Generally, "ations" are regarded as good things.
Propagation, masturbation, fornication, copulation, lubrication – all
activities mankind finds to be worthy efforts. However words containing this
benevolent suffix are have recently been besmirched by the smear campaign being
waged against one of their brethren. And with oil prices rising like Dirk Diggler’s imposing
lightsaber, the war against speculation threatens to
drag some of America’s
favorite pastimes down with it as casualties of this crusade.
Question" segment last night focused on the popular theory that speculators
are responsible in large part for driving up the price of oil for downtrodden
consumers everywhere. This has become a widely cited theory – its populist
appeal a draw to many feeling the squeeze of higher gas prices. In essence,
this theory lays blame for the high prices of oil squarely at the feet of the
moneyed few – speculators being players in the futures markets who bet that the
price of oil (or other commodities) will rise by buying up supplies via the
market and selling them for a profit when the price rises.
A short-term bubble caused by this rampant speculation is,
of course, a much more appealing theory than a long term price spike fueled by
basic supply and demand economics. The problem, however, is that most economists
seem to agree that while speculators could be responsible for a small portion
of the recent price hikes, but the majority is a strict question of bread and
butter demand pressuring supplies like never before and tossing some serious
consumer salad along the way.
Sadly, the speculator theory, in addition to dragging fellow "ations" through the effluent sewage and
bile of global economics, is serving as a rallying cry for those advocating for
offshore oil drilling and opening other public lands to oil companies. The
argument being that oil companies, being as fast acting as a Viagra and Red
Bull cocktail, will start traipsing through newly opened oil fields like
woodland fairies hell-bent on drinking morning dew off wildflowers and devouring the souls of
newborn kittens – quickly tapping oil reserves and thus driving prices down by
making speculation less lucrative due to increased supply.
However, that assumption only holds water if speculators are
truly the wealthy despots enthusiastically buggering the gas-consuming public
every time they turn around to unscrew the gas cap. And while they are indeed
taking swims in Scrooge McDuck style money bins, they’re merely responding to
market forces – not creating them. And while statistical evidence of this is
often hard to come by, there are indicators.
One such indicator is how long the price run up has been
occurring. Oil prices have gone from $26/barrel to the current $137/barrel in
the last seven years. And while correlation does not necessarily equal
causation, reduced oil output from Iraq due to Middle Eastern adventurism
combined with a nearly 100 percent increase in demand for oil from developing
countries like China over the last seven years would seem to be a likely cause,
especially when global output, unlike the Cousin It looking mother
fuckers in My Morning Jacket, just ain’t getting any higher. And since it
takes a hell of a lot of resources to create a capitalist economy out of General Tso’s chicken and corrupt
Communist party officials, the demand will only rise.
In fact, according to the Energy
Information Administration, worldwide energy use is going to continue
rising – 50 percent overall in the next 25 years, 85 percent in developing
countries. What’s worse, these estimates are based on numbers a year old, prior
to the recent run up in prices. Plus, with developments like India’s Tata
Nano, more people than ever will have access to cars – spiking demand even higher.
And not sexy Top Gun style
spiking. We’re talking Minneapolis Park & Recreation volleyball, with
beer bellies flying as former college athletes attempt to relive their once
In addition to pure demand, our own low interest rates,
designed to stimulate economic activity and spur the economy to avoid
recession, are a source of high gas prices. Low interest rates depress the
value of the dollar, making it more expensive to buy oil on global markets.
The government is, unsurprisingly, talking about stepping in
to regulate commodities markets. However, the proposed regulations would likely
do little to push fuel prices down – especially since oil speculation is a
global market. And they could even have a depressing effect on the U.S. economy as
a source of tax dollars dries up.
There is a bright side, however. Transit use in metropolitan
areas is up 15 percent. People are suddenly conscious of how much they drive
and this crisis is starting to make people look again at living in the cities
where they work, fueling a minor resurgence in home sales in some urban areas.
This reduced demand will, eventually, depress prices, but hoping that
speculators are the root cause of this decidedly painful gas bubble is akin to
Munn will fall for your geeky charm and closet full of Han Solo costumes.
But then, if you’ve convinced yourself of that, you’re probably used to
disappointment. And luckily, all those other "ation" words haven’t bee ruined for you.
Except maybe masturbation.