Liars and Scapegoats

I heard on the news the other day that the airlines are trying to tell everyone that we shouldn't blame them for the high ticket prices that many are facing today, or all of the extra fees that they have added. They say that you should blame the speculators for driving up the cost of fuel.

This generally works because most people don't know what speculation is, or what speculators are. This is further complicated by the fact that normally level headed people, who normally give pretty good facts, like Bill O'Reilly, have bought into this "Evil Speculators" jargon, and are hocking it all over the place. Basically, and there is a bit more to it than this, but here's the basics, speculators buy a certain amount of oil (or whatever product, but we're talking about oil here) in the future. What they do is to look at the market forces and guess what oil prices are going to do down the road. So, if they buy the oil higher than what it is today,and the actual price is higher at the time that their purchase comes due, than what they paid for it, they make a lot of money. This can work when prices are going down as well. Of course, if all the speculators are bidding high, it can cause the prices to go up, but, if other market forces make the price fall in spite of the speculation, they could lose their shirts.

Anyway, the airlines get into speculation also. This only makes sense, when the prices are going up, and they need to have a supply of fuel going forward, they buy futures (in other words they speculate) in order to try to have fuel at a better price in the future, so that they won't get hit so hard if the price increases keep flying upward. So, if you want to blame speculators, ok, but that means you can blame the airlines also, they told you that you could.