Thursday, June 19, 2008

Yay Capitalism!

Oh, smashing, groovy, yay capitalism! - Austin Powers
I find it shocking that our capitalist nation, the United States, keeps suggesting decidedly socialist solutions to the rising price of oil, such as interfering in the free markets that set the price, and imposing extra taxes on companies who are making money as the price of oil rises.
On the other hand, communist China comes up with the simple capitalist solution: raise prices to curb demand! What is so hard about that? "Oil prices dropped Thursday morning on reports that China is raising fuel prices, a move that could dampen the booming Asian nation's oil consumption." Associated Press 6/19/08
It troubles me that American leaders trumpet insane blame game theories about speculators being the cause of the rising prices. Oil is a global asset. Speculators do not set prices - free markets set prices. If speculators drive oil up to prices that are out of whack with the natural (supply and demand) equilibrium, the prices will come down. That's a fact - it may take longer than 3 weeks or 3 months - but it will happen - that is, if it's the fault of the speculators, which I do not believe it is.
Instead of blaming oil companies for making money, or speculators for expressing their opinions (that's all speculators do you know - they take a view on a price being too high or too low, and then sell or buy respectively. It's really no different from when anyone trades stock in their own account - we are all SPECULATING that the prices of the stocks we own will go higher), we can do things about it if we don't like the high price of oil. Buy a car that gets better gas mileage. Use public transportation. Car pool. My dad bought a fireplace fan device and a cord of wood - he'll use less heating oil this year because he'll burn wood instead - WE HAVE CHOICES!
Americans need to understand that $2.50 a gallon gasoline is not a birth right we have. Europeans pay over TWICE what we do for a gallon of gas! $8.67 a gallon in England, and $8.90/gal in Germany! If you want government subsidized gas, MOVE TO CHINA! But beware, even the communist Chinese have SENSIBLE capitalist tricks up their sleeve, and if your Hummer uses too much of their cheap fuel, they've shown that they'll take advantage of the most basic capitalist price/demand theories to restore equilibrium.

1 comment:

Anonymous said...

Speculators, or those with large amounts of capital, especially those from the housing bust are running for cover. Yes, they are to blame because they are using oil just like people use gold, to store value through uncertain times.

Real capitalists will do this to store value but the speculators looking to make a return on it are fooling themselves. It's only a place to hold value in uncertain times, not to make a profit. But they will climb on it because all the major money moves and they follow.