How Politicians Make Themselves Look Stupid
Earlier today, CNN Money’s Scott Anderson wrote about new legislation introduced by Senate Democrats that is meant to “crack down” on oil speculators, who they claim are responsible for high crude oil prices. The bill, known as the “Stop Excessive Speculation Act,” is sponsored by Senator Byron Dorgan (D-ND) and Senate Majority Leader Harry Reid (D-NV), along with other Democrats. According to Anderson:
It would provide more resources and authority to the Commodities Futures Trading Commission to detect and punish speculation, stop speculators from using foreign markets to manipulate the price of oil in the United States, require more transparency in oil markets and limit the trading of market players who do not intend to take delivery of the oil they purchase.
In particular, the bill will give the CFTC greater power to regulate the “swap” market for futures and differentiate between “legitimate” and “illegitimate” hedge trading that, the Democrats say, has lead to increased prices.
Well, a test vote on the legislation took place today, with the result being 94-0 in favor of. At this point, it’s not clear when a final vote would take place. Senator Dorgan remarked:
First things first. If you are running a race with hurdles, jump the first hurdle first. The reason we have oil at $130, $140, $145 a barrel - like a roman candle going up, up, up - is because we have excessive, relentless speculation in these markets… Nothing in supply and demand in the last year justifies the price of oil.
Now, here’s where it gets funny…
From the Associated Press Tuesday afternoon:
A federal task force set up to examine the sharp run-up in oil prices says in an interim report that fundamental supply-and-demand factors are most likely to blame…
The Interagency Task Force on Commodity Markets, chaired by the Commodity Futures Trading Commission, was formed last month to examine investment practices and fundamental market factors.
I recall something that Jim Puplava said this past weekend on his show “Financial Sense Newshour.” He said:
We’re posturing here, rather than dealing, and that’s why we’re going to be heading into a crisis. Instead of trying to solve the crisis, it’s like Matt [Simmons] said- they’re on a witch hunt. You’ve seen it. They’ve tried to blame it on the weather, the war, the dollar, the oil companies, and now, the latest witch hunt is speculators. And, instead of solving the problem, they’re just making the problem worse, which is why we see a full-blown crisis in the year ahead.
Maybe Congress should focus on something they’re good at, like conducting hearings on steroids in Major League Baseball…
Sources:
“Democrats: Crackdown on oil speculators”
Scott Anderson
CNN Money, July 22, 2008
“Fundamentals led to $130 oil – report”
Associated Press, July 22, 2008
Financial Sense Newshour
3rd Hour, Part 1
FinancialSense.com, July 19, 2008
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