My Two Cents: Here we go. It was only a matter of time. Nah, the printing of trillions of dollars out of thin air as evidenced by the Fed’s balance sheet (see below) has nothing to do with the price of oil going up. I guess all of the great inflations of eras gone by have all been a consequence of speculators! How convenient. I guess Mr. Kennedy deserves a Nobel Prize in Economics. Why not, they are apparently giving out Peace Prizes like hotcakes.
Fed Balance Sheet Since the 2008 Crisis (up a measly $2 trillion give or take a billion)
The best line from this ridiculous article is “Because of speculation, today’s oil prices of about $100 a barrel have become disconnected from the costs of extraction, which average $11 a barrel worldwide.” Cost of extraction is $11 on average. Really? Does that include capital cost? Does he understand how commodities are even priced. At the margins. What is the marginal cost of new oil including capital costs? What a disingenuous dope. Here’s the brilliant NY Time piece of scapegoating propaganda.
Op-Ed Contributor
The High Cost of Gambling on Oil
By JOSEPH P. KENNEDY II
Published: April 10, 2012
THE drastic rise in the price of oil and gasoline is in part the result of forces beyond our control: as high-growth countries like China and India increase the demand for petroleum, the price will go up.
But there are factors contributing to the high price of oil that we can do something about. Chief among them is the effect of “pure” speculators — investors who buy and sell oil futures but never take physical possession of actual barrels of oil. These middlemen add little value and lots of cost as they bid up the price of oil in pursuit of financial gain. They should be banned from the world’s commodity exchanges, which could drive down the price of oil by as much as 40 percent and the price of gasoline by as much as $1 a gallon.
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