3/14/2012 8:42:00 AM Speculation drives up gas prices
Want someone to blame for high gas prices? Find a financial speculator.
Demand for oil is down and production is up, but prices are still soaring. That backwards result comes because more speculators are seeking profit in the oil market, turning fear over what might happen in Iran into ever-higher prices.
It's time to stop chasing phantoms and let the market work as it's supposed to, based on supply and demand. Catholic teaching supports this view, having long held that channeling greed into speculation, rather than into productive investment, leads to instability.
The Catechism of the Catholic Church says it's "morally illicit" to engage in "speculation in which one contrives to manipulate the price of goods artificially in order to gain an advantage to the detriment of others." What happened in the housing market and what's happening now for gasoline are close if not squarely in this ignominious category.
Say what you will about Europe, this kind of financial peril is better understood there, probably because of the continent's Catholic social foundation going back at least to Leo XIII. Reviewing the U.S. housing crisis, European leaders blamed “speculative capitalism.” French President Nicolas Sarkozy said it right when he declared, “We want a capitalism of entrepreneurs. We don’t want speculators.”
Whether he was conscious of it or not, Sarkozy was repeating what Pope John Paul II said in his 1991 encyclical on the dignity of work, Centesimus Annus. The pope wrote that ownership of the means of production is illegitimate when the result is speculation and not a true economic expansion.
Speculation may be immoral. Certainly it's often stupid. For example, oil prices went up last month over fears that Iran would halt shipments to Britain and France. Yet both countries had already stopped buying oil from Iran. In addition, experts were saying that there are alternative supplies that will make up for any shortages.
Still, prices rocket on because an increasing amount of oil is traded in financial markets, where common sense does not always hold.
A McClatchy news survey found that, if supply and demand were in charge, and not speculation, oil would cost about $75 a barrel, not more than $110.
Let's allow pure capitalism to return and curb speculation, which has turned the American dream into a long sleepless night.