Politicians slip oil crisis blame

Like Shakespeare’s Leontes, Americans amid crisis are inclined to believe “all’s true that is mistrusted,” and so to the fore stride politicians with false villains in tow, this time, oil speculators. In the manner of a thief amid angry hordes who know only that the treasure has been purloined but not the faces of the perpetrators, politicos of sundry titles and hues charge commodity traders in the case of soaring oil prices.
The accusers includes the Republican and Democratic presidential candidates, majority leaders in both chambers of Congress, pundits and commentators from both sides of the party line and, of course, Ralph Nader. Speculators, the complainants cry, have driven up crude oil prices from $50 a barrel in January 2007 to $130 a barrel at this writing.
This has happened, according to theory, because traders such as oil baron T. Boone Pickens and securities giant Goldman Sachs have guessed that prices would increase to $150 a barrel and higher. As costs have risen in ostensible response, speculators have reaped the dividends at consumers’ expense. So have risen shaking fists from elected panderers such as House Speaker Nancy Pelosi, who vows grimly, “We are putting oil speculators on notice.”
What makes for theater good or bad does not make for Newton moments, turning theory into law, unless one relies on Hollywood and Washington for supplies of false reality, of which there is an abundance and of which growing ranks of the naïve freely drink.
Speculators profit not by price but by speculating accurately. To gain excessively from so doing in the current milieu would require investors to stockpile large inventories to manipulate prices higher or to capitalize when prices rise. U.S. inventories are almost 1 percent lower than they were three years ago, before the onset of the crisis.
So whom to blame? Watch for the politicians edging toward the door.
Prices are affected not by speculators but supply, which exists but is unavailable. To reach the crude that flows below rather than in refineries would require investment in technology and research at a cost of $4 trillion, according to the International Energy Agency. Oil companies possess the money and will but not the access.
More than three-fourths of known global oil reserves are under state control. Iran is an example of why this is problematic. Iran disdains foreign companies, and their investment dollars, in the same way it does foreign governments. Lacking sufficient investment money of its own, Iran watches as exploration and production are mired in antiquation. Similar situations permeate the oil-producing world.
America, meanwhile, is hostile to itself on behalf of caribou and polar bears. Oil awaits liberation in Alaska’s Arctic National Wildlife Refuge, but Congress resists toppling a drilling ban imposed under the Clinton administration a dozen years ago. Presumptive Republican presidential nominee John McCain could carve distinctions between himself and Democratic opponent Barack Obama on this subject but declines, fancying himself Teddy Roosevelt reincarnate. Obama could do the same but risks losing the fervor of his environmentalist constituency. So we pay as they preen.
Leontes realizes his errors too late to save his wife and son. If Americans awaken with haste to the falsehoods perpetrated by their political suitors, the market’s blues, like Leontes, might be driven from the world economic stage in Shakespearean fashion: “Exit, pursued by a bear.”