PUBLISHED : Friday, 29 August, 2008, 12:00am
UPDATED : Friday, 29 August, 2008, 12:00am

Market remains best estimate for price of oil

There are several flaws in Thomas Palley's reasoning in his article ('Speculative dangers', August 19).

First, he concludes that only speculation can explain the rise in oil prices and states that speculators are now active lessees of commercial storage capacity and somehow able to control the supply of oil as a result. Instead, oil prices have fallen recently.

Second, he argues that the dramatic increase in oil trading by financial institutions and hedge funds is evidence of rampant speculation. If yes, so what?

For every buyer there has to be a seller and if the speculators are all buying to drive the prices up, then it must be the producers of oil who are selling.

In this way the market forms a consensus on what the fair price of oil is. Speculators are no better or worse than anyone else.

Third, Dr Palley states 'there have been no changes in demand and supply that explain the scale of unanticipated jump in oil prices'.

This ignores perceived future risk factors, including refining capacity, political risks in the Arab Gulf and Russia and threats of tropical storms disrupting supplies that also affect market prices.

China's decision to raise the domestic price of its subsidised oil signalled to the market that demand was likely to slow and oil prices began retreating soon thereafter.

If all countries removed these subsidies (implemented by government policy people), consumption of oil would fall even further.

Dr Palley also states that the rise in oil prices has stoked global inflation. Never mind that most economists leave out volatile energy and food prices when calculating core inflation, that oil prices are now going down means that global inflation will now fall by this reasoning.

Dr Palley would do well to remember the words of the great economist and Nobel laureate Milton Friedman that inflation is everywhere and always a monetary phenomenon. More fundamentally, market prices may swing about and over or undershoot the theoretical 'fair' price from time to time. However, not even Dr Palley can say with any degree of certainty when this is happening.

The best estimate of what the fair price is at any given time remains the market price.

Those arrogant enough to believe otherwise are welcome to speculate at their own peril.

Keith Noyes, Sai Kung

Leung victim of public opinion

I agree with Christopher Cheng ('No way to govern', August 21) that public opinion, when based on pure speculation if not bias, should not be a reason to deny retired civil servants approval to take up work in the private sector.

The right to freely choose and accept work is enshrined in the International Covenant on Economic, Social and Cultural Rights, which is guaranteed by the Basic Law.

The constitutional right should be restricted only when there is cogent evidence of a real and likely conflict of interests. That Leung Chin-man felt compelled to resign from a job that had already been officially approved amounts to a conviction by the people's court that he was eyeing 'delayed interest' - a term used by a political scholar writing in the Chinese press - when he dealt with New World Development before his retirement.

Those who believe in such a 'delayed interest' consideration are indicting not just Mr Leung but the company and also, the checks and balances within the civil service.

Some retired civil servants in Mr Leung's situation may choose to be whiter than white and so decline the offer.

The choice should be theirs instead of being imposed on them by the court of public opinion.

Ironically, the prosecutors in this tyrannical court are those who purport to be staunch protectors of human rights.

Ng Hon-wah, Pok Fu Lam

Not all streets deserve saving

It is important to protect Hong Kong's old streets and I am satisfied with the current preservation system.

I am not against the principle of heritage preservation but economic development is also important, especially in a city like Hong Kong, where there is so little space. This means that some of the less remarkable aspects of our past have to be sacrificed. The government is trying to preserve shops in some of these old streets, such as Graham Street, in Central. This benefits the economy and keeps the old street.

The cultural importance of a location is important rather than collective memory, because it is very difficult to define what collective memory of citizens means. Sometimes if an old street is of little importance it should be redeveloped.

Li Pui-ying, Tseung Kwan O

Medals no sign of well-being

While it is understandable for Simon Yau ('A bad case of sour grapes', August 27) to rebuke the claims of Laurence W. Stewart ('Medals haul means little', August 26), it is sobering to note that the mainland state media and sports analysts have shared some of Mr Stewart's views.

They claim China is not yet a sporting giant as its performances in athletics, swimming and major team sports still leave much to be desired and that many of the events that China has excelled in (for example, gymnastics, diving and weightlifting) are minority events.

The fact is that the Olympics is no more than a series of contests between elite sportsmen and sportswomen, many of whom have been groomed specifically for such competitions.

Medal hauls often bear little relationship to the overall level of physical well-being of a nation's population, which is what really matters in everyday life.

Raymond Wong, Happy Valley

Fuzzy logic

If Laurence W. Stewart's logic is sound ('Medals haul means little', August 26), that the total medal count is the best indication of how a country has done in the Olympics, then a nation that gets 11 bronze medals would be seen as achieving more than a nation that gets 10 gold medals.

I do not know how many people would agree with this logic. And why is Mr Stewart 'puzzled by all the triumphalism and self-congratulation in the Chinese media'?

Does he think that the best-ever performance of a Chinese team in an Olympics is not enough to warrant a feeling of triumph and self-congratulation?

How would Mr Stewart's national (US) media react if it had been America's best-ever Olympics?

Thomas C. C. Wong, Happy Valley

Real winners

Laurence W. Stewart writes from Denver ('Medals haul means little}, August 26) insisting that the United States had the highest Olympic medal count and that, when it came to sports, the US is the greatest.

For my part I congratulate both China and the United States on their remarkable sporting achievements. But, may I add, one needs to take into account the size of populations and the vast resources each country is able to plough into sport.

The real winners of the Olympics were the small, undeveloped countries like Jamaica. With a population of fewer than 3 million they won six gold medals. It also did one's heart good to see runners from Kenya, Morocco and Ethiopia lead the pack and pick up the medals in the men's marathon.

To my mind such countries - and one could name several others - were the real winners.

Dan Waters, Mid-Levels