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Comment on Sam Pizzigati’s commentary

I recently read a commentary on the price of oil on ALTERNET.ORG.

This piece, written by Sam Pizzigati, bemoans the role of speculation in the current soaring oil market, which have such obvious consequences for gasoline.

The commentary was so badly written and argued, I just had to take the author to task, as below.

****

Here is your quote:

“Since then, commodity trading volume has jumped six-fold. This speculative shot in the arm, Consumer Federation of America research director Mark Cooper believes, is adding at least $40 a barrel to the price of oil, about a third of the recent going price.”

Okay.

That explains everything from 97 dollars a barrel to 137 dollars a barrel, but explain this:

“…getting oil to the surface currently costs under $5 a barrel in Saudi Arabia, with the global average cost certainly under $15. And with technology already well in hand, the cost of sucking oil out of the planet we occupy simply will not rise above roughly $30 per barrel for the next 100 years at least.” www.manhattan-institute.org

So, now we have to explain why oil, which costs 15 bucks a barrel to pull from the ground, sells for 97 dollars, after accounting for speculation – and, that, my friend, is an 82 dollar premium on the barrel.

97 dollar a barrel oil means that, absent the price effects of speculation, no less than 85 percent of the price of of oil is unaccounted for in Mr. Cooper’s statement. I am not sure there is any other branch science other than economics where 85 percent of what its experts try to explain can remain unaccounted.

You quote, “widely respected London School of Economics analyst Meghnad Desai,” saying:

“…nothing happening in the real-world market for oil — like growing demand from China — can explain the current oil market.”

Again, how can you call someone as an expert witness on something, when they openly admit they have no explanation for the thing on which they comment?

You need to start from scratch and come up with a better article!

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