Government intervention will make the problem worse. Didn’t we already experience what happens when government interferes with the free market while Carter was president?
Speculation makes markets react faster and increases liquidity. Without liquidity the market could be much worse and subject to larger price fluctuations.
Speculators are not the problem. The number 1 problem is government created: The Gulf War has cost 600 Billion dollars. Rather than force Americans to pay for this in taxes, the government has borrowed and printed money. This has caused the dollar to crash in value. Oil is a commodity, just like gold, copper, and steel. All of these items have gone up in dollars as the dollar has gone done in value.
If the dollar held it’s past value, oil would be under $100 a barrel.
Besides the crashing dollar, other significant causes are: increasing demand from Asia, decrease in new discoveries, subsidized gas in China, and high per capita consumption in the U.S.
Speculation is a debatable factor. I don’t think it hurts us, but I know government interference will!Tags: commodity, government interference, gulf war, liquidity, Oil prices, price fluctuations