The Democratic Establishment Doesn’t Understand Economy and They Will Destroy the US

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by Chris Black

Here comes the “corporate greed” narrative. After all, we’re supposed to believe that government policies have nothing to do with skyrocketing fuel costs.

Big Oil follows the lead from the Tiny Hat commodity contract traders who drive up the prices of everything, including the ethanol that is added to gasoline, which used to add around $.08 per gallon but is now closer to $.30.

How about they grill the C suites of Goldman Sachs and other commodity traders who have made billions in profit off trading energy contracts? At least the oil companies made profit off something people actually needed and consumed.

Allowing 99% of the volume in daily commodity contracts to be traded by HFT algorithms serves no purpose. Twenty years ago the daily volume of traded oil contracts is surpassed in 100 milliseconds of high frequency trading.

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One simple rule of requiring all energy traders to take delivery of settled contracts at the end of the month would crash oil to $30.

Profits are way up. The crack spreads between the single barrel and refined product has never been higher. The problem with margin expansion is that corporations never want to drip back to historical norms.

Retailers used to never make more than 20-30% on an item. Now they won’t touch a product unless they can make at least 50%, with the normal margin being 60%.

Margin expansion is pure inflationary air, the same as multiple expansion in stocks.

The underlying business or product did not become more valuable, yet it sells for more money.

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