Tuesday, June 17, 2008

Congress takes aim at another scapegoat

High gas pump prices have members of Congress searching for scapegoats again – an imperative, lest Americans begin looking too closely at Congress’ own (very considerable) role in establishing a regulatory climate that creates false scarcity and drives prices higher. Big Oil “profiteers” are always convenient bogeyman, but the witch hunt now seems to be shifting to the role that “speculators” may be playing, as this story in the Los Angeles Times.

I honestly don’t know enough about commodities to speculate about what role, if any, traders are playing in high gas prices (though I would wager money that an unbiased analysis would find Congress far more culpable than commodities traders), but the Reuters wire service has done enough solid journalism to dig out the facts: Reuters News Wire.

It doesn’t seem to me, as a layperson, that this sector of the market is completely unregulated, or that a regulatory overreaction by Washington is warranted, given the high probability that government intervention will cause more problems than it solves.

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