McCombs TODAY

Forbes, August 11, 2008

The reason oil prices are so high? The market is betting on an Obama win. How’s that? Ehud Ronn, an economist and director of the Center for Energy Finance Education & Research at the University of Texas, says the kink in futures prices, a condition known as contango, fits precisely with the theory that traders believe a U.S. military attack on Iran is more likely after the election than before. The futures price of oil spikes in early November. Inference: The market believes that Obama, the likely Democratic choice, will win. “If the Republican candidate is elected, the thinking goes, the Administration will say, ‘This is your baby, you handle it,’” Ronn explains. “But if the Democrat is elected, they’ll say, ‘We can’t trust him, we’ll handle it ourselves.’” Read story.