Team Obama could profit from expertise in oil markets - a little sarcasm on DC follies

Donald Boudreaux, economist at George Mason University in northern Virginia writes at Cafe Hayek that the Obama administration, in contemplating regulation has the wrong approach to fluctuations in the price of oil. Since his regulators apparently know what are unreasonable and merely speculative prices as compared to true prices they should intervene in the market as investors.

Given their superior knowledge they should do well, he says, trading for the public benefit.

Writes Boudreaux: "Rather than issue new regulations that might distort prices - prices that typically convey important information about market conditions - Mr Obama and his lieutenants can better address this problem... 

"Whenever they believe that speculators are driving oil prices too high (and, thereby, setting the stage for these prices to 'fluctuate' back downward) Team Obama can go short in oil.  

"Likewise, whenever they believe that speculators are driving oil prices too low and, thereby, setting the stage for these prices to "fluctuate" back upward, Team Obama can go long in oil."

Not only will these brilliant public servants earn personal fortunes in the oil market, they'll also, Boudreaux points out, in the process, mute the allegedly excessive price fluctuations because, for example, selling oil short when its price is rising adds supply to the market today, thus relieving the pressures pushing today's price upward. 

"And because Obama & Co. would use their own resources, we the public will be better assured that their actions aren't driven by opportunistic politics."

Prof Boudreaux doesn't mention the brilliant funding scheme recently discovered by highways and transit sub-committee chair Pete DeFazio (Dem, OR) to fill a $140 billion funding gap in the six year $450 billion Surface Transportation Authorization Act that he and infrastructure chairman James Oberstar introduced into the Congress last month to much acclaim from the Washington construction lobbies, AASHTO and ARTBA.

The $140b funding gap must be filled by a tax on trading in oil futures, DeFazio said in a press statement  June 25, that failed to get the attention it deserves. (There are so many brilliant schemes being hatched these days in Washington, reporters can't keep up with them.)

No more messy inequitable user fees like tolls or gasoline taxes to fund highways, DeFazio is saying:

"Let the speculators pay!"

DeFazio's plan proposes a 0.02% tax on every oil futures contract and a 0.5% tax on oil futures option contracts. He says this would raise $190b over the six years of the STAA reauthorization, "more than enough to fill the gap."

That's $32b/year, that DeFazio plans to extract from his oil futures taxes.

http://www.tollroadsnews.com/node/4230

Would Obama & Co Oil Trading would be paying their fair share in taxes and building our infrastructure to boot?

Those trading as public servants should not be treated as speculators, so in the long American tradition of confining taxes to the private sector, we guess the Congress would give them an exemption.

Animated oil well at the top is courtesy WTRG:

http://www.wtrg.com/daily/crudeoilprice.html

TOLLROADSnews 2009-07-09