For the past four years now we've seen gas prices rise steadily from an average of $1.84 per gallon to what I paid today, $4.07 (I run 93 in my car). The talking heads on the television are putting the notion in our heads that this is because of the recent tensions in the middle east namely Iran. Frankly I find this rather insulting because A.)This is not how economics works, the Supreme Leader of Iran doesn't wake up one day and decide to charge an extra $50 for a barrel of crude and B.) Iran is one of many oil producing countries and it is only second tier at that. The U.S. produces around 225% the daily amount of crude oil that Iran does.
So why the rising gas prices?
First we must ask ourselves, are gas prices actually rising?
There are two answers. A keynesian economist would say yes.
I fancy myself an austrian economist and I say no.
We look at the data and acknowledge that yes, it costs more dollars for a barrel of crude than it did in 2008.
However this is not so much because gas is more expensive, as it is the dollar losing its value through inflation.
I'm sure you've heard of the housing bubble. Unsustainable housing loans given through the government organizations Freddie Mae and Fannie Mac artificially inflated the housing market which popped in 2008 crashing the stock market and causing a dangerous period of intense deflation. One arguably positive short term side effect of this crash was the dramatic drop in gas prices (nearly $2/gallon!).
However over the past 3 years we have seen the market correct itself and once again gas has risen to sit comfortably around $4/gallon. Let's take a quick look at the chart below, first the data represented by the black line - the price of gas. Holy crap, it's getting expensive lately isn't it? Well I guess. That's the line the keynesians focus on. Now I'm going to give you the red pill and we're going to look at the data adjusted for inflation on the red line. That makes things much more interesting. We see the red line affected by the economy somewhat, dropping and rising and yet, peaking at the SAME PLACE in 1918, 1981, and now.
Essentially what this means is the net cost of gas HAS NOT RISEN and you are BEING LIED TO.
The cost of gas has not risen - only it's price in dollars!
Gas price adjusted for inflation.
So, what's behind the rise in gas prices? Its that same evil word that's behind the rising cost of clothing, food, and other consumer commodities - one you may hear about is gold, which has risen to a rediculous price in the past 5 years as people move their wealth to gold instead of the dollar (they know what is coming).
Some say its Bush's fault, some say its Obama's fault, I say its the fault of the bankers and every president since 1913. The Federal Reserve System, created in 1913 along with the income tax, prints money and loans it to the government with interest. The money taken from our income tax goes back to the federal reserve to pay this interest and it becomes a vicious cycle that America has been dragged through for 100 long years now. We've managed to save ourselves by printing money and artificially inflating and deflating the system many times over, but with a $15 trillion debt and the dollar having been devauled 96% from its original value we have reached the end of this cycle and we will stop the easy way or the hard way.
Soon we will experience hyperinflation and the dollar will fail. This will happen in the next 1-5 years. If you want to avoid losing your entire savings or being without money when this happens I suggest buying silver or, I suppose gold if you can afford it (just go with silver its easier). This is an easy failsafe to protect yourself from financial disaster, and worst case you can just sell the silver back for a profit.
Before I go, I will add that the only presidential candidate that understands inflation is Ron Paul. He has the knowledge and the plan to fix the economy and he is the man responsible for me knowing what I know now. This is the guy that is going to save us if we choose to let him. Don't be fooled by the people telling you he can't win. He most certainly can if we, the people, wake up fast enough.