Tokatakiya: Things You Should Know

There has been much ado from the right about the recent fall in gasoline prices. This is understandable as much anger has been (justifiably) directed towards the Bush Administration and the GOP led Congress regarding this particular issue. Many Republicans have explained that their sacrosanct "free market" has been responsible for this decline just as it was - entirely unavoidably, mind you - responsible for the increase. For those of us who find it somewhat fishy that gas prices have fallen 50 cents a gallon just weeks prior to an election in which the Republicans control of Congress is on the line, well, we must be nut-job conspiracy theorists with tin-foil hats.

Now, I'm no Commie. Far from it. I consider Communism to be the scourge of the 20th Century. Capitalism is clearly the pony to back (plus, I like money). However, laissez fair capitalism has been pretty well discredited. Without any controls on the marketplace you get a chain reaction that will reach a critical mass and destroy all involved.

The free market-o-centric idea assumes that the free market is a machine that is only influenced by supply and demand. A kind of deus ex machina quickened by the breath of God.

Unfortunately, this beautiful self-deception does not hold water because it is individuals that make the decisions that drive markets. Individuals whose sole goal is to generate profit for themselves. Again, there is nothing inherently wrong with that. People will always push anything as far as they can get away with in the pursuit of their own self-interest. However, what is good for some is not necessarily good for the whole. That is where regulation is supposed to come in - to protect the larger community and, in fact, to protect the market from eating itself.

Individual investors who make money by guessing what the future cost of energy will be are know as "energy speculators". Energy speculators drive a fair amount of the price of crude oil.

"Such speculators base their investment decisions on the potential for future problems, like international relations between the United States and Iran, rather than market realities. In doing so, they significantly affect oil and gas prices on the spot market."