Friday, June 27, 2008

Krugman on Oil



To paraphrase Barbie: "Economics is hard." And global economics is even harder, so us amateurs have to defer to the guys with the bigger brains. One I'm listening to is Paul Krugman; mainly because what he is saying about speculation in oil futures rings true with my understanding of how markets work.

Bottom line: speculators never burn a drop of oil. Any artificial changes they create in the daily price of oil can influence the behavior of both suppliers and users somewhat but it is not the driving force. Supply and demand are heart of it.

Cracking down on speculators won't increase supplies. Drilling will.

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