The Economy

No.

The reason the price of gas ran up to $10 per MMBtu was that the Russia - Ukraine situation took a lot of supply off the market. And demand stayed the same as is typical heading into the winter (where no one can predict the weather in advance).

"Speculators" aren't doing "hocus pocus." They are just participants in what is a very liquid market with a lot of buyers and sellers active in it. If there is any "hocus pocus," it is supply and demand at work -- which find equilibrium prices. Speculators take the other side of the trade from hedgers who are trying to lock in prices and create predictability. You need both speculators and those hedgers in order to have a balanced market. They each play a vital role in the market and insure that there is actual price discovery determining prices.

People have it in their heads that someone just dictates prices to people. And when the price goes up, or there is a shock, it's "gouging." The price went up because of restrained supply (Russian stopped supplying gas) and steady demand. Too many people demanding a lot of something for which there is less of it, makes the price rise. It should be obvious to people.

After most of Europe (including, for example the German government) furiously stockpiled nat gas after Putin started to cut off Europe, and it drove the price up due to the limited supply. ... the winter has turned out to be relatively mild (so a lot of the supply is still available). At the same time, some liquid natural gas from the United States has made its way to other parts of the world, adding supply that didn't exist. As a result, in the last two months, the price of nat gas has dropped hard. ... it is down more than 75 percent from where it peaked in late August. That has nothing to do with hocus pocus or the "speculators" (who are not some monolithic group of magicians) either. Although I always laugh how when prices are rising it is "gouging" and "greed," but when prices drop the way they just did, there is never an explanation about why all those greedy people with a magical ability to dictate prices decided to lower the price by 75 percent.

To the extent that anyone speculates in those markets, they are trying to anticipate what the market will do. They are not determining prices. Supply and demand are.

 

Most goods and services don't suffer from a free rider problem. It's only a problem when something is non-excludable and non-rivalrous, meaning you can't stop people who refuse to pay from getting use or benefit from whatever it is, and it has to be something where the use of the good or service by one person doesn't reduce its availability for others.

If I buy a car, there is no free rider problem. The car benefits me. People can't mooch off of what I paid for it to benefit from the car. When I drive it, it doesn't benefit anyone except me.

The things that do suffer from a free rider problem are public goods. Things like a national defense or a fire department. A fire department has to be prepared to put out every fire, because you can't contain a fire to just the homes of the people who will willingly fund the fire department. The fire will spread. As a result, you end up with situations where one person will figure, "I am not going to pay. Everyone else is paying for it and I am still going to benefit." And what ends up happening is nobody will pay for it. It's why you need government (and taxation) to force people to fund things like them (non-rivalrous and non-excludable). It's the actual legitimate function of government in a free, democratic society.