By Bonnie Erbe, Thomas Jefferson Street blog
One key element of our recovery is that oil prices remain relatively low. I was disappointed recently to see them rise above $70 per barrel, which is twice as high as the low point for oil last December and earlier this year. Today, they fell again due to a slow Chinese economy. But Americans had better realize that if they go back above the $100 level, our meager recovery will slow to a halt.
Crude oil prices fell the most in two weeks as Chinese equities led a global slump on concern a slowdown in lending may derail an economic recovery in the world's second-largest energy consuming country.
Oil futures declined for the first time in three days after the Shanghai Composite Index, China's benchmark, tumbled 6.7 percent on a report that the nation's banks cut lending. U.S., Asian and European stocks followed the Chinese market lower.
One economic reform that I believe is crucial to our long-term financial equilibrium is to take the wild swings out of oil prices. The only way to do that is to push speculators out of the oil market. There had been some discussion during the depths of the recession about eliminating persons or entities from purchasing oil futures unless they were prepared to take physical possession of the barrels of oil when the futures came due. That would eliminate speculation. Powerful moneyed interests have quashed that kind of talk. We should not let them succeed and we should kick speculators out of the oil market.