14
Jun
08

McCain’s War on Oil

McCain's War on OilMaybe there should be a requirement that anyone who runs for office in America be required to pass a stringent economics exam. Seriously! Politicians are morons!

At a town hall meeting in the old Federal Hall (New York City) last night, Senator John McCain had this to say:

“I believe there needs to be a thorough and complete investigation of speculators to find out whether speculation has been going on and, if so, how much it has affected the price of a barrel of oil. There’s a lot of things out there that need a lot more transparency and, consequently, oversight.”

“I am very angry, frankly, at the oil companies not only because of the obscene profits they’ve made but at their failure to invest in alternate energy to help us eliminate our dependence on foreign oil. They’re making huge profits and that happens, but not to say, ‘We’re in this so we can over time eliminate America’s dependence on foreign oil,’ I think is an abrogation of their responsibilities as citizens.”

It may sound like the bumbling argument of a drunk down at the corner bar, but no, these are the words of a Presidential contender. Let’s take a closer look at McCain’s mis-education.

What is a speculator? What does a speculator do?

In the commodities market, there are two types of traders – hedgers and speculators. What hedgers do, is attempt to reduce the risk of price uncertainty. For example, Henry, a potato farmer has another six months before he can harvest his crops and take them to market. He has fixed costs, so he wants to make sure he can get a profitable price on his potatoes, otherwise he may (literally) lose the farm.

So what does he do? He buys a futures contract which guarantees him today’s market price. If the price of potatoes falls when its time to harvest, he has no worries because his price has already been guaranteed. His downside is that if the price of potatoes goes up, he doesn’t earn any additional profits, but he’s happy because he already locked-in the profit he desired.

The speculators take the opposite approach. Instead of locking in today’s price, they attempt to predict the price in the future. The speculator is willing to buy Henry’s potatoes at today’s price, EVEN IF THE PRICE OF POTATOES FALLS THROUGH THE FLOOR! In other words, the speculators guarantee Farmer Henry the price he desires, and shoulder the risk of a potential fall in price for him. Without speculators, Farmer Henry wouldn’t be able to take this risk adverse action of hedging his crops.

BOTH the hedger and speculator are buying and selling the commodity. The difference is that the hedger is selling at a fixed price, while the speculator is buying at a fixed price. Quite frankly, without speculation, ALL markets would collapse.

“I believe there needs to be a thorough and complete investigation of speculators to find out whether speculation has been going on …”

Duh! Should there be a thorough investigation of accountants, because there’s been a lot of accounting going on? Also, it should be noted that many of the speculators are the big state pension funds of teachers, police, and firefighters! This guy doesn’t have a clue of what he’s talking about.

“I am very angry … at the oil companies … failure to invest in alternate energy to help us eliminate our dependence on foreign oil.”

McCain should start a company to create this MAGIC Alternate Energy Source! Can we be candid for a moment? You, me, the guy down the street … all the CEO’s in the world, Algore, and everyone else would LOVE to discover an energy source better than oil! It’d be a bigger deal than the invention of the light bulb and the computer. You’d be able to hire Bill Gates as your butler!

War on OilRight now, however, this “alternate energy source” doesn’t exist. And all the bumbling speeches of Politicians and their accompanying Rube Goldberg regulation schemes won’t change that fact. So instead of blaming BIG OIL for our dependence on foreign tyrants for energy, Mr. McCain should look himself in the mirror, and then take a good look at his “Good ol’ Boy” network in Congress … because America needs to be producing oil!

It is YOU and your cronies in CONGRESS who keep Americans dependent on foreign oil!

The 2008 Presidential Election has set a new low in America. We have the choice between a radical socialist in Obama, and an economic dunce in McCain.

God save us all. God save the U.S.A.!

Advertisements

1 Response to “McCain’s War on Oil”


  1. 1 aaa.still
    June 28, 2008 at 5:10 pm

    Thanks for putting some sense into this nonsense argument about about speculators and oil.

    How clueless do people have to be? We basically run the country on coal and oil. First they coddle the enviros and want to do away with drilling for oil. Then they coddle the enviros and want to avoid CO2 by not burning coal.

    People – this is what you get: $4.50 gas!! Wake up.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: