Speculators=Vampires II

Has anyone noticed that the price of gas has dropped for 24 consecutive days? I’m sure you have as there has been a drop of 15 cents over the last two weeks. Strange, Congress takes a vacation from doing squat all season and oil prices drop rather nicely. Hmm, maybe it’s just a coincidence.

But what of the conspiracy theories regarding speculators brought forth by progressives and liberal Democrats? Where are these capitalist vampires and why in the world would they let oil prices drop when there are riches to be had? Heck now is a good time to stick it to consumers since Congress is out of town. Why not ratchet the price up ever higher? Who is going to stop you, right? After all, the Enron Loophole is still in place and so are all the laws that sneaky Phil Gramm passed back in 2000 which, according to over active imaginations or political spinsters, are the mechanisms used by speculators to push crude oil prices higher and higher.

But, dear reader, as we have witnessed over the last couple of weeks, the laws of supply and demand, a strengthening dollar, and slowing economies in Europe and the U.S., have proved the conspiracy theorists wrong. What a surprise!

By the way, the U.S. Commodities Futures Trading Commission released the results of its interim investigation into any fraud, wrongdoing, or market manipulation on 07/22/08. And the conclusions of the interim report, “found that fundamental supply and demand factors provide the best explanation for the recent crude oil price increases.” Imagine that.

However, we shouldn’t be surprised if oil prices spike up again due to an unexpected world event (or if the dollar starts to sink again) and that complaints from the Left begin again in earnest. Quite frankly, I would actually be OK if the Enron Loophole were closed. Then, when prices do go up again, we won’t have to hear all the ludicrous theories on how capitalism doesn’t work, more regulation is needed, and how speculators are all making a mint as they tool the market.

Some "speculators" lose too

NEW YORK (Reuters) - SemGroup LP declared bankruptcy on Tuesday after $3.2 billion in oil trading losses torpedoed the formerly 12th-largest private U.S. company.

The Tulsa-based company racked up the massive losses as oil prices ran up record gains, undercutting short crude futures positions SemGroup bought to hedge against its 500,000 barrel-per-day trading business.

To meet obligations, SemGroup plans to sell off oil and natural gas gathering, transportation, and storage assets worth an estimated $6.14 billion that were purchased in a whirlwind of acquisitions since it was founded in 2000. (Read More)

Semgroup was, according to Forbes, the 12^th largest private company in the U.S. The company overestimated the oil market and it has collapsed unto itself. Unlike what the popular media regularly portrays, sometimes the “speculators” will not be making a mint. They will instead make the wrong moves and they will lose spectacularly. Being an oil trader or a "speculator" does not automatically mean great profits and high returns.