The host of the popular Fox News program, "The O'Reilly Factor," has taken to bashing "speculators" as villains:
Speculators bet that oil prices will go higher, and if they do, they sell the paper to concerns that will actually take the oil. If prices go lower, the speculators lose their money.
But get this. The speculators don't have to pay cash to buy the paper contracts. They use credit, so it is easy to play this Las Vegas-type game.
Now, every time the speculators bid up the paper price of an oil barrel, companies like Shell and Exxon Mobil raise the price of gas at the pump, justifying the increase by pointing to the paper price.
That's why the price of gas is rising so quickly in the USA. Speculators gamble, and big oil goes along for the ride. But when the paper price of oil drops, the pump price often does not because the speculators can always bid the price up again. So the oil companies just wait.
This is obviously a rigged game, and working Americans are getting hurt big time.
This "rigged game" is called capitalism, Bill. It ill behooves a man who earns $9 million a year to badmouth the free market -- another rich ignoramus like those liberal Hollywood blowhards O'Reilly rightly scorns.
The fact that speculators borrow money to buy futures does not mean it's "easy to play this Las Vegas-type game." Lenders have to evaluate the risks involved, just as they evaluate the risks of giving you a loan to buy a home or a car. And if the speculator goes bankrupt, he's not going to get any more credit, so he's out of the game.
If some economics grad student needs a dissertation topic, let me suggest deconstructing the populist idiocy of O'Reilly's "Talking Points Memo."
UPDATE: Apparently, Obama's following O'Reilly's lead, calling for a "crackdown" on speculators.