The News Messanger’s James Proffitt reports on Ted Strickland’s latest excursion into chicken-coop economics:

On another serious matter facing all Ohioans, Strickland said the state has lost hundreds of thousands of jobs because of skyrocketing fuel costs, and will lose more if something isn’t done about it. “I don’t believe it’s the free market at work,” he said. “I don’t think it’s a supply and demand situation,” he continued, pointing out that the world crude oil supply now isn’t significantly different than it was several years ago.

In his opinion, “Human greed is the answer.” The effects of energy speculators has driven the cost to its phenomenal highs, and Strickland is hoping for government intervention. “I hope legislators do something, but I don’t know if they will,” he said. “It’s estimated that up to 1 trillion dollars in wealth this year is being transferred from our nation to the Middle East.” He concluded by pointing out the trend cannot continue. “We just can’t sustain that.”

But as Larry Kudlow pointed out a couple weeks ago, speculators serve a useful purpose:

Oil futures markets have contracts that run out five years and beyond. If these traders — or “speculators” — believe new oil supplies are on the way in the future, they will sell those out-year contracts. And before long market arbitragers will backward-ize those price drops toward the spot market, bringing prices down there as well.

In other words, trader/speculators can be very handy instruments of energy (and economic) policies. If demand exceeds supply they are buyers. But a prospective future supply increase makes them sellers. In a free market prices move both ways.

I suppose Ted didn’t spend too much time on economics at the Asbury Theological Seminary, and it is scary to think that the leader of our state doesn’t understand economics.

Speculators, just like other middlemen and unlike liberal pandering politicans, act rationally to new information and serve a useful purpose in the marketplace. Speculation means that people are simply trying to account for what risk the future holds and try to make a profit… and is the basis of the world’s stock and commodities markets. Speculators reduce uncertainty, and help the market gradually adjust for increases in demand for oil in China and other countries, issues regarding limited access to oil during times of war, and adjust for inflation.

And speculators can also have an impact in lowering the cost of oil IMMEDIATELY, if they see that Congress is allowing oil companies to drill in domestic areas.

Instead of blaming speculators, or George Bush, Ted Strickland shouldg point his uneducated finger at himself. Because at every turn, Gov. Ted Strickland while serving as an unnoticeable congressman from Appalachia, voted to oppose domestic gas exploration and the construction of new oil refineries, which is what American oil companies need if we are going to see cheaper oil.

For example, in 1993, then-Congressman Ted Strickland voted for HR 2264, the Omnibus Budget Reconciliation Act, the largest tax increase in history (Roll No. 199, 05/27/93; Roll No. 406, 08/05/93). This bill, which retroactively hiked taxes by $241 billion, increased taxes on gasoline by 30 percent and extended a 2.5-cent per gallon increase of the motor fuels tax through 1999.

And when the opportunity to repeal these exorbitant tax rates arose, Ted Strickland voted to keep gas taxes right where they were: Strickland opposed H.Amdt.551 to the Transportation Equity Act for the 21st Century, which provided for a four-year plan to phase out all but $0.03 per gallon of the federal gasoline tax Roll No. 97, 04/01/98).

And here is what OnTheIssues.org has to say about Strickland’s voting record on energy:

• Ted Strickland voted NO on keeping moratorium on drilling for oil offshore. (Jun 2006)
• Ted Strickland voted NO on scheduling permitting for new oil refinieries. (Jun 2006)
• Ted Strickland voted NO on authorizing construction of new oil refineries. (Oct 2005)
• Ted Strickland voted YES on prohibiting oil drilling & development in ANWR. (Aug 2001)
• Ted Strickland voted YES on starting implementation of Kyoto Protocol. (Jun 2000)

Of course the Ohio media will never talk about this, and a race car event may not be the place that one could have a serious policy discussion. But if Ted Strickland’s perspective on oil is typical among most politicans, the best thing our elected leaders can do is to literally do nothing.