Politicians like John McCain and Barack Obama show a fundamental misunderstanding of economics when they attack “speculators” as the cause of price increases for things like oil. Leaving aside the falling dollar—which increases the price of anything imported—the prices of commodities and raw materials are going up because demand for those materials has increased all over the world. And that demand has been increasing faster than supply.

In other words, as Robert J. Samuelson shows in the Washington Post, the shocking reality is that the law of supply and demand is governing the prices of commodities, not some unseen cabal of evil “speculators” gaming the system.

Unfortunately for politicians, economic laws can’t be demagogued. A suspicious and easily-caricatured “other” is needed to attack. So even though politicians themselves have done much to constrict the supply of certain commodities (oil) and artificially raise demand for others (corn), they’d prefer to blame the price increases on someone else. So “speculators”—who actually use futures markets to shield themselves from future risk—are now the villain du jour.

Let’s say you want to buy a plane ticket to visit a relative for Christmas. You might decide to buy the ticket now or months before Christmas. Many other people will do the same. You might just like making plans early, or you might be thinking about all those bills you’ll have around Christmas. Part of the rationale for buying early is that it helps you manage future expenses better by shifting some of the burden to today. Or you might just worry that the tickets will cost more in the future.

Well, the airline does the same thing.

It takes a lot of fuel to fly, and any significant change in the price of fuel changes the economics of every flight. So, airlines can buy fuel futures, meaning that they make a financial commitment today in exchange for a guarantee to get fuel at a certain price in the future. If the price of fuel moves up significantly, the airlines are protected because their price is locked in by the futures contract. This helps prevent airlines from taking massive losses on flights in the future, and it’s what enables them to sell you tickets months in advance.

If there were no futures market, airlines would be taking a big risk by selling tickets far in the future. Without the ability to lock in fuel prices, every ticket sold would amount to a bet taken by the airline. The futures market allows the airline to shift that gamble to a third party: whoever purchases the other side of the futures contract.

The so-called “speculators” aren’t gaming the market, they’re lubricating the market. Without them, commerce would be riskier and more expensive.

It’s too bad that both major party candidates don’t get this.