I get very frustrated when I hear people talk about those evil speculators in the oil markets supposedly driving the price of oil higher for no reason and ripping off poor unsuspecting consumers. There are several market truths that the public needs to be educated on.
1. Speculation is good - it provides liquidity in the market - you have to have someone to take the other side of your trade - the more people involved in the market the better.
2. The market is the best mechanism for setting the price of oil - not the government - the market is telling us the price needs to be higher - that the fundementals in the oil market have changed drastically.
3. Higher oil prices are actually forcing the development of alternative sources of energy which is a good thing.
4. The dependence of the U.S. on foreign sources of energy is bad - the sending of trillions of dollars to other nations and running an unsustainable current account deficit because of it is a national security issue.
Americans need to stop whining and save gas if they don't like the price - or find another mode of transporation. That will bring down the price and also help our national security situation.
I am hopeful that this fuel crisis (if it is one) will force the hand of the U.S. to use its intellectual capital to develop the next wave of innovation in the energy markets and make back some of those dollars.
By the way - McCain/Obama tied - that is good news - please contribute.
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