The only way speculation can have a persistent effect on oil prices, then, is if it leads to physical hoarding — an increase in private inventories of black gunk. This actually happened in the late 1970s, when the effects of disrupted Iranian supply were amplified by widespread panic stockpiling. But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels. This tells us that the rise in oil prices isn’t the result of runaway speculation; ..."
Perhaps it's time to change my opinion? Via N. Gregory Mankiw. He also links to a bit on Obama blaming speculators.
2 comments:
As Greg Mankiw's blog pointed out, Alan Reynolds of Cato Institute also agrees with you. But none of us has matched your analogy with the idea that "betting on horses increases their speed." Lucky for Krugman and I that you don't write a regular newspaper column. We like competition, but preferably not so close to home.
http://www.cato.org/pub_display.php?pub_id=9479
Thanks! You are too kind.
I didn't mention my agreement with analysis coming out ot Cato, because that happens all the time.
Best Regards,
-Steve
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