Blaming speculators for $4 gas

What happened

The House of Representatives on Thursday passed a bill aiming to curb speculation in the energy market. The measure—which was passed as crude hit a record of $140 per barrel—calls on the Commodity Futures Trading Commission to consider imposing limits on how much each speculative investor can buy, on the theory that investors who are buying up oil futures are largely responsible for soaring fuel prices. (Bloomberg in the Los Angeles Times)

What the commentators said

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The Energy Department blames soaring oil prices on supply and demand, said Ed Wallace in BusinessWeek.com, but you’d have to be blind not to see that “speculation is distorting the oil market (and that of any commodity with an inelastic price, such as foods).” Now that the Commodities Futures Trading Commission is talking about bringing those "dark, unregulated" markets into line, maybe sanity will soon be restored.

“Regulating futures markets more tightly isn’t a bad idea,” said Paul Krugman in The New York Times, “but it won’t bring back the days of cheap oil. Nothing will.” And pointing fingers at speculators is not the way to confront that reality. The key is driving less, switching to more fuel-efficient cars, and, if the government must weigh in, encouraging the private sector to develop energy alternatives, and spending more on public transit.

So far, the solutions from both political parties have been “uninspiring,” said Steve Huntley in the Chicago Sun-Times. Democrats, “believing the world is divided into villains and victims,” want to slap a windfall profit tax on oil companies and “scapegoat free markets” by pinning the blame for $4 gas on speculators. And Republicans think the answer is drilling for oil everywhere we can. What we really need is a Manhattan Project for energy security that embraces all the nation’s options, including plug-in hybrids, clean coal, and flex-fuel cars.