Key insights
- The article argues that US manipulation of oil prices via futures markets will lead to shortages and higher prices in the long run, citing historical examples of price controls causing market distortions. It suggests potential negative impacts on US consumers and the broader economy, with possible gas lines and rationing in the near future. The author believes the discrepancy between spot and futures prices indicates an unsustainable situation.
I would like to explain in simple words why the US manipulating oil prices down is very bad for the markets. That's why you keep reading lies and fakes news from Trump, just to manipulate oil prices. Source: https://www.reuters.com/business/energy/exchanges-oppose-potential-us-treasury-intervention-oil-futures-market-2026-03-12/
In basic economics, the price of a commodity is dictated by supply and demand. When there is high demand and low supply, the price of the commodity will go up, and as the prices go up, less people would want it, leading to a balance and so the price of the commodity would come down.
What happens if there is high demand and low supply, and you enforce low prices for the commodity? History is full of examples on this. It will lead to the commodity running out faster, prices going up higher (black market). It leads to DISASTER. If you see the oil prices spike up later in the coming weeks, understand this, it is partially caused by the Trump administration manipulating the oil futures. The spot price of oil (real physical oil) is about $140 now while the oil futures (paper oil) is only $110. Let me say this. People need real physical oil to run their cars/trains/ships, not the paper oil.
Many countries are already running out of oil. There are long queues and rationing of oil in some Asian countries. This will hit Europe in the next few days as the last oil tanker on sea reaches them. This will hit US in May. Consider yourselves warned.
US 1970s Gas Lines - During the 1973 Arab oil embargo, US price ceilings on gasoline caused long lines and station closures, as low prices spurred hoarding while refiners reduced output.
Venezuela Shortages - Price caps on food, toilet paper, and oil since 2003 triggered chronic empty shelves, factory shutdowns, and imports of basics like 39 million toilet paper rolls.
Soviet Union Goods - Central planning fixed prices low, resulting in perpetual shortages of bread, meat, and staples, with "meatless days" in Moscow restaurants.
Nixon's 1971 Controls - Wage-price freezes emptied supermarket meat shelves, as farmers stopped supplying unprofitably priced livestock, fueling black markets.