Echoing Larry Kudlow over at the Corner:
Obama, meanwhile, is repeating the tired old Democratic response that there’s no way offshore drilling will lower prices now. But he is wrong. And McCain has an opening here if he’d only stop his silly attacks on “reckless speculators.” The Arizona senator doesn’t know anything about speculators or investors or commodity trading or any of that stuff. The reality is, should Congress overturn its offshore-drilling moratorium, those very same speculators are gonna start selling crude-oil futures contracts and price declines will filter backwards from the longer-term contracts to the cash market. In other words, what can be bought will be sold. If drilling expectations change on the hope that future oil supplies will rise, prices will adjust lower and it will happen fast.
It brought to mind one of my favorite lines from the movie Trading Places, starring Eddie Murphy.
Randolph Duke: Exactly why do you think the price of pork bellies is going to keep going down, William?
Billy Ray Valentine: Okay, pork belly prices have been dropping all morning, which
means that everybody is waiting for it to hit rock bottom, so they can buy low.
Which means that the people who own the pork belly contracts are saying, "Hey,
we're losing all our damn money, and Christmas is around the corner, and I ain't
gonna have no money to buy my son the G.I. Joe with the kung-fu grip! And my
wife ain't gonna f... my wife ain't gonna make love to me if I got no money!" So
they're panicking right now, they're screaming "SELL! SELL!" to get out before
the price keeps dropping. They're panicking out there right now, I can feel it.
[on the ticker machine, the price keeps dropping]
Randolph Duke<: He's right, Mortimer! My God, look at it!
If tomorrow, the US Congress passed legislation opening up ANWR, offshore drilling and oil shale drilling across the board, the oil "speculators" that McCain and Obama are so quick to demonize will be bailing so fast on the oil future markets it will make your head spin. They're going to want to buy their son's the GI Joe with the kung fu grip!
The corrollary is that all this talk about not drilling in pristine ANWR means that the "speculators" are going to drive the price further up.