John R. Lott, Jr. - High Gas Prices Are Not Something New
Cole Firearms Inc.
http://johnrlott.tripod.com/op-eds/FoxNewsDefSpeculators051208.html
This piece is mistitled.
Article published Monday, May 12, 2008, at Fox News.
High Gas Prices Are Not Something New
By John R. Lott, Jr.
With oil prices closing above $125 a barrel of oil on Friday, angry
politicians are blaming the higher prices on everything from
speculators to greedy oil companies. Last week some Democratic
Senators demanded "urgent action . . . to adequately investigate
whether speculators are driving up prices."
Democrats are proposing to protect the American people from "greedy
oil traders who manipulate the market." Senator Barack Obama wants
price gouging by oil companies to be a federal crime.
Everyone wants lower prices, but many politicians seem unable to
understand that speculators actually smooth out wild swings in prices.
Speculators make profits by buying oil when the price is low and
selling it when it is high, and doing that protects consumers.
Tensions rose last week because of Venezuela financing Columbian
terrorists. Columbia looked like it might retaliate and send troops
into Venezuela, the world's sixth largest oil exporter.
There was an obvious risk that Venezuela's oil exports could be
stopped. Oil prices increased immediately. They didn't wait for the
war to actually break out. By buying oil now in order to set it aside
if supplies are interrupted if the conflict escalates, is good for
consumers. Storing oil for then will prevent what would have been even
higher prices. Politicians obviously thought speculators were
unjustified to start bidding up prices. After all, war might never
occur. Yet, if speculators didn't do that and Venezuela's shipments
are halted, the much bigger increase in oil prices would surely cause
politicians to really call for the scalps of everyone in the oil
business.
The speculators are taking a real risk with their own money. If no war
occurs and prices fall, few in congress are going to shed tears over
the money that the speculators would lose. If war breaks out and
prices only rise a fraction of what they otherwise would have gone up,
who is going to thank the speculators for a job well done?
Speculators are actually extremely accurate in predicting the future.
But it is not just in oil prices.
Markets do a remarkably good job compared to polls and pundits in
predicting election outcomes. In 2006, trading markets correctly
predicted the outcome of every U.S. Senate race. In 2004, they
correctly guessed the presidential vote in every state but Alaska.
Similar accurate predictions have been seen in everything from how
much money movies make to who will win sports league championships.
Possibly all that isn't too surprising when people put their own money
at risk, but do politicians' really want to compare the accuracy of
their predictions with that?
Bidding up prices today also produces another benefit. Higher prices
today reduce consumption and increase inventories and thus reduce how
much prices will rise tomorrow. All this ensures that the overall
increase in price will actually be less.
The possibility of higher prices when disasters strike also gives oil
companies an incentive to put aside more oil to cover those
emergencies. Storing oil is costly, and if we expect oil companies and
speculators to bear those costs, you had better compensate them.
The irony is that letting the companies charge higher prices actually
reduces customers total costs because there will be more gas available
when the disaster strikes. Unfortunately, Venezuela's risks are not
the only production problems that have been occurring. Last week,
Nigeria, the eighth larger oil exporter, faced rebel attacks on a
major oil center. Over the longer run, the U.S. has refused to
increase production of oil despite huge untapped reserves. While New
York Sen. Charles Schumer and other Democrats lambast Saudi Arabia and
other countries for not increasing oil production enough, these same
politicians have consistently voted against any increase in U.S. oil
production.
Senator Obama sees part of the solution in a massive windfall tax on
American oil companies. Putting aside the fact that having politicians
blame oil companies is a bit hypocritical — U.S. oil companies have
paid more than three times in taxes to the government than they have
earned in profits over the last 25 years — higher taxes on profits
will reduce production and increase prices. A higher tax on profits
will mean fewer investments in producing oil and that in turn will
mean less production in the future.
Ironically, Democrats won the 2006 elections and took control of both
the House and the Senate by promising they would reduce gas prices.
Yet, with regular gas now selling above $3.67 a gallon, Americans can
only longingly remember the average prices of about $2.20 a gallon
that Democrats were complaining about in early November 2006. The
Democrats' bigger sin is that they seem to have no understanding of
how markets work.
As Robert Samuelson recently pointed out, high gas prices have long
been in the making. But punishing speculators and oil companies, while
politically popular, will only hurt consumers.
*John Lott is the author of Freedomnomics and a senior research
scientist at the University of Maryland.
--
“Your Rights will last only as long as your Ammunition!”
-- Rev. Shawn Cole
z
<colefirearm...@sbcglobal.net> wrote:
> The links in the piece can be found here:http://johnrlott.tripod.com/op-eds/FoxNewsDefSpeculators051208.html
> This piece is mistitled.
