Guilty, until proven innocent

There's a new website available for those who prefer to "shoot first and ask questions later" when it comes to speculation in crude oil futures markets. Like many other complex issues of the day, simplistic Bill O'Reilly solutions seem to be the most popular.
As is the case for many others who desperately want to "ban the speculators" so we can all go back to life as we once knew it, which consisted of an endless supply of cheap energy, the organizers of this website exhibit a fundamental lack of understanding about how commodity markets work:

Speculators in these markets are increasingly buying and selling commodities such as oil to sell again, rather than to use. As largely unregulated speculators pocket billions of dollars at your expense, the price of commodities has increased out of proportion to marketplace demands.
...
As speculators continue to dominate the market, the volume of oil traded “on paper” has been as high as 22 times greater than the volume of oil consumed.
...
Today, as many as 90 percent of all commodities trades occur outside of the traditional marketplace exchanges. In these so-called “Swaps trades”, parties secretly buy and sell commodities with absolutely no one watching. This means speculators can manipulate oil prices and corner the market without anyone knowing.

If only it were that simple.

Hopefully, saner heads will prevail and perhaps some enterprising young economist will follow in the footsteps of the popular book Freakonomics to expose the extraordinarily high correlation between IQ and the zeal with which individuals want to ban speculators from oil markets.

See this Wall Street Journal story($) for a more balanced reaction.

ooo

This week's cartoon from The Economist: