Why are gas prices rising? Duh.
Isn't it amazing how completely clueless most people are about the reason behind rising gas prices? I've been reading article after article with no mention of the real reason for rising gas prices, which is of course inflation. You would think the fact that almost EVERTHING is going up would be the first clue.
One article did mention inflation but they got it backwards, The heading was "Rising Gas Prices Drive Inflation!". Argghhhhh.
Or, you know, oil pipelines were reversed to hedge the difference between brent at WTI prices. http://online.wsj.com/article/SB1000...864856270.html
It's convenient to blame everything on inflation, so long as you find no consequence in looking like a fool.
That doesn't change the fact that oil prices have been on the rise for a long time now. As RP himself has pointed out, oil prices in gold have remained relatively stagnant where as oil prices in dollars have continued rising.Originally Posted by Jordan
To disregard the role inflation has played is just as foolish as attributing everything to inflation.
This is nothing special. Gasoline storage facilities are full.
Gasoline demand is at the lowest levels in a long while, yet gas prices are higher than ever before. That is inflation.
Short term factors may cause the price of oil to fluctuate but the reason it's fluctuating around $100 a barrel and not say $50 a barrel is due to inflation.
How do you explain the fact that almost everything is going up in price?
Last edited by Madison320; 02-19-2012 at 07:50 AM.
i have posted my thoughts about the price of crude on this and other forums many times , never one comment.
crude oil is the only commodity in the world that is controled mainly by a cartel (OPEC ) , big speculators help pump the prices , as it is a no lose commodity , we will never see crude prices below $90/ba if things remain as they are now.
the margin requirements on crude oil and the cracks ( gas/heating oil ) is 6% , meaning you can control $100,000 worth of crude oil with $6,000.
the real price of crude oil should be $50-$60/ba , which would mean $1.50/ga gas and diesel fuel / heating oil.
they will always trade crude as the elected officials are so much in big oil pockets,
there is only one answer ----raise the margin requirement from 6% to 75%---make all contracts for delivery only , meaning if you buy one or 1000 contracts you must take delivery .
you would see crude oil at $60/ba very fast.
remember what a commodity trader is : someone that doesn't have the items selling to someone that don't want the items and both sides wanting to make money.
for the free traders among us , where is the free trade when a controled commodity is traded on our exchanges.
where would the prices of- corn--wheat--soybeans--cattle--hogs be if our great farmers had a cartel ?????????
Last edited by ILUVRP; 02-19-2012 at 08:25 AM.
So would you require that everything sold has to be physically delivered? Bicycles? Refrigerators? Just oil? Does it have to be actually physically delivered to your property? Would we have to "speculator police" monitoring all our transactions to make sure we're really receiving the goods? Sounds more like totalitarianism than a free market to me.
http://www.lewrockwell.com/williams-...liams80.1.html
Hey, doncha know it's those evil greedy Arab oil-cartels, that's what driving the prices up or it could be those slimy speculators!
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Oh yeah, those cartels & those speculators!
People who blame the "speculators" don't understand how the markets ACTUALLY work, the contracts bought are always equal to contracts sold because nobody can buy unless someone is willing to sell so raising margins doesn't do much, all it does is reduces the number of players & volumes go down & bid-ask spread increases & volutility is increased even further because the flow of information that directs prices is tempered
And why an arbitrary number like 75%, let's have 100%, I mean it's not like we see stock-bubbles since they have to bring in 100%..............hmm, ok, wait a minute..........
