Some Democrats (and others, including the Saudis) have muttered darkly that the current high price of oil is caused by “speculators” who are driving the price up. Today in Saudi Arabia, U.S. Energy Secretary Samuel Bodman rejected that theory, pointing out that production has failed to keep up with rising demand, especially from India and China.
It would be a wonderful thing, of course, if the current price spike were caused by speculation. All bubbles burst. Those now buying oil futures at $130 a barrel would be like those who bought Yahoo at $120 in 1999–fools. The price would soon come crashing down, and the laugh would be on the “speculators.” Unfortunately, that isn’t the case. The Saudis have their own reasons for blaming speculation in the oil market, but Democrats who float the same theory have a different motivation–it’s an excuse for doing nothing other than carrying out dumb Congressional “investigations,” in which the Dems specialize. The only way to stabilize and bring down the cost of energy, long term, is to produce more of it.