After the largest weekly drop in oil prices there was the New York Times, the oil industry's good Samaritan, instructing(link) us to the cheers of the oil crowd, of the inevitability of ever higher oil prices to come. In its inimical fashion the New York Times trotted out all the usual palaver assuring us that oil's recent sharp price decline is but an interlude, a blip, in its continued ascent into the stratosphere. Thereby not only giving us the oiligopoly mantra, but also preparing us to accept unquestioningly any new ascent in oil prices. By doing so, making it easier for the 'preordained' oil and gas price increases to come to pass -- the best flacks the oil industry could buy could not have pitched it better.
Yes, there were all the usual lesson points as to why we should blandly accept the inevitably of higher prices. The disruption of production in Libya and the Gulf of Mexico, and of course Yemen, increased consumption in developing countries, and in Japan as it recovers. Then there is the Energy Department's projection that world oil consumption will increase by 1.5 million barrels a day in 2011 and 2012 and that "supplies would increase to meet only roughly half the added demand this year," as if Saudi Arabia's elective shut down of 4.5 million barrels/day of its production capacity were an act of nature.
The article goes on to reference a bevy of like minded "oil experts" such as Barclay's Capital, "corrections, even sharp ones are not unusual as commodity prices follow longer trends up." Well yes, but barely a mention that some commodities are not trend followers, but a reflection of speculation and manipulation. In that context the Time's article makes a muted aside to the administration's newly formed 'Oil and Gas Price Fraud Working Group' cursorily quoting Attorney General Holder, "Fraud or manipulation must not be allowed to prevent price decreases."
Far be it for the New York Times to take up the cudgel of oil prices being a gamed market and that the recent sell off is but the timid beginnings of a return to market conditions without "fraud and manipulation".