We have all seen the soaring gas prices recently and depending on what kind of information sources one uses there are a variety of explanations provided. There seems to be some truth to each explanation which is why none of them are particularly satisfying when we hear it.
It’s Biden! It’s Russia! It’s the Greedy Oil Companies!
All of these have some truth but they all also have the common thread of speculation. The reasons for the higher gas prices is because each of these sources gives companies and investors cause to speculate on what is going to happen.
Before the 2020 election Oil Companies stocked up on licenses so they could investigate places to drill and create a bit of a cushion when it comes to speculated increases in regulations for drilling for new oil.
Biden gets into office and gets rid of the XL Pipeline Project and promotes the move to all green energy. Investors speculate that the pivot to green energy by law and by companies will reduce the potential returns on investing in new oil discovery.
Russia goes to war and through sanctions and negotiations the whole world speculates on what impact that will have on the Russian oil supply to the world.
All of these speculations seem absolutely reasonable when pulled out an examined individually but create a mess when thrown around just to find someone to blame. But is it reasonable to accept all of this speculation?
I am not a fan of heavy regulation so that is not the solution that I will advocate for. I believe motivated self-governance (like profit or altruistic incentives) are much more flexible and effective. But what kinds of incentives are there to discourage excessive speculation? We certainly have controls in place to shut down trading but that hasn’t helped with gas prices.
There is the idea that has been used in the past to control the flow of information to control effects within a population but that has also been used to breed corruption. And when it comes to self-censorship I’ll just refer back to the tendency towards corruption, even if the motivation is more along the lines of the consequences of speaking actually align with one’s beliefs.
I am of the mind that investments in companies and economy should largely be driven by growth and invention. The system has morphed into a wealth generation tool and because a few companies do it best they have been able to take everyone’s collective scraps and turn them into mountains that let them have great influence over what should and should not be done by companies.
In the end is the speculation really the problem or is it more about the centralization of investments? You may only have $20,000 in your 401k but because you and 200 million other people do as well instead of being able speculate as individuals and measured in statistical groups, it’s all made done by like minded giants.
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