While one generally views the New York Times as a bastion of limousine liberalism, that isn’t necessarily true in the business section.  When it comes to protecting money interests, they can out-conservative the Wall Street Journal any day.  So Joe Nocera’s defense of oil speculators should come as no surprise.

What does come as a surprise is just how flagrantly Nocera sells the speculator line.  Without any shame at all, Nocera opens his article thus:

So now we know: it’s all the fault of those damnable speculators. They’re the ones to blame as the price of oil tops $140 a barrel.

It’s not our government’s fault for failing to come up with a credible energy policy — that can’t be it. Nor is the problem the weak dollar, or the voracious energy appetite of the Chinese, or those pesky rebels in Nigeria who are trying to blow up their country’s oil pipelines. And it’s certainly not the fault of you and me for driving gas-guzzling S.U.V.’s. It has to be those speculators. They are the only villains in sight.

Sarcasm is always a good way to deflect attention, but it’s a poor way to construct a credible defense against accusations of wrong doing.  Sure, there’s blame to be leveled at others, but that doesn’t mean you didn’t pull the trigger.

Nocera then tries to shoot down the arguments.  First up, the straw man:

More than once this week, legislators used that same word their constituents were using: “manipulation.”

So let’s take a closer look at what the speculators’ critics are saying. First, despite the loose use of the word “manipulation,” that is really not what is being alleged here, at least not in the classic sense. Remember how the Hunts tried to corner the silver market? They bought up silver and took it off the market, thereby creating an artificial shortage. I suppose OPEC could do something like that — one could even argue that OPEC does that already — but no mere speculator could.

But Joe, that isn’t the market they are manipulating.  They are playing with the commodities futures market.  Do you have anything to say about that, Joe?  I didn’t think so.

Instead, the critics’ thesis is that speculators are creating an energy bubble the same way investors created the Internet bubble. As speculative bets on energy have grown drastically in recent years, the sheer amount of money being thrown at energy futures is making those bets a self-fulfilling prophecy. All that money, in other words, pushes prices higher than they would go if the market simply consisted of the actual buyers and sellers of oil.

There are so many holes in this argument I scarcely know where to start. The C.F.T.C. says that some $5 trillion worth of futures and options transaction trades take place every day; can an influx of $240 billion, spread over five years, really propel prices upward to the extent that he and others claim? Then there’s the fact that the commodities markets don’t work like equity markets, where a small amount of trading can lift every share of a company’s stock. In commodities trading, every contract has a buyer and a seller, meaning that for every bet that prices are going up, somebody else is betting they are going down. Why doesn’t that short interest depress prices?

Fact alert: The $5 trillion covers the spectrum of commodities, and the $240 billion is only the increase in the amount in commodity funds, as known to one trader.  And no one said it was spread over five years.  And you left out that it was all “long-money”, meaning that there is $240 billion today buying up options.  Could that cause the price of oil to sky-rocket?  You bet.  Has it?  I’d say there are $140 reasons to conclude it has.

So let’s cut to the chase, and gain a little appreciation of why New York Times business reporter Joe Nocera thinks that speculation in oil futures is good for America.

Even if you eliminated speculation entirely, the price of oil wouldn’t fall. Thankfully, no one is proposing to go that far (though Senator Lieberman was toying with the idea), because even members of Congress understand that futures markets serve a crucial purpose. They help companies hedge their oil prices, and they help energy companies manage their risk, for starters.

As I was filling up the tank the other day, I asked myself, “Isn’t it only right that oil prices go through the roof so that oil companies can hedge their prices and manage their risk?”  After all, you never know when someone will invent some inexpensive, inexhaustible source of energy that will fuel the world and turn shares of Exxon Mobil into colorful wallpaper.  Now that would be a tragedy.