Experts Think Going After Oil Speculators is Pointless
Experts and opinion makers don’t think much of the administration going after oil speculators as a way to lower gas prices.
[Everything bolded is mine.]
Former commissioner of the Commodity Futures Trading Commission, Michael Dunn spoke with CNBC’s Carl Quintanilla:
QUINTANILLA: Do you believe that the kind of behavior he’s describing is responsible for a significant rise in the price of gas in this country, say, over the past year?
DUNN: Well, I’m not privy, too, since I’ve been out of the commission since October of 2011, but the whole time I was there, I never saw any empirical data that said speculators were responsible for an increase or a spike in fuel cost.
We identify six strands in the literature corresponding to different empirical methodologies and discuss to what extent each approach sheds light on the role of speculation. We find that the existing evidence is not supportive of an important role of speculation in driving the spot price of oil after 2003. Instead, there is strong evidence that the co-movement between spot and futures prices reflects common economic fundamentals rather than the financialization of oil futures markets.
Finally, there’s the Washington Post’s editorial board:
No one should imagine that this will help much at the pump, no matter how much the White House talks of the urgent imperative to protect vulnerable consumers. America, after all, has been down the blame-price-manipulators road before. In 2006, President Bush ordered an investigation into gas-price gouging that had trouble finding even credible complaints of price manipulation. In 2008, the CFTC found that speculation wasn’t systematically driving gas-price increases.
This futile quest for Oilus Manipulatus is more political gimmick than serious policy.