In the months since Obama took office, the price of oil climbed and kept climbing and of course people on the right were quick to blame him for ridiculous oil hikes. Now that oil prices are tanking through the floor, people on the left are doing a little revenge ribbing in return. Truth is, Presidents have nearly no control over the strategic price of commodities, let alone one as volatile as oil. This is, as you might know, a pet peeve of mine. The people who control the price of oil are not producers. They are not consumers. When it comes to high-volume speculative commodities like oil, the guys in charge are Wall Street speculators... so forget your high school economics lectures about supply and demand. That was then. This is now. The reason oil was spiking like crazy last spring is because commodity hedge funds were buying futures on oil (can you say derivatives?), the net effect of which was to drive the price even higher. Sweet gig for them. The same process is now being played out in reverse: derivative traders are now trading on the expectation of oil at prices in the mid-$30 / barrel, so expect to see more price decreases until speculators decide they can make more money by betting on higher prices once again. On their regular Wednesday segment, four economic wonks in Canada regularly battle it out over whats shakin in the business world and my hands-down favourite (
Posted on: Wed, 17 Dec 2014 07:10:39 +0000
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