Tuesday, June 24, 2008

Obama Clueless on Price of Oil

Obama is quick to prescribe a solution for price of oil! Blame the speculators!!
What a joke! Sure price of commodities have some speculation involved but it part of supply and demand and most importantly expectations of the future.

Here is what he said from the Washington Post

'Sen. Barack Obama rolled out a proposal yesterday to curb speculation in energy markets, which his advisers said would help stabilize soaring gasoline prices. '

No amount of regulation (that does not target consumption) is going to bring the price of oil down.

From Paul Krugman in the NYT:

'Now, speculators do sometimes push commodity prices far above the level justified by fundamentals. But when that happens, there are telltale signs that just aren’t there in today’s oil market.

The only way speculation can have a persistent effect on oil prices, then, is if it leads to physical hoarding — an increase in private inventories of black gunk. This actually happened in the late 1970s, when the effects of disrupted Iranian supply were amplified by widespread panic stockpiling.

But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels. This tells us that the rise in oil prices isn’t the result of runaway speculation; it’s the result of fundamental factors, mainly the growing difficulty of finding oil and the rapid growth of emerging economies like China. The rise in oil prices these past few years had to happen to keep demand growth from exceeding supply growth.

There is nothing new about Obama. He is not an agent of change. His policies and pandering to get votes is about the same old, same old.

Same old politician!

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