Oil Prices Again

This is a Simulcast

 

They are at it again: those people trying to convince us that the financial markets are working efficiently and fairly and have nothing to do with speculation.

 

So there was a financial “expert” blethering away on BBC World yesterday: he was EXPLAINING why the Dollar has surged and why the Pound is falling in value. He didn’t mention speculation in this context and yet we all know that 95% of all deals in foreign currency are to do with speculation.

 

Then this Expert said that because of the “... collapse of the oil price ...”. I must repeat a post I made a couple of weeks ago when I talked about the language of the oil price. Why do they say the price has collapsed? By using the word collapsed they are suggesting that the high prices reached up until about two months ago were normal or expected or acceptable. When the oil price was surging from $90 a barrel to almost $150 a barrel, they said the price was unsustainable ... because of speculation ... because of the disequilibrium of supply and demand. All nonsense of course: it was all because of ill informed speculation.

 

I proved with the example of the cutting of production by the UAE for annual maintenance having no effect on prices that supply and demand had nothing to do with the oil price.

 

So this expert did his best and he mentioned a number of possible factors: interest rates in Australia, the need for changing interest rates in the UK, collapsing oil prices, the threat of recession in the UK. All laudable words and much of it pure drivel. I keep meaning to make notes of the names of these experts so that I can name and shame but I think I am always just overawed at their bare faced effrontery. One thing you should notice is that the BBC doesn’t use the same non BBC expert very often. Wonder why?

 

DW