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Take it backStop Oil Price Rise by Banning Trading
While it looks like the oil prices may not hit the $100 mark after all, I did read a rather bizarre article on the New York Times on a proposed Indian solution to help contain the rising oil prices.
M.S. Srinivasan, who is India’s Petroleum Secretary, is as worried as anyone else about the rising oil prices, despite steady demand and steady supply (we’ll ignore the temporary jumps due to oil rigs being closed in some parts of the world due to unfriendly weather in the seas).
His solution?
Why, taking the crude oil off the commodity exchanges, of course. The way he sees it, the speculators are driving up the prices of oil, fueled (pardon the pun) by investors from hedge funds, banks and other financial institutions that have poured a lot of capital into the oil market.
Not that it’s a bad idea, per se, but it does sound a lot like an Indian idea — when something does not work, regulate it until it does.
BPSK Said,
November 8, 2007 @ 5:54 pm
Sure, and while we are it, let’s get gold off the exchanges too. India is one of the biggest consumers of gold, so it’s not right that speculators in the West can dictate what we desis should pay. Let people buy gold directly from the jewelers. It will be half the price it’s at today.
Umm, let’s see – what else can we apply this principle too? How about Google? Paying $700+ a share for Google is the height of lunacy – let’s buy the shares directly from the company. It’s sure to be cheaper.
BPSK
kkiyer Said,
November 9, 2007 @ 12:22 am
Regulations have only led to more chaos and corruption rather than setting standards .I think Oil prices will become sensible after there is a correction in the financial markets.They should be worried about the looming Recession forecasts which will make them come to better sensible prices..
After all how long can this increase goon unabated? Anything which goes up comes down and oil prices will have a big crash in the months to follow as that is the key to fuel economic growth.
Karthik Narayanaswami Said,
November 10, 2007 @ 6:28 pm
@ BPSK –
Eh, would be funny eh? I just find it ironic (and stupid), especially considering the fact that it’s coming from a high ranking minister of one of the world’s largest economies.
@ KKIyer –
> After all how long can this increase go on unabated?
That’s what economics is all about, right? Supply and demand, and usually things just find a level on their own.