Sad and wistful thoughts arise in the mind of the traveler who visits the lone and level sands of the antique land that is — or was — Vermont Tiger. There its shattered visage lies, with frown, and wrinkled lip, and sneer of cold command.
And there, beside two vast and trunkless legs of stone, lie scattered bits of rubble, all that remain of Tigger’s delusions of intellectual grandeur. Rubble, mostly, from the mind of Art Woolf, pretty much the only person still posting on the site. The Last Tigger Standing, if you will. I have previously dubbed him Vermont’s Loudest Economist ™ for his relentless media presence. But, reading his recent — and lonely — postings on Tigger, I am tempted to substitute a new monicker, Vermont’s Laziest Economist (trademark pending).
After the jump: Signs of laziness.
Take his latest emission, a half-hearted ad hominem attack on Bernie Sanders. Woolf is exercised over Bernie’s brazen introduction of a bill called the End Polluter Welfare Act, which would end federal tax incentives to Big Oil. In Woolf’s eyes, it’s a cardinal sin to name a bill in a way designed to enhance its political appeal, rather than to simply describe its purpose.
Don’t know where Art’s been lately*, but this has been common practice in Washington for quite some time now, and is at least as often done by Republicans as by the odd socialist. Think USA PATRIOT Act, for starters.
*Judging by the fact that, in one recent post, he admitted that he only recently learned of such a thing as “TV shows only available online,” which have been around since the mid-90s, I’d say he’s been under a rock somewhere. Or a vast and trunkless leg, whatever.
At the end of his short rant, Woolf admits that “I don’t know the purpose or the impact of the tax incentives [Sanders] proposes to eliminate.” Now, that’s laziness taken to heroic lengths. He’s hammering a bill whose effect he hasn’t bothered to determine, simply because he doesn’t like its name.
The post before that, also an attack on Bernie Sanders, was even worse, because its laziness was directly related to Woolf’s supposed area of expertise.
(Economics.)
Woolf noted that, three months ago when gas prices were closing in on $4 a gallon, Sanders was quick to cast the blame on speculators. Then he said that since Sanders made his outrageous accusations, the price of oil had fallen by more than 20%.
Woolf took this as proof that Bernie is a goofball because “if speculators have so much power… then why are they allowing prices to fall so much?”
This conclusion is so completely wrong, any sane economist ought to be too embarrassed to put it out for public consumption. If Woolf knows anything about how investors and speculators work, he would know that they don’t always want higher prices, nor are they always in full control of all circumstances.
On the former point, the wise guys on Wall Street don’t like persistent price rises; they like fluctuations, because they know how to make money both ways. If a price consistently rose, then all the “dumb money” would flow in and wreck the game. Specific example: investors might take a short position on oil if they believe that prices will fall in the near future. Obviously, they don’t want prices to rise; they’ll lose money.
On the latter, remember the big oil price spike in the spring of 2008? It was the economic event of the year — or it was, until the mega-Wall Street meltdown that followed. The oil spike can be traced back to late 2007, when the mortgage market began to collapse and the smart money started looking for safe havens. Many investors turned to commodities, and the prices of oil, wheat, gold, and other items went through the roof. Not because of supply or demand, but because of speculation. Then, in the summer of 2008, there were some disastrous hurricanes that interrupted oil drilling and refining on the Gulf of Mexico. There were predictions of $5 or even $6 a gallon gas. But at the same time, Wall Street was going belly-up and a lot of speculators needed to turn their oil positions into cash.
And, in spite of the hurricanes and the interruptions in supply, gas prices went down.
That’s just one example. The bigger issue is that Woolf is basing his argument on one single price movement and ignoring all the evidence that speculators do exert an unhealthy influence on energy prices. Bernie Sanders cites a figure of 80% of all oil trading is by speculators — not by those who want to consume oil, but by those who want to make money by trading the rights to oil back and forth.
But if you want to discount the claims of Vermont’s Homegrown Socialist, let’s turn to the absolutely non-collectivist Bloomberg Business Week, and an article entitled “Rising Gas Prices: Not Demand Driven.” (GMD readers with severe cases of OCD will recall this passage from a February posting entitled “Gas Pump-a-geddon!” It’s just as pertinent here.) Bloomberg quotes Tom Kloza, chief oil analyst for the Oil Price Information Service:
Kloza believes much of the increase is due to speculative money that’s flowed into gasoline futures contracts since the beginning of the year, mostly from hedge funds and large money managers. “We’ve seen about $11 billion of speculative money come in on the long side of gas futures,” he says.
Speculator-driven crude prices went so high in February that some refineries cut production or even shut down rather than operate at a loss — which meant lower gas production and higher prices.
In that same diary, I referred to another unlikely source of speculator-bashing: the Vermont Fuel Dealers Association. For years, they have been calling for strict limits on commodities speculation because they see how speculator-driven price fluctuations can cause great harm to oil dealers and consumers alike.
Art Woolf blithely ignores all this evidence and more, simply to take a cheap shot at Bernie Sanders. And now you know why I’m tempted to call him Vermont’s Laziest Economist (trademark pending).
I look on his works, and despair.