell's bleating will accomplish nothing. And the only thing anyone should be concerned about is the outcome.
Posted by: hinton on July 19, 2008 08:49 AMAnd folks are right in bringing up Maria's own fortune builder called Real Networks. To me, that scam was even worse than what she claims to abhor.
Posted by: Mr. Cynical on July 19, 2008 08:56 AMIt takes a few weeks for cheaper oil to be shipped to a refinery, for the refinery to do it's thing, for the gas to be loaded into a truck, to be shipped to a gas station. Thus there is always a lag between the drop in oil and the drop in gas price.
And yes, it is human nature to pass along price increases quicker than price decreases. I notice that the average person was quick to raise the selling price of their home during the bubble, but the average person is pretty slow in dropping the price. These same evil "average people" work at oil companies.
The other 40% of oil is used as heavy lubricants, grease, jet fuel, etc. Most of these products have gone way up too.
Posted by: John McDonald on July 19, 2008 09:54 AMLet's shine a little more light on this one. Madame Cantwell scored the job at Real Networks - not because she knew anything about electronic networks, nor about running a business, but because she had a fat Rolodex from her one paltry term as a Representative.
And exactly in the way that Michelle Obama's salary tripled in her soft hospital administrator job as soon as Obama was elected to the Senate - due to no efforts nor inventions nor talents of Michelle, but solely on account of that connection - senorita Maria was lavished with stock options at Real Networks as one of the anointed 'in' crowd. It's not what you know, but who.
Yet Maria rails against investors who accept real risks in taking part in supplying the public with a necessary good. Well, if she thinks they don't earn their gains (while she ignores their losses), who is she to accuse them of collecting rewards without producing some real goods or services? She herself is but a puffed-up 'middleman' between the taxpayers and the government, doing her best to loot one set of citizens to reward another set more congenial to her Party.
Yah.
Posted by: Insufficiently Sensitive on July 19, 2008 11:53 AMWhether it was a corrupt deal or not, I don't know, but it's an obvious question that I've never seen addressed in the Times or PI.
Posted by: russell garrard on July 19, 2008 12:08 PMSenator Cantwell then did what Kenny Boy's pal should have done, and attempted to recover the money Enron had swindled from Wasington State's citizens.
This experience shows how well our millionaire software executive understands politics, economics, and the importance of having properly qualified regulators. Perhaps she should block the nominations of commodities regulators, until she can check their backgrounds. Else, we might go through the Enron thefts again, with other commodities.
I'm sorry, I seem to have forgotten your complaint. What was it again?
Posted by: tensor on July 19, 2008 12:30 PMAt least Enron provided folks with electricity. Government officials setting regulations and tax policies that promote class warfare do far less, while generating slush funds for their cronies. Consider how entire brigades of 'scientists' are funded to dig up proof of global warming, while any independents who investigate phenomena which support the opposite notion are refused grants.
And the Royal Society of Britain (formerly a great supporter of scientific research) has now devolved into such a religious cult that it demands the removal of grants from any scientist who doesn't follow the GW party line.
Oops, off topic - the Sno County electricity price rose suddenly because demand left supply in the dust. That supply has been constricted for decades on account of 'environmental' policies deliberately set up to prevent the construction of refineries and generating plants. Now THERE'S an example of regulation run amok, in opposition to the economic needs of the citizens. And those who set up such regulations are every bit the crooks that electricity arbitragers were painted to be. They build their pastoral heaven on the backs of the workers, by denying the people the necessary electricity and then demanding that they simply use less.
Cantwell would love a top-down socialist society, if only she could be sure of being seated in the Politburo.
Posted by: Insufficiently Sensitive on July 19, 2008 01:27 PMDemonize the investor. Makes sense: there are too few of them to worry about their lost votes, and the people don't know what they do, and so misunderstand them. The people are jealous of them.
For FDR, the result of cracking down on gold speculators was that the great depression lasted longer.
Cantwell is either ignorant of economics, or if she is not ignorant, she is engaging in policies that she knows will hurt her own constituents.
