Oil and the Art of Speculation
by Special Correspondent TS DeHaviland
So, let me get this straight. US drivers have been driving less. In response, the price of oil hit new record highs. The Saudis have upped production. In response the price of oil hit new record highs. The major oil companies signed agreements to pump Iraqi oil into the global market. In response, the price of oil hit new record highs.
All this and the oil companies, industry analysts, all the mainstream mediacs, still say that the primary reason we’re seeing these prices is “simple supply and demand.” Is there something I’m missing here? How is this not ample evidence that supply and demand have nothing, or little, to do with it, that these prices are almost entirely due to speculation?
If the precious free-market worked the way its adherents say it should, shouldn’t the oil companies have shifted away from the oil pumping business long ago, say starting in 1970 when the largest oil consumer, the US, reached peak production? You don’t see the Fisher company making bodies for horse-drawn carriages anymore; they’ve long since switched to making car bodies for GM. You don’t see IBM making typewriters anymore. Why are oil companies stuck on this single, finite, outdated product? Of course it’s a lot cheaper these days to buy the presidency, and more importantly the vice-presidency, than it is to retool. It’s even better when that presidency comes with its own army, so you can enforce your energy hegemony “for reals.”
Speculation itself is both the highest, most esoteric of the investment arts created by Capitalism and a signal of its dissolution as practical economics. Speculation is investment for its own sake and by means of concept, in the same way that abstract art is no longer practical representation but the conceptualization of the elements of art themselves. The difference is this: if Rothko wants to delve into blocks of color on canvas, no one suffers, nobody loses a job–aside from maybe Rothko. Art, literature, philosophy are about what isn’t there; they absent the world in order to speculate about it within their infinite realms of greater or lesser imaginative abstraction. An economy is about living in a practical sense; it’s how a culture survives within its environment. There is no room for speculation there.