The truth about Hawaii's high prices is that they’re still the highest. Take the price of gas – please.
We’re the Speculators?
A staff member at the Natural Resources Defense Council contributes an answer today, and it can only make us worry. Summarizing an author's thesis, the staffer says the futures oil market has become a hot place for investors to place their money. These aren’t just the presumably wicked speculators but mainstream sources like commodity indexes that may be using some of your 401(k) money to place their bets.
According to the author quoted by the NRDC staffer, the Commodity Futures Modernization Act of 2000 “opened the road for new commodity swap instruments to be created away from the regulated exchanges and over-the-country treading…and also paved the way for the sale and marketing of commodity indexes as an investment… Money seeks to buy, and only buy, oil through indexes. The other natural side of the futures trade is missing. The only way you can encourage people to sell something they really don’t wantto sell is to offer an outrageous sum for it.” This cycle, according to the author, is “oil’s endless bid.”
The staffer’s blog has more than enough links to background and supportive material to make your head ache. Don’t say we didn’t warn you.
The tie-in with Honolulu rail, as usual, is the inevitable increase in transit ridership that accompanies increases in the cost of driving. If the author’s theory is right and nothing is done to upset the apparent influence of speculation in the oil futures market, Honolulu rail may have to reduce the headways between trains to meet rider demand.