Posted by: Bruce Guthrie on July 19, 2008 01:55 PMAnd it is an article of faith among libs that Bush and Lay were arm in arm, but according to 'Impostor' by Bruce Bartlett:
"The truth was that George W. Bush had no love for Ken Lay...because Lay had backed Bush's opponent, Ann Richards, in the Texas governor's race. Moreover the Bush Administration rebuffed Enron's request for aid. It was, in fact, the Clinton Administration that was most receptive to Enron, aiding it with numerous loans and loan guarantees...Ironically Bush was hit for Enron's collapse, he was largely blameless. If there is any blame to assess, Clinton deserves more of it, since Enron's problems largely developed on his watch, with the collapse coming shortly after Bush came into office...."('Imposter,' p 117).
The writer is a harsh Bush critic (hence the book's title) and has many good things to say about Clinton. One of the chapters is titled 'On the budget, Clinton was better.'
The Bush-Lay talking point has been oft-repeated, but that doesn't make it true.
Now, what was your defense of Sen. Cantwell again?
Posted by: russell garrard on July 19, 2008 02:22 PM1. The worst investment that an average american will make in their lifetime is social security at less than a 0.25% effective interest rate - and that is provided you live a normal lifespan, the average american would have to live to 139 years old to have social security payoff like a normal bank account. It is likely the social security "investment" will get much worse.
2. Freddie Mac and Fannie Mae "government backed institutions" are effectively bankrupt while holding 5 trillion in debt.
3. There is no way to pay for government promises to baby boomers and their medicare.
Thus the massive drop in the value of the dollar and thus 30 to 50% of the rise in the price of oil is because the dollar has been devalued due to broken government policy.
Maria needs to shut the hell up and fixed the problems of the government that are current and her and her parties control. R's are responsible for this too.
Posted by: John McDonald on July 19, 2008 02:48 PMIt doesn't take a few weeks for oil companies to raise the price of already refined gasoline when oil goes up. That, in fact, takes the time of a phone call.
As for the price of homes, the obvious differences include the fact that most people did not sell their homes during the bubble; most people do not need to sell their homes to live; and, of course, when homes, like gasoline, DON'T sell, (Like gasoline HASN'T been selling) then what happens to real estate prices?
And why hasn't that happened to gasoline prices again?
We have absolutely NO shortage of either oil or gasoline. None. Yet we continue to pay shortage prices. The "demand" argument only goes so far. And right now, it's going nowhere.
Posted by: hinton on July 19, 2008 05:01 PMYou missed my point. My point was: it is human nature that people raise prices as soon as they can, and are reluctant to lower them. This is true of home owners, oil companies, etc.
The reasons oil went up are numerous.
1. The value of the dollar dropping, each dollar buys less stuff including oil. Since most of our oil comes from foriegn countries the dollar's drop impacts oil disproportionally.
2. Oil does have a supply and demand issue. Demand has been very very close to Maximum supply capacity. Suppliers know that buyers cannot really go anywhere else. Thus prices can go up and buyers cannot do anything. Saudia Arabia is the only country with signficant extra capacity and they are not releasing it.
3. Suppliers are also not worried about other competitors taking marketshare. For example, about 3 to 4 years ago there was a massive and negative restatement of oil reserves held by Western Oil companies.
4. Further, foriegn oil companies do not fear domestic production in the US any time in the near future due to our regulations.
So with a dropping dollar, oil demand near maximum supply, and no fear of additional supply it is pretty easy to raise prices.
Thankfully, the US is still a very dynamic economy and we are rapidly shifting to high efficiency cars and other energy sources so demand distruction is occuring remarkably fast now (2% in past 3 months). I suspect that oil prices will come down due to so many people switching to high mpg cars and other industry initiatives.
Cantwell was the ringleader of the cabal that fought to keep ANWR closed to oil exploration since 2002. She must not be allowed to evade this fact. Her current jihad against "speculators" is a transparent ruse to distract the gullible from the part she played in this economic catastrophe.
Cantwell, the Democrats and their environmentalist overlords are trying to forment the anti-industrial revolution and the formation of the all powerful state that will be necessary to implement it.
