An article in Financial Advisor magazine describes an attempt by consumer advocates and public interest groups to ban Exchange Traded Funds that invest in commodity related vehicles. Their rationale is that the speculation represented by the ETFs is pushing the cost of these commodities up and thereby fueling inflation in food and, especially, energy costs.
The complaints are a lot of hot air. If commodity prices were "too high" sellers, yes speculators, would be providing inventory until the price found its "correct" level. Current commodity prices reflect supply and demand pressures on both the domestic and global markets, as well expectations for future market stocks based on economic, demographic, and policy trends.
Yes, demand for gasoline is rather inelastic, and $4 per gallon seems high. But the culprit is not Exchange Traded Funds. More responsible are the regulations that are mothballing oil refineries, and limiting the exploration for and production of oil within the U.S.
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