Theoricus Non! (Don’t Speculate)

You know that we’re onto something big when the Pope chimes in.

At his weekly blessing, Pope Benedict XVI called upon the Group of Eight countries to limit oil speculation to end the “perverse” effect on oil and food prices. I guess the prices of leather Prada items have gone through the roof. The Pontiff says he was looking out for the poor as they are the hardest hit when food prices rise.

Even Italian Premier Silvio Berlusconi chimed in and said he would try to rein in specualation in the oil markets on the coattails of the Pope’s address.

While I am not a fan of ‘government controls’ to solve the world’s ills, it seems that excessive speculation in the past year has played some part in petroleum’s run-up. A few weeks ago, some financial experts compared oil’s rise to the NASDAQ back in the late 90′s and 2000. The undoing of the NASDAQ was due to the unsupportable base financials of the tech-heavy exchange. Once stock prices could not be supported by virtually worthless companies, the index dropped 60 percent of its value.

The one huge difference I see here is that petroleum is not worthless. It is the energy of preference, for now, that powers the global economy. The same cannot be said for a unproven ‘dot bomb’ startup. Simply put, we can expect a softening of oil prices as investors and speculators move on to the next ‘flavor of the month’.

Now that the Holy See is involved, maybe we can hope for divine intervention!

Bloomberg: Pope Benedict Appeals to G-8 to Limit Oil-Price Speculation