Q: If oil speculators were to blame for the $12 per barrel January-June increase, do they now get credit for the $25 drop?

From Mark Perry of "Carpe Diem."

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Last summer, Sen. Bernie Sanders (I-VT), a member of the Senate energy committee, blamed greedy speculators for rising oil prices and he introduced legislation on June 26 that would “require the Commodity Futures Trading Commission to take certain emergency action to eliminate excessive speculation in energy markets.” Since Sen. Sanders’ legislation was introduced, oil prices have fallen by about $25 per barrel from a peak of $107.50 per barrel in June to below $83 per barrel last week. So let me have a little editing fun and update this report in the Burlington Free Press from last June:

Sen. Bernie Sanders, I-Vt., introduced legislation to make federal regulators invoke emergency powers to stop speculators from using the
turmoil in Iraq tothe US shale boom and the slowdown in global demand to drive
updown oil prices.

The price of crude oil has
risenfallen by more than
523 percent since June 12,
when militants attacked and took control of several Iraqi cities, thanks in part to a nearly 500,000 barrel increase in daily domestic oil production accompanied by weak global energy demand, according to Sanders’ office. Oil prices have
risen 53 fallen 42 percent since
20092008.

“The fact is that high gasoline prices have less to do with supply and demand and more to do with Wall Street speculators driving prices
updown so sharply in the energy futures and spot markets,” Sanders said in a statement.

AAA reported gas is
more expensivecheaper now than it has been in
sixfour years at the beginning of the
summer drivingwinter season. The average price of gas nationally today is $3.05 per gallon, according to GasBuddy.com, the lowest national average since December 2010. In Vermont, gas averaged
$3.69$3.29 per gallon, and in Burlington,
$3.75$3.36 per gallon - that’s about 40 cents per gallon lower than in June when Sanders introduced his bill. Speculation has help drive the price of gas at one station in Jay, VT to below $3 per gallon.

Sanders’ legislation would force the Commodity Futures Trading Commission, the federal agency that regulates oil markets, to use all of its authority, including its emergency powers, to eliminate excessive oil speculation to prevent prices from falling even further. The bill is co-sponsored by 17 senators, all Democrats. Rep. Rose DeLauro, D-Conn., is introducing a companion bill in the House to stop the greedy speculators from driving down prices at the pump even further.

MP: Here’s a question for Sen. Sanders and his 17 fellow Democratic sponsors: If greedy speculators were to blame for the $12 per barrel increase in oil prices during the first half of this year that motivated your anti-speculation bill in June, do oil speculators now get any of the credit for the $25 drop per barrel in oil prices over the last 4 months? And further, do we really still need your anti-speculator legislation?

In Sen Sanders’ fantasy world, I guess we are we to assume that greedy speculators only enter the futures markets when they “smell profits” from rising oil prices, but then they suddenly disappear whenever prices are falling? As if greedy traders can’t speculate just as easily on falling prices (with a short position), as they can for rising prices (with a long position)? Alternatively, I guess Sen. Sanders would have us believe that speculative trading (and not market forces) is solely (or largely) responsible for rising oil or commodity prices, but then market forces (and not speculation) suddenly take over and are responsible for falling prices? After all, greedy speculators who correctly anticipate the future direction of commodity prices can make just as much money when they correctly predict that prices will rise as they can when they correctly predict falling prices.

Realistically, Sen. Sanders and him Democrat co-sponsors can’t have it both ways. If speculators are to blame for rising oil prices, they have to also get the credit for falling prices. In that case, we and Congress should be celebrating and thanking the speculators for the recent drop in oil and gas prices that will save consumers collectively about $100 billion over the next year."