Whenever there are expected shortages of a commodity, there are millions of wonderful nongovernmental people who enter to help. These people, often vilified and called every name except child of God, are the speculators. Efficient allocation of resources requires allocation over time. If speculators guess there will be future shortages, they will buy the commodity now in the hopes of making a personal gain when prices rise. Their purchases have the effect of raising the commodity's price now and making more available in the future -- and at a lower-than-otherwise price.
Last April, President Barack Obama called for his Department of Justice to lead a task force to root out manipulation of the oil market and gouging of consumers at the gas pump. U.S. Sen. Bernie Sanders, I-Vt., introduced legislation called the End Excessive Oil Speculation Now Act. White House and congressional attacks on oil speculation do not alter the oil market's fundamental demand-and-supply reality. What would lower the long-term price of oil is for Obama and Congress to permit exploration for the estimated billions upon billions of barrels of oil off our Atlantic and Pacific shores, the Gulf of Mexico, and Alaska -- not to mention the estimated billions, possibly trillions, of barrels of shale oil in Wyoming, Colorado, Utah and North Dakota -- but doing that would offend the sensitivities of environmental extremists who have the ears of Congress and the White House.
Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
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