Investing soon to be illegal
By J.J. Jackson
The pea brains in Congress and many of their cronies around the country have found the problem that, they feel, is causing us so much pain at the pump. First they tried to demonize the oil companies. But that did not work too well. After that witch hunt, those on Capitol Hill are getting inundated with requests, if not demands, to get off the backs of oil companies and open up areas placed arbitrarily off limits to exploration and production.
So enter the "new" reason why gas prices are so high. The "new" problem is now that people are investing and taking risks.
How dare people take risks! Don't they know that they might fail? And if they fail, why government will have to pick them up at tax payer expense - or so the old canard goes.
However the trick here is that these people investing their own capital are not being called "investors". The new term of derision hurled at these folks is "speculators". Every time you hear this word now the hope among those who are really the problem (Congress, radical environment activists, loopy animal rights folks, etc.) is that you are conditioned to react with a mighty gasp, a knot in your gut and nod your head in blind agreement that the problem with the price of oil is the "speculators".
It just sounds so sinister.
Many of our elected officials are working their grubby little fingers to the bone trying to find ways to rein in "speculation" in the oil markets. Congressman Hinchey has even repeated a previous call by Maxine Waters to "nationalize" the oil industry much like Hugo Chavez has done in the Marxist "utopia" of Venezuela.
But many of our elected officials don't seem to care too much about why this speculation is taking place. They are not interested in the cause, because it is they that are the cause, and are only interested in masking the symptoms of the disease.
Investors are naturally attracted to a market where they believe they can make money. It does not take a rocket surgeon to figure that one out. It hardly makes a lick of sense to invest money somewhere where you think your investment will decrease in value or stay at the same level over time. That would defeat the entire purpose of investing!
The cause of inflated oil prices is not the investors who are putting their money in petroleum hoping to increase their investment. The cause is that right now supplies are not keeping up with perceived future demand. There are various reasons for this but some of the main reasons include the vast amounts of oil that are arbitrarily placed off limits by government fiat and ungodly regulations that don't necessarily prevent the building of new wells and drilling sites and even refineries, but certainly are not making the option to build them an attractive one.
Enter the investors. As demand increases faster than supplies of oil and refined petroleum products they can buy contracts for future delivery now at a lower price than they will sell them at next month or even next year. This is what investors do. They act on a resource where there is profit to be made.
Then those "pea brains in Congress" I recently referred to start getting nasty calls from their constituents demanding something be done as the price of their gasoline goes up. And they do what politicians tend to do - they blame the investors even though the investors are doing absolutely nothing wrong and only reacting to a situation Congress itself has created.
The investors are vilified as evil "speculators" and blamed for everything that cannot be blamed on Big Oil themselves or George W. Bush. Congressmen rush to the microphones and start talking about all the things they are going to do to punish these "speculators" who are now blamed for running up the price of gasoline at the pump. Legislative proposals and regulatory rules begin to be floated by politicians and bureaucrats alike looking for ways to either punish those that have taken advantage of the problems caused by Congress or at the very least seek to limit the activity of the "speculators" and cap their daily profits to a level determined by someone sitting behind a desk in Washington.
It is all a big dog and pony show with some smoke and mirrors thrown in for additional effect. But what it boils down to is that you have politicians in Congress seriously considering making investment abide by even more rules, if not making taking risks in the oil market a straight up crime all together.
As long as enough people are angry and not thinking straight they may get away with it too. But if you stop and think about it for a second you realize that if Congress can curtail investment in one market what is to stop them from doing it in another? If Congress is allowed to cap one person's profits today what is to stop them from capping yours tomorrow? Your good looks and charm?
Imagine a few years from now a politician with slightly more smarts than your typical politician, who are generally half as smart as your average American for reference, realizing that investments in the markets often out perform the return on investment of Social Security and make the government program look like the shoddy ponzi scheme it is. So perhaps Congress will next decide that this is unfair and that profits from private retirement investments (401ks, 403bs, pensions) will have to be limited as well. Perhaps they will be limited to the same rate as Social Security where you would be lucky to get two to three percent return on investment. We cannot have those "windfall profits" you know!
And on top of this, these investments by "speculators" in the markets also affect prices. The "speculation" that goes on with Google or Microsoft stock, for example, drives up the prices so high that most people cannot even afford a single share of either.
Or maybe Congress will next decide that people "speculating" on gold, which has skyrocketed in price over the past couple years, are reaping unwarranted profits. Gold is very sought after and as the price of gold is increased by "speculators" many Americans can no longer afford to own it. Congress should step in - or so someone might propose.
Who knows what could be next. But one thing is for sure, when it comes to Congress you never can tell. Today it is the oil investors. Tomorrow it is something you are invested in through retirement accounts just hoping and praying to make enough money to retire on because God knows those government retirement accounts are not doing too well.
If we let them take down the oil investors today, then ask yourself this question. Who will come to defend you when the same nebby bureaucrats come knocking on your door demanding that you give up your right to make a living? Or a profit? Or a nice retirement? When the out of control federal government sticks its grubby little hands into your wallet, what leg will you have to stand on and claim that it is unfair if you let them do it do someone else today?
No, not in America. It cannot happen here right?
Do not be silly. It already has.
J.J. Jackson is a libertarian conservative author who has been writing and promoting individual liberty since 1993 and is President of Land of the Free Studios, Inc. He is the lead editor of Conservative News & Opinion – The Land of the Free and also the owner of The Right Things – Conservative T-shirts & Gifts. His weekly commentary along with exclusives not available anywhere else can be found at http://www.libertyreborn.com.
Get weekly updates about new issues of ESR!