>
> Article published Monday, May 12, 2008, at Fox News.
>
> High Gas Prices Are Not Something New
>
> By John R. Lott, Jr.
...
> Ironically, Democrats won the 2006 elections and took control of both
> the House and the Senate by promising they would reduce gas prices.
There ya go again, John. ( http://www.whoismaryrosh.com/)
Unless you mean by that "Energy Independence", which would not be what
anybody else means by that. Otherwise, the 2006 Democratic platform
was:
Honest leadership and open government
Real security
Energy independence
Economic prosperity and educational excellence
A healthcare system which works for everyone
Retirement security.
Kudos to you Mr. Cole Firearms for bringing this fib to our attention;
keep watching this guy.
Felix D.
"z" <gzuc...@snail-mail.net> wrote in message
news:f6100265-6015-455e...@m36g2000hse.googlegroups.com...
> There ya go again, John. ( http://www.whoismaryrosh.com/)
> Unless you mean by that "Energy Independence", which would not be what
> anybody else means by that. Otherwise, the 2006 Democratic platform
> was:
Yes, let's look at their platform as poposed to the actual results we have
to live with before we give thesew nitwits another four years to fuck things
up:
> Honest leadership and open government
House Ethics Committee hearings are starting now to get to the bottom of
potentially illegal Democrat rule changes *after* a vote had been taken that
didn't go the "right way."
> Real security
And that's why they cancelled the FISA program, right? Now we have no idea
what the muzzies are saying to each other. Some security when you let Ahmed
the Terrorist sue the Telecom companies for letting the government listen in
as he flaps jihad to his pals in Buttfuckistan.
> Energy independence
LOL! Let's trurn more corn into gasoline and see how many starving kids in
Africa die. But, drill in ANWR? Off the coasts? Never! Far better to watch
the Cubans move in offshore than risk smudging a one fukken seagull.
> Economic prosperity and educational excellence
We have a recession going on right now according to the Democrats who
promised to deliver us from such an event; the dollar is sinking lower, oil
costs are at an all time high, and Johnny still can't read.
> A healthcare system which works for everyone
Where? Maybe for Congress.
> Retirement security.
C'mon! Your Democrat pals have been giving away social security money for
decades now; did you miss the latest about sending SS money to Mexico?
> Kudos to you Mr. Cole Firearms for bringing this fib to our attention;
> keep watching this guy.
You've been pretty well brainwashed, friend.
z
> "z" <gzuck...@snail-mail.net> wrote in message
>
> news:f6100265-6015-455e...@m36g2000hse.googlegroups.com...
>
> > There ya go again, John. (http://www.whoismaryrosh.com/)
move the goalpost much?
"Democrats won the 2006 elections and took control of both the House
and the Senate by promising they would reduce gas prices"
"That's not even close to the truth"
"Well, they didn't deliver on their promises. So there."
Felix D.
>> You've been pretty well brainwashed, friend.
> move the goalpost much?
Is this the best spin you can come up with? I'll bet you're an Obamite,
right?
Trevor Wilson
"Cole Firearms Inc." <colefir...@sbcglobal.net> wrote in message
news:xk8Wj.399$qH4...@nlpi061.nbdc.sbc.com...
> The links in the piece can be found here:
> http://johnrlott.tripod.com/op-eds/FoxNewsDefSpeculators051208.html
> This piece is mistitled.
>
> Article published Monday, May 12, 2008, at Fox News.
>
> High Gas Prices Are Not Something New
>
> By John R. Lott, Jr.
>
> With oil prices closing above $125 a barrel of oil on Friday, angry
> politicians are blaming the higher prices on everything from
> speculators to greedy oil companies. Last week some Democratic
> Senators demanded "urgent action . . . to adequately investigate
> whether speculators are driving up prices."
>
> Democrats are proposing to protect the American people from "greedy
> oil traders who manipulate the market." Senator Barack Obama wants
> price gouging by oil companies to be a federal crime.
>
> Everyone wants lower prices, but many politicians seem unable to
> understand that speculators actually smooth out wild swings in prices.
**Bullshit. For an alleged economist, you know fuck-all about speculators.
Speculators WANT wild fluctuations in prices. The bigger the fluctuation,
the bigger their profits. It matters not if the price rises or falls. They
can sell short during falls and buy during rises. Either way, they make
money. Leveraging ensures that profits can be spectacular.
> Speculators make profits by buying oil when the price is low and
> selling it when it is high, and doing that protects consumers.
**Yes. However, speculators can make money, regardless of which way the
market goes. They have ZERO interest in keeping prices low (or high). They
only care about the movements. The bigger the movement, the bigger the
profit. One would think, that as an economist, you would know this stuff.
Share traders have been doing this for decades.