Aside from the leftist twits I doubt whether many Americans are ready, or will ever be ready, for a descent into the environmentalist hell horror that Cantwell and the warmists are planning for them. Alas they have not yet reached the point when they are ready to tell Cantwell and her dour band of Luddites to "Get the hell out of our way!"
Posted by: Bill K. on July 19, 2008 10:55 PMIn theory, with falling demand should come falling prices. Falling prices as a result of lower demand have been reflected precisely nowhere... not in oil prices, not in gasoline prices.
"Close to maximum" does NOT equate to a shortage, yet we continue to pay shortage prices, as if we HAD some how exceeded capacity.
I get that a weak dollar plays a part. I don't believe that we're anywhere near capacity. The supply and demand argument will only work if there is an inadequate supply. There isn't.
And since there isn't, we need to look elsewhere for the causes.
There are many things that involve human nature that we must overcome to sustain a society. They range from the base type at the lowest level (Overcoming anger to avoid killing someone, for example) all the way up to doing what is best for this country when it comes to raping the public unnecessarily with gasoline prices.
If it were just an S&D issue, then gasoline prices would be down a LOT more to reflect both lower demand and lower oil prices. That they're not down appreciably indicates to me that the causes for these prices go beyond those you've stated.
Enron proved beyond any doubt that markets are not above manipulation. Have we forgotten so soon?
And now, we're in a position where the speculators NEED unrest in the Middle East to sustain their prices. They NEED us to bomb Iran, so they can make a killing.
In the end, Cantwell is a politically tone deaf moron. She and the rest of the leftists many of the more moronic posters here support are part of the reason prices are so high. But I remain unconvinced that our system has not been above manipulation to the benefit of the few and to the cost of the many.
If the fringe left is to be believed, prices should have dropped by now as a part of the GOP conspiracy to get McCain elected. The morons running Congress have been helpless to do anything to address this issue, their election year lies of 2006 notwithstanding. Looking at manipulation seems like an idea whose time has come.
Posted by: hinton on July 20, 2008 10:55 AMGov. Bush spent many hours of the 2000 campaign aboard the Enron business jet, and he appointed felon-boy's pal to the Federal Electricity Regulation Commission, where he dutifully did nothing while Enron illegally restricted electricity supplies, and then profited from the resultant human misery. (Please note carefully: "preventing" delivery is in fact the exact polar opposite of "providing" it.) Since FERC would not act, Senator Cantwell tried to recover the money stolen from Washington State's ratepayers by the felons at Enron. Her experience with corrupt commodities brokers and do-nothing regulators informs her current actions. I do believe the voters of Washington State have already delivered our opinion of her work.
Did you really need a book to tell you that a budget surplus was better than a deficit? I've voted for the only President of my adult life to run federal budget surpluses, and I'm proud of having done so.
Posted by: tensor on July 20, 2008 12:06 PM
In theory, with falling demand should come falling prices. Falling prices as a result of lower demand have been reflected precisely nowhere... not in oil prices, not in gasoline prices.
"Close to maximum" does NOT equate to a shortage, yet we continue to pay shortage prices, as if we HAD some how exceeded capacity.
I get that a weak dollar plays a part. I don't believe that we're anywhere near capacity. The supply and demand argument will only work if there is an inadequate supply. There isn't.
And since there isn't, we need to look elsewhere for the causes.
There are many things that involve human nature that we must overcome to sustain a society. They range from the base type at the lowest level (Overcoming anger to avoid killing someone, for example) all the way up to doing what is best for this country when it comes to raping the public unnecessarily with gasoline prices.
If it were just an S&D issue, then gasoline prices would be down a LOT more to reflect both lower demand and lower oil prices. That they're not down appreciably indicates to me that the causes for these prices go beyond those you've stated...
You seem to have the general idea of supply and demand down; congratulations!
Your application to the real world, though, needs work.
The oil and gasoline markets are global, not domestic. What Americans do is significant only in the context of what the rest of the world is doing, supply and demand wise.
Address that, before your ignorance leads you to "indicate" that someone is engaging in acts that would bring them jail terms.
Posted by: Das Baron Von Zippee on July 25, 2008 10:29 AM