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Oil: Paying the Price

Oil: Paying the Price

Do the speculators have us over barrel?


It is difficult to pick up the paper without reading something about oil prices going up and its effect on the economy. We are feeling the difficulty of $75 fill-ups for vehicles that hardly resemble Hummers. As for the Hummer owners, well quite frankly I have little pity for them. We read about many factors that are contributing to this situation; the higher demand of oil by China and India seems to be cited quite a bit. But there is something strange going on given the suddenly dramatic and quick rise in price. It is not as if China and India came from nowhere and overnight became such major consumers of oil that rapidly!

Not helping matters are the disturbing news stories with recent headlines such as this:

Oil tops $140 after OPEC price prediction. Cartel's president says oil price could top $150 a barrel.

We could do without some of these predications, thank you. It seems that every time some "expert" mentions anything negative about the situation, it becomes a self-fulfilling prophecy and indeed oil immediately shoots up in price another few dollars a barrel.

Now I may not be an authority in this field and all I have is the same information that you read in the media, but there are a couple of relevant Jewish principles that I think could remedy the situation somewhat. There is a simple solution to these fluctuations in price every time one of these oil mavens passes gas with his mouth (pun intended). It is based on a verse from a song of King David as recorded in Samuel II 22:27. There he describes attributes and behavior of God that we can learn from:

With the pure, You (God) act purely, but with the corrupt, You act crookedly

People are always worried that they will sink to the same level of an immoral person by mirroring their ways and actions, and this is indeed true most of the time. But there are times when we need to fight fire with fire when dealing with corrupt forces, thereby realigning a situation to where it ought to be. I think this is one of those times. We need some powerful political and financial figures to make loud and clear predications how the oil bubble is about to burst, how the demand for it is dramatically tapering off, and how new alternative energies will soon replace our need for oil.

Just as OPEC makes its dire predictions sending prices skyrocketing, there needs to be some powerful political and financial leaders making counter-predictions to send the prices back down. This actually may not even be in the category of the so-called deceit King David speaks of since these predications and proclamations are not science but mere speculation.

Indeed there has also been much talk about the role of speculators in all of this. NPR reported recently that industry analysts say if not for speculators, oil prices would be half of what they are today. Recently Congress, through the House Energy Subcommittee on Oversight and Investigation, has been looking into what role speculators may have played in rising gas prices.

This is nothing new, and there have always been those who have tried to take advantage of a bad situation for their personal and selfish gain. One might say that these are the rules of a free market and that may indeed be the case. But the Talmud cites a teaching that speaks of this practice:

Those who hoard produce … or those who distort the market (Rashbam: by causing prices to artificially rise), concerning them Scripture states (Amos 8:4,5) "Hear this, you who swallow the needy and cause the poor of the land to fail: … God has sworn by the Glory of Jacob, 'I shall certainly never forget any of their deeds'.(Bava Basra, 90b)

How all of this will play out is anyone's guess. In the meantime we must do whatever we can to better this situation by any means possible. We must also keep in mind the above Talmudic teaching from the prophet Amos that the Almighty has eyes and ears on all of this and justice shall prevail. It may be bad now and it may even get worse, but perhaps the silver lining is that we will finally find cleaner sources of energy and wean ourselves from Arab oil and all the wealth and power it offers them. Once that happens, imagine what a beautiful world it will be.

July 5, 2008

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Visitor Comments: 2

(2) Beverly Kurtin, Ph.D., July 11, 2008 10:20 AM

We were warned

Good grief! We were warned back in the '70s that this was coming. Doesn't anyone remember what OPEC did to us?

Seeking new kinds of power sources has always been with us. When wood no longer because viable, we switched to burning animal excrement, whale oil was huge, coal oil was even larger.

The problem lays with GREED, because we certainly are not running out of oil. Anyone who thinks that is fooling him/herself.

The oil companies want to squeeze every penny it can out of Americans and have bought the White House to get them to permit oil drilling in Alaskan areas that are protected by law. But when has this White House ever cared about something as silly as the law?

Alternatives are already available, but recently research into alternatives to oil have been blocked from federal lands thanks again to the miserable oil companies who are attempting to keep us tied to oil.

Money that could go to research is being given to the oil companies by giving them billions of dollars in "tax breaks." For WHAT?

My family is doing its best to "go green" and we did it before it was fashionable. We paid high prices for the compact fluorescent light bulbs. And the naysayer cockroaches are screaming wherever they can get a microphone and a camera that GASP! they have mercury in them. Yes, all fluorescent bulbs have mercury and have since they first came out in 1901, it's not like it's new, folks.

Our power bill has steadily decreased as we've taken more and more measures to cut our power usage. We've given up on using our expensive central air conditioner in favor of less expensive to run window units. Yes, they're more noisy than central, but watching our power bill go down month-by-month makes it all worthwhile. Why not just give up air conditioning? Are you nuts? I live in Texas and we're running close to 100 every day.

If the government will get out of the way, we can solve this "crisis," but please don't come running to me with tears in your eyes over how bad things are. I work for myself so all I have to do is produce more and I make more money.

(1) Andy, July 10, 2008 2:19 PM

your last line said it all re specultors it's more complex then it seems

You quote the bible often so it should be no surprise to you that when life is fat and easy we don't perceive the danger at the door.We tend to act irresponsibly or worse, and often despite outward appearances we delude ourselves into believing that we are in full charge of our destiny. When the wake up calls come along we are given opportunities for greater clarity, and can realize that it's only an illusion that we are in charge. Hopefully, we are motivated to acknowledge the true reality and to act responsibly. It seems to me a gam zu le tov which is not so hidden.
I'm guessing that speculation plays an important and neccessry role in free markets, but suspect their operations need to be more transperent and possibly require more stringent regulation.It's not an area of expertise for me but I would be surprised if it was a simple matter of speculation being only negative.

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