Just about every day, I continue to get letters and emails from readers, about this column from a few weeks ago, in which I argued that speculators are not really to blame for the soaring price of energy. Whatever role they play in the market tends to be positive, eliminating pricing inefficiencies and generally smoothing the rise and fall of futures contracts. The price increase is due to high demand, stretched supply and a shortage of refinery capacity.
It was, um, not a crowd pleaser. The general consensus among my correspondents is that speculators are evil, they are trying to ruin the lives of innocent ordinary folk, and dorks like me should lose our journalism licenses.
Well, the U.S. government task force charged with getting to the bottom of the speculator scandal issued its report yesterday. Bottom line: speculators aren’t to blame. The oil price is the result of high demand, stretched supply and a shortage of refinery capacity. Never easily daunted by mere facts, the Senate voted unanimously(!) to press ahead with debates aimed at curbing price speculation in the futures markets.
We do not want to hear that we are the cause of the oil price rise. And politicians do not want to be the ones to press that unpopular reality. So off we go to bizzaro world, where the facts don’t matter. Only emotions do.