Home > Jay Bookman > Archives > 2008 > July > 23
Wednesday, July 23, 2008
Time to flee the heat….
The Atlanta Journal-Constitution
I have an announcement I need to make.
No, I won’t be taking the AJC’s buyout offer (cue groans of disappointment from Commie, Management, Corporal and others).
I will, however, be going on two weeks’ vacation, beginning today (cue cries of joy in the Bookman household). As I understand it, the blog will be open for commenting during working hours only until I get back.
If I had thought it through early enough, I might have asked permission to give a couple of you — one on the right, one on the left — posting powers while I was gone, so you could keep things going. Maybe next time.
So I’m out of here, but just temporarily.
Readers may comment at a re-posting of this entry by clicking on this link
No, it’s not oil speculation either
The Atlanta Journal-Constitution
Oil speculation offers Democrats what off-shore drilling offers Republicans: An easy explanation to a complex, difficult problem.
In both cases, it doesn’t seem to matter that the explanation doesn’t fit the facts, that neither oil speculation nor the drilling ban have caused this runup in oil prices. What matters is that the explanation plays well politically before an electorate demanding action.
And in both cases, the two parties have defaulted to their instinctive narratives, the prefabricated explanations that they tend to apply to almost any economic challenge.
The Democratic narrative, for example, prefers Wall Street manipulation and corporate malfeasance as an explanation for whatever might ail us; thus, their focus on speculators and oil company profits.
The Republican narrative prefers environmentalist excess and government regulation as the default explanation. Hence, the focus on the offshore oil drilling ban and ANWR.
Again, neither is valid. Even under optimistic assumptions, oil drilling off the U.S. coast will not produce nearly enough additional supply to move the world oil price. And as a special task force created by the Commodity Futures Trading Commission reported yesterday, speculation has played no discernible role in driving the price of oil artificially high.
“Current oil prices and the increase in oil prices between January 2003 and June 2008 are largely due to fundamental supply and demand factors,” the task force concluded in its preliminary report.
Looking back over the way the futures market has operated, the task force found that speculators have responded to economic signals just “as one would expect in an efficiently operating market,” with no evidence of manipulation.
The real explanation is a lot simpler: “As it is very difficult to rely on substitutes for oil in the short term, very large price increases have occurred as the market balances supply and demand,” it said.
That kind of truth doesn’t lend itself to easy solutions, so Congress — and the American people — have preferred to ignore it. As a result … well, look at the mess we’re in.
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