Let Oil Markets Work

Placing regulatory limits on oil trading is a terrible idea. This is the latest example of the government sticking its nose where it doesn’t belong. We ought to allow oil markets to trade unencumbered, without government meddling, or limits, or controls on both large and small investors. This creates the broadest possible base and the largest possible volume. This approach — unsurprisingly — creates an efficient market.

Oil prices are continuing to fall as economic fears linger among investors. What’s so hard to grasp about this story? Look, if President Obama, Vice President Biden, and the White House advisers managed to misjudge the economy, why can’t we cut some slack for the oil traders who decided oil demand won’t be so strong?

By the way, if we would stabilize the value of the dollar, oil prices would probably be less volatile. And speaking of volatility, have you taken a look at the VIX index for stocks? It has been incredibly volatile of late. And yet I don’t hear tinhorn, flatfooted politicians calling for a limit to stocks. Do you?

England’s Gordon Brown and France’s Nicholas Sarkozy wrote a Wall Street Journal op-ed yesterday saying oil prices need government supervision. Nonsense. Oil prices need market supervision, and Brown and Sarkozy need adult supervision. They need to stop meddling in markets and attempting to control prices.

Here’s the key: If Team Obama would deregulate energy, drill, drill, drill, and make it easier for our Canadian cousins to send us oil from the oil sands in Alberta, oil prices would be a whole lot lower with greater inventory supplies. And our enemies in the Middle East would be a whole lot poorer.

Yes, I believe oil trading and any other market trading should be totally transparent. But various forms of market meddling and price controls would be an unmitigated disaster.

Finally, the markets will move offshore if we mess with them. So let market freedom rule. Drill, drill, drill. Work with Canada. Stabilize the dollar. And accept the fact that markets always work better than government planners do.

Why is this so difficult for Washington to grasp?