Every time gas prices go up, people on the Left seem to think that a conspiracy is afoot. The conspiracy theory can take different forms, but a favorite is that energy speculators are behind the price increase. Chris Hayes is the latest to make the argument that speculators are responsible for the increased prices at the pump; the only surprising thing about all of this is that it took him so long to come out with his assertions.
The problem with the claim, of course, is that there is no evidentiary backing for it, as Ryan Avent explains:
First, it’s not true that American output was falling in the first half of 2008; GDP declined in the first quarter but rose in the second. Second, the oil market is global. While American output stagnated in early 2008, growth in places like China continued to soar and demand for commodities followed. Indeed, the fundamental trend in commodity prices, including oil, over the past decade has been a general upward movement as demand growth outstrips supply growth. Third, the fact that price increases span commodities undermines the argument that speculation has played a major role, because prices for commodities that don’t trade on these markets have risen alongside those that do.
Fourth, the wild swings in price after July of 2008 aren’t evidence for speculation either. As prices rose supply ramped up on a lag. Not all of the world’s marginal supply can be turned on at the flick of a switch. But in the fall of 2008, the global economy fell off a cliff. Demand plummeted in the face of rising supply and prices tumbled. But by 2009, supply and demand were more closely aligned, and the global economy was recovering. There’s no mystery here. And fifth, the easiest and most effective way to speculate on the price of oil is to leave the stuff in the ground, and there’s not a thing the American government can do about that.
Sadly, Avent is probably just shouting in the wind here, true as his arguments are. Expect the Obama Administration to demand that the Federal Trade Commission launch an investigation. And expect the FTC to come back with . . . nothing whatsoever to back up the theory that energy speculators have caused you and me to pay more for regular unleaded.
Equally predictable, when it comes to dealing with energy issues, is the call–whenever supply goes down, and prices go up–for the President to release emergency oil reserves from the Strategic Petroleum Reserve. This is only supposed to be done in an emergency, of course, and “emergency” does not mean “every time people who may vote in the next election grouse about gas prices.” I don’t like paying more for gas either, but my discontent over the price of regular unleaded–and the discontent of others–does not an “emergency” make.
That having been written, I am all in favor of extraordinary measures taken to ensure the plentiful supply of other vital materials.