Gasoline prices are on the rise again. And even some supposedly “learned” folks are blaming those dastardly “speculators” who “pervert” the supply-and-demand curve to sate their greedy profit motives.
But it's sheer ignorance, an economic illiteracy regularly exploited by pols (and equally ignorant pundits) seeking to “command” another part of the economy for their short-term political advantage but to the detriment of normally functioning markets.
More specifically, “institutional speculators” — those who bet and hedge on the price of oil to make a profit and who never take delivery of that oil — are being drawn and quartered for the current price hikes.
But it matters not whether speculators take delivery or not, “all speculators perform the vital service of speeding price adjustments and reducing volatility,” reminds Pacific Research Institute scholar Robert P. Murphy.
Or, as George Mason University scholar (and regular Trib columnist) Don Boudreaux reminds, “Speculation makes resources more abundant when there is great scarcity by encouraging people to use those resources more sparingly when there is relative abundance.”
In a nutshell, speculation evens out supplies and prevents even wilder price swings.
This is fundamental economics. And what has become our national failure to understand such things is yet another example of the educratic establishment's failure to teach critical thinking skills.
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.