Markets shouldn’t be that hard a concept for you either. Even Newt mentioned something like a 10% change in supply in natural gas cratered the price by over 50%. Small differences in supply can make a big difference in price in any direction. And, yes, they are watching the market to anticipate changes in supply (Middle East turmoil, accidents, government exploration) or demand (economic booms or busts). It’s not just airlines, you could have governments like China or India hoarding oil as well. The speculators keep the oil priced too high for hoarders to grab it, making sure the world will have the available supply it needs even when demand is high, thanks to them keeping the price at a reasonable market level. Because it’s better to fill your tank at a high price than not be able to fill it at all.
This is an economy. If a commodity gets scarce, we need to know about it as early as possible, or anticipate it so we can plan accordingly. It’s working well, as we already have our politicians pushing to drill for more oil in anticipation of likely shortages, which might give enough lead time to stave off a real crisis. And if you don’t think potential nuclear war in the Middle East is a crisis that will impact oil supply, you’re being irrational. The markets are working. The markets are telling us we’d be better off economically producing more oil domestically, and they’re right.
Middle East turmoil, accidents, government exploration...yes, that’s a marked departure from the reality of the history of the entire world. Wait, no it isn’t. It’s always been that way. Why are you acting like all of a sudden now the oil-producing countries are destabilized? They have always been that way and probably always will be. Unless you are going to argue with the facts that supply and demand are inelastic, I have no idea what the hell you’re talking about. If oil supplies have been consistent for 30 years despite all of the events that have occurred, I have no reason to suspect (nor should anybody else) that the future will be different.
I’m sorry if I don’t see the speculators as some sort of guardian angel making sure we all have oil, even at ridiculously inflated prices. I’m sure that’s exactly what they intend to do. We should thank them. Hell, we should go back and praise everybody who cratered Enron. After all, they were probably doing the same thing.
If a commodity gets scarce...yes, if a commodity gets scarce, it would be good to know about such an event. Of course, AS YOU CAN PLAINLY SEE, THE COMMODITY IS NOT SCARCE. The speculators have been wetting their pants with wild swings in expected supply and demand yet NONE OF IT HAS EVER MATERIALIZED.
It isn’t the markets, by the way, that tell us we should be producing more oil domestically. It’s common sense and it’s been telling us that for probably 50 years.