Why are gas prices rising? Duh.

[gunnysmith]

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?

The products you buy are shipped by vehicles using fuel, the food you eat produced by machiery using fuel.
The list goes on and on.
Every thing plastic is fossil fuel

[Brian4Liberty]

Here is the simple explanation. You seem to understand why a farmer would sell a futures contract; to lock in a price. Lets say they farm wheat. Also lets assume there is a flour producer, he needs to buy wheat. How do these two buyers and sellers meet up? that's where the exchange comes in. Additionally the exchange assumes counter party risk. So if the farmer or the baker back out at the last minute the exchange makes good on the contract.

Thanks for clarifying that. I knew that "exchange" was too generic a term when I used it, but didn't feel like going into specifics. As an analogy, suffice it to say that loans and banks may play a part in your everyday home purchase, but you will not convince me that Goldman Sachs repackaging loans into derivatives, insuring them, and selling them in a global marketplace is necessary in order for the buying and selling of homes to occur. Likewise, other commodities could be bought and sold without a global, homogenized, standardized, controlled and taxed "exchange".

[3kgt]

Someone tell me my note was good please my self confidence is low today

[dustup]

Someone tell me my note was good please my self confidence is low today

Good post 3kgt!

But that's only part of the reason that gasoline prices are up,

Ethanol has contributed to the U.S. fuel supply and reduced net petroleum imports.

Domestic production and consumption of ethanol may lead to other effects that are not addressed in this report. For example, increased production of ethanol has probably led to some reduction in oil imports and the price of gasoline, to an increase in average farm income, and to some impact on the quality of the nation’s air and water resources.


higher mileage standards and federally mandated ethanol use, along with slow economic growth, have curbed demand.

Mandated Ethanol additive to fuel, gasoline and diesel

To reduce our Nation's dependency on foreign oil by investing in clean, renewable, and alternative energy resources, promoting new emerging energy technologies, developing greater efficiency, and creating a Strategic Energy Efficiency and Renewables Reserve to invest in alternative energy, and for other purposes.

[rockerrockstar]

Once the economy rebounds gas prices will rebound more too. I expect gas to be more expensive sooner or later even if the Iran war does not happen. Between increase demand when the economy returns and also the inflation from the bailouts/wars .

[enoch150]

I've been trying to remember the gas crisis in the seventies. I think inflation was kicking in from all of the war spending at the time and someone froze wages and prices, I'm thinking. I think production was cut because the fiat currency just couldn't cover cost.

I was just reading up on that. Nixon started with his wage and price controls in 1971, the same time he severed ties with the dollar. Most of them went away by 1973, but they doubled down on oil when OPEC started the embargo. In 1973 Nixon allocated domestically produced oil to the states based on 1972 usage rates. States with an increase in population had severe shortages. He also froze prices for existing domestically produced oil supplies. New domestic sources of oil were allowed to float at market prices. The idea was to encourage new exploration, which it did. It also shut down production of existing oil sources, making the oil crisis worse. The oil embargo only lasted six months, but the regulations lasted eight years. Carter made it worse by banning imports from Iran and imposing a windfall profits tax on domestically produced oil.

[InTradePro]

Agree with OP and others. It's inflation.

[ILUVRP]

in 1891 the Texas railroad commision was established to set the production/price of crude oil , OPEC was at full member strength in 1973 , replacing the TRC , it was said the only difference between the TRC and OPEC was the OPEC didn't have Texas rangers.

in 1983 crude oil futures started trading on our exchanges , since 1983 i have always wondered how a commodity that had its production controled by any cartel could be traded on a exchange.

will someone tell me how raising the margin requirement to at least 75% from 5-6% now , and make ALL contracts deliverable , if you by one or a thousand contracts ----you must take delivery---- would hurt amy American except the big specs/banks/headge funds.

any person that believes in free trade doesn't understand free trade if they think what is happening in the crude oil futures is free trade.

big oil / big banks run AMERICA , and we are all in deep kaka . get used to it , things are going to get much worse .

[Madison320]

Let's take a look at that inflation adjusted price of gasoline and see what has been happening. Yep- it has been rising since the late 1990s.
http://inflationdata.com/inflation/i...tion_chart.htm

I don't trust the government inflation numbers for one minute, do you?

Back in 1970 we were on a gold standard at $35 an ounce and oil was $4 a barrel.

Now gold is $1760 an ounce and oil is $105 a barrel.

According to my math back in 1970 1 ounce of gold bought you about 9 barrels of oil. Now 1 ounce of gold will buy you about 17 barrels of oil. So in terms of real money oil is half the price of what it was in 1970.

If you really want to understand the effect of inflation you need to take a macro view. Take a look at the price of commodities from 1933 to 1970 (gold standard) and then from 1970 until now. If you smooth out the bumps the price of commodities basically remained steady while we were on a gold standard until 1970 and has steadily risen ever since. Speculators and cartels and middle east unrest may cause a bump up or down but they are not the cause of the overall increase.

[tfurrh]

nvmnd