There are days I wonder why David Strom ever invites me on his show. This column about the Stop Oil Speculation Now program gets it right, and adds something I had not:

The government taking more control over futures markets would do nothing to hold down the price of oil or food—in fact, such a move would almost certainly make things worse in the long run. And I am willing to bet that the folks behind Stop Oil Speculation Now KNOW that it would make things worse for consumers.

But they aren’t worried about that. I think they are hoping that getting the government into the oil pricing business will lead to more explicit price controls and supply management, putting their “vital” businesses at the head of the line for cheaper fuel and avoiding the inevitable fuel shortages that price controls would bring.

All scarce goods are allocated somehow; in a market system, price serves that function. If you prevent prices from performing that function, something else will. Airlines as rentseekers would be in a position to get government to do it for them.

Labels: economics