Gas prices are high and on the rise again in America, after taking a tumble after 2008′s financial crisis. Well, consumers dissatisfied at the pump tend to be voters dissatisfied at the ballot box. Obama knows it, and he’s not going to take high gas prices lying down: by golly, America, you’re being ripped off, and speculators are to blame!
I won’t guess whether this is ignorance or demagoguery, but either way it’s shameful. The “speculator” (which has unfortunately become a somewhat pejorative term) is not a fraudster, but
…one who, in the time-honored phrase, tries to “buy low and sell high.”
In other words, what the speculator does is essentially no different than what we do when we drive an extra block for cheaper gas. And more than that, the activity of the speculator is as beneficial to the market as our shopping around: it smooths out prices over time based on foreseeable circumstances.
And that’s exactly what we see happening. Unrest in the middle east caught everyone by surprise, but it hasn’t cut off the supply of oil… yet. If it had, speculators wouldn’t have foreseen it, and prices would have spiked (believe it or not) even higher than they did, because everyone would be totally unprepared. But luckily, we got wind of it before the supply was cut off, which is very likely to happen, especially from Libya. It allows us to adjust our consumption in advance, so we’re not hit so hard in the future.
Far from defrauding consumers, speculators prepare us for foreseeable changes in the market. Without speculators, the market will be totally unprepared, prices swinging wildly with every twinge in supply or demand.
The truth of the matter is that, far from causing starvation and famines, it is the speculator who prevents them. And far from safeguarding the lives of the people, it is the dictator who must bear the prime responsibility for causing the famine in the first place. Thus, the popular hatred for the speculator is as great a perversion of justice as can be imagined.
There is more to the defense of speculators and the full extent of their beneficence, of course, but I can hardly say more than Walter Block already has.
Or maybe we should just be grateful that Obama isn’t quite as foolhardy as Nixon was.