When will we ever learn?

By Jami Jones
senior editor


If anything good can be said about the down economy, not paying an arm and a leg for fuel is one of them.

But, as the saying goes, all good things must come to an end.

Along about October, both diesel and gasoline prices started snaking upward at a fairly brisk pace, leaving many wondering why. After all, the economy hadn’t really rebounded – yet.

Of course, the immediate grab at an excuse was the ol’ “supply and demand” dodge. Big oil reports claimed supplies were “off.” Not that demand was up, mind you. Leaving one to wonder how we ran into that supply situation so easily.

Nevertheless, supply and demand is still a convenient excuse – arguably an easily manipulated variable. As prices go higher and higher, you almost expect to hear that a trashcan fire on an oil rig shut down operations and caused the latest spike.

The reality is, despite everything we went through when oil and fuel prices skyrocketed, with speculation shouldering the blame, little has been done to prevent the second verse of that same song.

As our economy recovers and the dollar becomes stronger on the world market, it becomes all the more enticing for investors – everyone from institutional to the armchair PC types – to jump back into futures speculation.

Now, futures speculation can easily be considered a form of legalized gambling on what the price of “something” – whether it’s grain, orange juice or oil – is going to be in the future.

The natural downward pressure on all things stock market related has had the money going to the “how low will it go” bets for quite a while. Things are bouncing back and inevitably prices will go up. So, it’s time for the hungry speculators to run to the other side of the boat and start buying low and selling high.

Funny how that works isn’t it? The neat trick, which  results in a rabbit being pulled out of the hat, is that if speculation continues to run unchecked, it can, does and will drive prices higher for consumers.

Funny how less than 18 months after everyone – including the Beltway – was screaming about speculation, we haven’t seen too much done in the way of heading back down that slippery slope once again.

When will we ever learn? LL