Wednesday, June 18, 2008

Gasoline and Democrats: O'Reilly Goes Nuts

This is actually a continuation of my series on ridiculous Democrat "positions" and deception on the issue of gasoline and oil prices.  I was using Senator Byron Dorgan as a springboard, and I was up to ridiculous Democrat statement no. 8:

8.  Blame the speculators.

Yes, Dorgan tried to do that on Sunday, as Kay Bailey Hutchinson ate his lunch.  But another Democrat actually introduced a bill to require any purchaser in the futures market to actually TAKE DELIVERY of every bit of oil purchased.  Bill O'Reilly--already way off the deep end on this issue to the point of insanity, and I say this as someone who has criticized Big Oil in this blog--finally went totally NUTS and endorsed this idea on his program last night.  I assume someone took O'Reilly away in a straijacket today.  He was already getting almost impossible to take before this, and I have stopped watching anything beyond his opening  "memo"--if even that.

My brother is co-owner of a trucking company.  For awhile (until prices got so high he decided it made no sense) he HEDGED his exposure to the price of diesel fuel by purchasing contracts on the fut\ures market.  However, there was no "futures" market in DIESEL (the most serious continuing cost for a trucking compnay).  Heating oil is the market that most closely tracks the price of diesel.  So my brother hedged by purchasing contracts in the HEATING OIL FUTURES MARKET.  Obviously, my brother could not possibly take delivery of all of that heating oil (for that matter, he could probably not take delivery of a lot of diesel all at once).  However, if the price of diesel went way up, my brother could (and did, for awhile) counter the cost with the MONEY he made on the heating oil futures. 

Bill O'Reilly does NOT understand markets (or maybe even want to understand, as people were TELLING him things like this).  Democrats do not understand markets, and/or DON'T CARE because the whole idea is to DECEIVE (just as O'Reilly's idea is to be seen as standing up for the "olks", DISHONEST or stupid as he may be in the way he is doing it).

WHO is "speculating" in oil.  It is NOT just airlines and trucking companies trying to avoid bankruptcy.  WHOLE COUNTRIES (like China and India) are HOARDING (specualating, in a sort of mammoth hedge) in oil. 

That is the problem with Democrats (and O'Reilly) not understanding markets.  EVEN if we shut down the AMERICAN futures market, there is a WORLDWIDE market in oil.  All we would do is hurt American markets, while ceding total control to WORLD markets. 

Democrats are fond of salying (transaparently falsely, in that every barrel of oil produced domestically is a barrel LESS of a problem we have t deal with) that we "can't drill ourselves out of this problem".  Drilling can obviously LESSEN the problem, even as we do other things.  Drilling WOULD have lesssened the problem, had leftist Democrats not opposed it for 15 or 20 YEARS.   Will we be still wrose off ten years from now, if Democrats succeed in continuing to block domestic oil production?  Almost surely "yes".

What is a much more accurate statement is that we "can't regulate our way out of this problem".  We might make some minor adjustments in margin requirements for futures markets, but attempting to interfere with futures markets will not lower the price of gasoline ONE PENNY.  It CAN'T, in a worldwide market.   It merely DISTORTS the market by stupid central planning.

Does that mean we are at the mercy of speculators manipulating the market.  Nope.  If we showed that we were SERIOUS about producing more oil, and about reducing demand (for example, by the Federal Government setting an example by reducing ITS use of gasoline and energy), we could put FEAR in the hearts of the speculators.  We need to make the market work FOR us, and we CAN.  We just have to have the WILL to do it.  See the entries in this blog over the past two weeks.

Yes, we can even put FEAR in the hearts of OPEC.  What if we actually went ahead toward oil shale development.  We have more oil trapped in shale in the West than ALL of the proved reserves of Saudi Arabia--enough for a CENTURY.  If OPEC see us as SERIOUS, they will produce as much as they can--both to make money while they can AND to drop the price so that these other sources of oil do not come into economic play.

That is how you bust both a cartel and speculators:  FEAR.  You can't do it with stupid laws and regulatons that have no effect (other than an adverse effect) on WORLD markets.

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