June 30, 2008
SEBASTIAN MALLABY: Why politicians should leave energy markets alone. “Richard Nixon’s early-1970s price controls were a disaster. Administering the controls on energy alone took an estimated 5 million man-hours per year and punished motorists with gas lines. Repeating this experiment by clamping down on oil trading is like burning your hand on a gas stove and then sitting on a barbecue. . . . Nixon’s heirs forget that the ‘speculators’ they attack are often trying to reduce risk, not embrace it. Pension funds have piled into oil because they are trying to protect themselves from inflation. Small investors who load up on retail oil funds are mostly doing the same. I know my family will consume several thousand dollars’ worth of oil this year, so I logged on to Fidelity’s Web site and locked in my price. Does Congress think I’m irresponsible?” No, they just hope others are gullible.