Here’s a letter to the New York Times:
You speculate that “excessive speculation, mainly by Wall Street index-fund traders, is needlessly driving up [gasoline] prices” (“Speculators and the Gas Pump ,” April 19).
Speculative buying is excessive only if it pushes prices higher than will be warranted by tomorrow’s conditions. But no one – not even any of the academic authors of papers to which you link – knows for certain just how tight gasoline supplies will be tomorrow. Many investors are speculating that these supplies will be very tight indeed. If these investors are correct, they’ll earn profits and their purchases today will be revealed tomorrow not to have been excessive.
You, in contrast, insist that these speculators are mistaken (that is, you think they’re destined to lose money on their investments). So put your money where your mouth is: invest contrary to these speculators by going short in gasoline. If you’re correct that today’s speculation is excessive, not only will you make a killing when proof of your prescience arrives tomorrow in the form of gasoline prices that are lower than are expected by the speculators who you criticize, you’ll also put downward pressure on today’s gasoline prices.
Rather than opine with no skin in the game, get involved! Show the world that your intellectual speculations aren’t idle.
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030