Lucente has flaws in logic about oil

While I believe some of the points Thomas J. Lucente Jr. made in his recent column, "The market will correct itself (Sunday)," there remain, however, some major flaws in Lucente's logic while explaining the recent reduction in the price of oil.

Over a recent three-day span, the price of oil plummeted $16 per barrel. Lucente claims the reason for this price fluctuation was lower demand and an increasing supply. The fact of the matter is that the lower demand (on a percentage basis) amounted to nothing more that taking a drop of water out of Lake Erie.

The market is not reacting to supply and demand economics (thus the now uncountable number of reasons given by the right for the increase in oil prices). The price of oil has risen dramatically because of market speculation. Because of a volatile US market and weakening dollar, major investors took their money out of the stock market and used oil speculation as a hedge against any losses that they may have encountered in the stock market. The market speculation of oil has continued to earn large profits while the stock market has not.

The recent drop in oil prices can be attributed to three specific actions in three specific days: 1.) the announcement by T. Boone Pickens that he is investing in alternative energy sources, 2.) the announcement by some congressional members that they are looking into the regulation of market speculators and, 3.) the announcement by some economists that the U.S. stock market might be stabilizing. The oil market reacted to those three events and not supply and demand.

I'll leave Lucente and his believers with one question: Did you learn nothing from the market manipulation employed by Enron, which led to the Western power crisis of the summer of 2000?