These speculative-markets aren't just there for people to gamble, they're there to allow markets to continually assess prices of things, especially those which have longer production-cycle. Before the advent of exchange-trading, prices would fluctuate MASSIVELY from one end of the spectrum to another, sometimes there used to be glut & prices used to go dirt-cheap & producers would get wiped out by losses & since it's dirt-cheap, producers would produce less & by the time, products hit the markets, there would extreme shortage & prices rising sky-high & that again, would cause producers to produce a lot more to exploit high-price & then so on & so forth
So the exchange-trading & "speculators" play a role of "middlemen" between producers & consumers, they are constantly trying to anticipate supply & demand & keeping the markets "liquid" allowing for a continuous assessment of prices by the market, after all, "prices" there are merely people's perception & expectations of supply & demand so when the move over a period of time, it's ONLY because of information relating to supply & demand
People don't speculate to lose money, they do it to make money but when prices move in a particular direction, it starts wiping out those in the "wrong-direction" & rewards those in the "right-direction" during a given period of time but in the longer term, it's the information that moves prices & the markets reward those who are anticipating supply & demand correctly & they make money while those who don't lose it, again, that's the function of the "speculators"
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You know, that's how it works, prices rise due to inflation caused by central-banks/governments (in conjuction with supply & demand of course) but they're always looking to blame someone else, they tell workers that the reason they can't keep up their living-standards is because of "greedy evil corporations raising prices", businesses think it's the "greedy workers & unions" that keep asking for more, bubbles are blamed on the "greedy speculators", crises are blamed on "evil greedy bankers" but what about the REAL CULPRITS? - central-banks/governments/politicians/regulators
Here's another nice explanation on basics & necessity of futures-markets - http://www.investopedia.com/universi...#axzz1muWl5aaw
Last edited by Paul Or Nothing II; 02-20-2012 at 01:59 AM.
There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
i said nothing about all things traded being for delivery only , only if it was under a cartel where the supply could be controlled to keep the price high .
i wonder why diamonds are not traded on the exchanges , could it be the the supply is controlled by debeers ? there are enough diamonds in the world to give everyone a bounch of them.
crude oil is not in short supply there is more crude oil in storage than ever.
i guess when you start paying $5/ga for gas and crude oil futures are at $150/ba ( therefor giving much more money to the bad guys of the world ) you will understand what free trade really means.
the prices for bicycles/refers are controlled by supply and demand. there is no supply/demand control of crude oil, the price is controled mainly by big specs/producers.
i will repeat --where is the free trade when the supply of a product is controlled ????????????
name me one more product that is traded on our exchanges that has a cartel controling the supply.
and yes , when leaman brothers / citi / goldman sucks and the big headge funds pump the price of crude oil up to make billions of $$$$ off the avg american -------make them take delivery of the crude if they need it so much.
i feel very sorry for you people that don't understand .
i will add , everyone remembers the early 80s when hunt/an arab/a so american tried to control the silver market , what did the exchanges do , they limited the number of contracts a non-headger could hold , they raised the margin requirement sky high .
as a side note i own stock in USO , so if the price of crude oil goes up i make more money off the uso than i pay for higher gasoline prices , but all people can't do this.
Last edited by ILUVRP; 02-20-2012 at 08:03 AM.
In 1998 or 1999 oil briefly touched $8. For about a week, gasoline was $0.96 per gallon in Connecticut and this state is always higher than the national average.
OPEC existed in 1999.
Problem is, the OPEC countries don't really get along and they have conflicting goals. Some countries want to keep oil prices low enough so that there is no incentive to create alternative technologies. Other countries want increased prices because they need more revenue. When the countries that want increased prices have control and they vote to reduce output, each individual country wants someone else to reduce output so that they can take advantage of the high prices and produce at full capacity. They all try to cheat on each other. There is no enforcement mechanism. The OPEC production quotas are rarely meaningful. OPEC's reputation exceeds its influence.
If the price of oil rises to high for to long, you will see a large increase in investment into alternative energy technologies. It may already be happening, who knows. In any case, that is how the free market keeps a check on abusive monopolies. It's far more effective than government controls, which, depending on which way things went, could either end up in shortages or with subsidies and extending the lifespan of old technology.
"Government is not the solution to our problem; government is the problem."
Ronald Reagan, 1981
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