> Tensions rose last week because of Venezuela financing Columbian
> terrorists. Columbia looked like it might retaliate and send troops
> into Venezuela, the world's sixth largest oil exporter.
>
> There was an obvious risk that Venezuela's oil exports could be
> stopped. Oil prices increased immediately. They didn't wait for the
> war to actually break out. By buying oil now in order to set it aside
> if supplies are interrupted if the conflict escalates, is good for
> consumers. Storing oil for then will prevent what would have been even
> higher prices. Politicians obviously thought speculators were
> unjustified to start bidding up prices. After all, war might never
> occur. Yet, if speculators didn't do that and Venezuela's shipments
> are halted, the much bigger increase in oil prices would surely cause
> politicians to really call for the scalps of everyone in the oil
> business.
>
> The speculators are taking a real risk with their own money.
**Not all of them. In fact, not even most of them. Banks, superannuation
funds and other entities are all involved in speculating on oil prices.
If no war
> occurs and prices fall, few in congress are going to shed tears over
> the money that the speculators would lose.
**There is no evidence that they would, necessarily, lose. Which you SHOULD
know. It is the movement that matters, not the absolute price of whatever
commodity is being traded.
If war breaks out and
> prices only rise a fraction of what they otherwise would have gone up,
> who is going to thank the speculators for a job well done?
**The speculators do nothing to help anyone, but themselves and their
employers. It's just gambling, for fuck's sake. They know the risks.
>
> Speculators are actually extremely accurate in predicting the future.
**Some are. Some aren't. As you SHOULD know: For every winner, there must be
an equivalent loser. Think of it this way (why do I need to explain this
stuff an economist, for fuck's sake?):
If a speculator thinks prices will rise, he buys. The speculator who sells,
then loses potential profits as a consquence. If a speculator thinks prices
will fall, he sells. The speculator who buys, then loses, because he pays
too much.
> But it is not just in oil prices.
**Indeed. Currencies, pork bellies, wheat futures, gold, silver, etc. They
all work the same way. Someone wins, someone loses. The consumer of those
commodities hardly ever gains.
Trevor Wilson
z
> "z" <gzuck...@snail-mail.net> wrote in message
so you're admitting that lott was "shading the truth" with his
"Democrats won the 2006 elections and took control of both the House
and the Senate by promising they would reduce gas prices" statement?
or denying it? or changing the subject? you can do whichever you wish,
of course, but it's polite to the other party to let him (me) know.
Felix D.
On May 14, 5:13 pm, "Felix D." <#1Chek...@OGPU.org> wrote:
> "z" <gzuck...@snail-mail.net> wrote in message
>
> news:dbd56718-0298-4da1...@27g2000hsf.googlegroups.com...
>
> >> You've been pretty well brainwashed, friend.
> > move the goalpost much?
>
>> Is this the best spin you can come up with? I'll bet you're an Obamite,
>> right?
> so you're admitting that lott was "shading the truth" with his
> "Democrats won the 2006 elections and took control of both the House
> and the Senate by promising they would reduce gas prices" statement?
LOL! No, I admitted you've been brainwashed.
z
> "z" <gzuck...@snail-mail.net> wrote in message
>
> news:a443cdfe-cfcf-4631...@k13g2000hse.googlegroups.com...
> On May 14, 5:13 pm, "Felix D." <#1Chek...@OGPU.org> wrote:
>
> > "z" <gzuck...@snail-mail.net> wrote in message
>
> >news:dbd56718-0298-4da1...@27g2000hsf.googlegroups.com...
>
> > >> You've been pretty well brainwashed, friend.
> > > move the goalpost much?
>
> >> Is this the best spin you can come up with? I'll bet you're an Obamite,
> >> right?
> > so you're admitting that lott was "shading the truth" with his
> > "Democrats won the 2006 elections and took control of both the House
> > and the Senate by promising they would reduce gas prices" statement?
>
> LOL! No, I admitted you've been brainwashed.
so you think the Democrats promised they would reduce gas prices, in
2006? and you think this because you saw them do it? but you're not
going to tell us where?
john...@gmail.com
http://www.highbeam.com/doc/1P1-123873372.html
for a piece in the Washington Post that contains this promise
See also such pieces as:
http://worldnetdaily.com/news/article.asp?ARTICLE_ID=51660
Minority Leader Nancy Pelosi of California and other House Democrats
recently released a six-pronged "New Direction for America" agenda for
change: Real security and immediate phased pullout in Iraq; higher
minimum wage; more affordable college; energy independence and lower
gas prices; affordable health care; and something called "Retirement
Security and Dignity," which calls for shoring up private pensions.
z
>
> - Show quoted text -
Yikes. OK, I submit, you win. (From the first link, the second one
doesn't relate.)