PM Pick

Why are oil prices so high?

Why are oil prices so high? The obvious answer would seem to be because we are running out of it. Peak-oil enthusiasts have argued this for years, but the idea is creeping closer to the mainstream. In the New York Times Paul Krugman argued that prices were based on fundamentals of supply and demand in this column from a week ago. He was responding to the idea that commodity speculators are wreaking havoc on the natural play of economic forces, an argument that fund manager Michael Masters recently presented at a Senate committee hearing. He blames "index speculators" among institutional investors, whose demand for oil futures rivals China:

According to the DOE, annual Chinese demand for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion barrels, an increase of 920 million barrels.8 Over the same five-year period, Index Speculators' demand for petroleum futures has increased by 848 million barrels. The increase in demand from Index Speculators is almost equal to the increase in demand from China!

At his blog, Steve Waldman takes an elaborate look at Masters's view and asks this pertinent question: "But what if the price-setting speculators are not momentum-driven index funds, but 'traditional speculators', correctly predicting that prices are below long-term fundamentals? Then limiting commodity speculation would prolong the mispricing, and cause us to waste resources that are kept artificially cheap." In other words, we would keep wasting fuel because regulators would be keeping its price artificially stabilized (kind of like they do in Venezuela and Indonesia).

Of course, there are high political stakes in this argument: if it's speculation and not peak oil that's driving prices, then we needn't worry so much about conservation or build any expectation of permanently higher fuel prices into our economic decisionmaking. That would make American automakers happy, at least, and supply political demagogues with an easy target as Americans suffer through "the summer driving season" paying prices at the pump ($4+ a gallon) that they have never dealt with before. As Krugman points out,

Traditionally, denunciations of speculators come from the left of the political spectrum. In the case of oil prices, however, the most vociferous proponents of the view that it’s all the speculators’ fault have been conservatives — people whom you wouldn’t normally expect to see warning about the nefarious activities of investment banks and hedge funds.
Why? Because the conservatives want to pretend America, in its glorious exceptionalism, need not change a thing about its wasteful behavior.

The surprising shift Krugman notes could actually be seen as the return of the old alignment of economic liberalism with political liberalism on one side, and economic conservatism and government intervention on the other, as it was before the Industrial Revolution, when society's elites (if you accept Polanyi's thesis in The Great Transformation) attempted to forestall the market's overwhelming society and all its established mores. In this sociopolitical configuration, conservatism is not about guaranteeing a free market but about preserving the existing distribution of power. For a while, a free market served that end, but conservatives have never cared about freedom per se. Our coming energy problems may make then more than abundantly clear.

The year in song reflected the state of the world around us. Here are the 70 songs that spoke to us this year.

70. The Horrors - "Machine"

On their fifth album V, the Horrors expand on the bright, psychedelic territory they explored with Luminous, anchoring the ten new tracks with retro synths and guitar fuzz freakouts. "Machine" is the delicious outlier and the most vitriolic cut on the record, with Faris Badwan belting out accusations to the song's subject, who may even be us. The concept of alienation is nothing new, but here the Brits incorporate a beautiful metaphor of an insect trapped in amber as an illustration of the human caught within modernity. Whether our trappings are technological, psychological, or something else entirely makes the statement all the more chilling. - Tristan Kneschke

Keep reading... Show less

This has been a remarkable year for shoegaze. If it were only for the re-raising of two central pillars of the initial scene it would still have been enough, but that wasn't even the half of it.

It hardly needs to be said that the last 12 months haven't been everyone's favorite, but it does deserve to be noted that 2017 has been a remarkable year for shoegaze. If it were only for the re-raising of two central pillars of the initial scene it would still have been enough, but that wasn't even the half of it. Other longtime dreamers either reappeared or kept up their recent hot streaks, and a number of relative newcomers established their place in what has become one of the more robust rock subgenre subcultures out there.

Keep reading... Show less
Theatre

​'The Ferryman': Ephemeral Ideas, Eternal Tragedies

The current cast of The Ferryman in London's West End. Photo by Johan Persson. (Courtesy of The Corner Shop)

Staggeringly multi-layered, dangerously fast-paced and rich in characterizations, dialogue and context, Jez Butterworth's new hit about a family during the time of Ireland's the Troubles leaves the audience breathless, sweaty and tearful, in a nightmarish, dry-heaving haze.

"Vanishing. It's a powerful word, that"

Northern Ireland, Rural Derry, 1981, nighttime. The local ringleader of the Irish Republican Army gun-toting comrades ambushes a priest and tells him that the body of one Seamus Carney has been recovered. It is said that the man had spent a full ten years rotting in a bog. The IRA gunslinger, Muldoon, orders the priest to arrange for the Carney family not to utter a word of what had happened to the wretched man.

Keep reading... Show less
10

Aaron Sorkin's real-life twister about Molly Bloom, an Olympic skier turned high-stakes poker wrangler, is scorchingly fun but never takes its heroine as seriously as the men.

Chances are, we will never see a heartwarming Aaron Sorkin movie about somebody with a learning disability or severe handicap they had to overcome. This is for the best. The most caffeinated major American screenwriter, Sorkin only seems to find his voice when inhabiting a frantically energetic persona whose thoughts outrun their ability to verbalize and emote them. The start of his latest movie, Molly's Game, is so resolutely Sorkin-esque that it's almost a self-parody. Only this time, like most of his better work, it's based on a true story.

Keep reading... Show less
7

There's something characteristically English about the Royal Society, whereby strangers gather under the aegis of some shared interest to read, study, and form friendships and in which they are implicitly agreed to exist insulated and apart from political differences.

There is an amusing detail in The Curious World of Samuel Pepys and John Evelyn that is emblematic of the kind of intellectual passions that animated the educated elite of late 17th-century England. We learn that Henry Oldenburg, the first secretary of the Royal Society, had for many years carried on a bitter dispute with Robert Hooke, one of the great polymaths of the era whose name still appears to students of physics and biology. Was the root of their quarrel a personality clash, was it over money or property, over love, ego, values? Something simple and recognizable? The precise source of their conflict was none of the above exactly but is nevertheless revealing of a specific early modern English context: They were in dispute, Margaret Willes writes, "over the development of the balance-spring regulator watch mechanism."

Keep reading... Show less
8
Pop Ten
Mixed Media
PM Picks

© 1999-2017 Popmatters.com. All rights reserved.
Popmatters is wholly independently owned and operated.

rating-image