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Thread: Why are gas prices rising? Duh.

  1. #31
    Member newbitech's Avatar
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    When we go around threatening to start a war in the neck of the bottle that holds 20% of the supply side of oil, we can expect the speculation that there will be a supply shortage.

    At the same time, the irrational hope that our economy will make some miraculous come back anytime soon is weighing heavily on any deflationary demand collapse.



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  3. #32

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    Gas prices are NOT rising. The purchasing power of the money used to buy the gas is losing it's value.

  4. #33

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    I agree with the charts posted earlier. Gasoline has risen in "real" inflation-adjusted terms. And that makes sense considering that more of the world has developed industrially and uses this resource.

    When I was in college in the late 1980s, I was earning about $11/hr as an intern and paying around $1.10 a gallon. So, six minutes of labor paid for a gallon of gas.

    Now I have a salaried white collar job with several years of seniority. But a gallon of gas is more than six minutes spent with my employer.

  5. #34
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    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 am Zippy and I approve of this message. But you don't have to.

  6. #35

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    Quote Originally Posted by Zippyjuan View Post
    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
    So has the money supply. But money printing isn't the only thing that causes prices to change.
    What I say is for entertainment purposes only!

    Mark 10:45 The Son of Man did not come to be served, but to serve, and to give His life as a ransom for many.

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  7. #36

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    Quote Originally Posted by Brian4Liberty View Post
    Well, sometimes it's a matter of degree. Selling forward contracts on your crops is part of the farming business. No problem there, especially if your contracts are with people who will actually take delivery of your product. I question the need for a Chicago Exchange and Hedge Funds to be part of that process though. We should question the wisdom of commoditizing every conceivable product and financial instrument in the world. This does not benefit the core businesses, supply chains and customers involved. It does further the agenda and reach of Wall St. banksers like JP Sachs, who in essence collect a tax on every possible business transaction. Look how well that worked out when they commoditized debt.
    You obviously have no idea what exchanges do.

    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.

  8. #37

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    Quote Originally Posted by Madison320 View Post
    Because 2 things determine the price of something. The supply and demand of the item AND the value of the unit (dollar) the item is priced in. There are too many houses and not enough buyers which is outweighing the effect of the weaker dollar. If the value of the dollar had not changed house prices would be falling even faster.
    My point exactly. Money supply is not the only factor, supply and demand matters a lot.

  9. #38

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    Quote Originally Posted by onlyrp View Post
    My point exactly. Money supply is not the only factor, supply and demand matters a lot.
    Yes, but in this case demand is down, but prices are up.
    What I say is for entertainment purposes only!

    Mark 10:45 The Son of Man did not come to be served, but to serve, and to give His life as a ransom for many.

    "If you want to make a lot of money, resist diversification." - Jim Rogers

  10. #39

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    Quote Originally Posted by cubical View Post
    Yes, but in this case demand is down, but prices are up.
    what price should it be in today's demand?

    was it still too high at $2 a gallon 3 years ago?

  11. #40

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    I've been liking this jpg.



    The price has seemed to have been holding pretty steady since the seventies when it held for years and years at around 17 to 25 cents. That is with real money. The value of the fiat dollar has certainly taken a hit during that time.

    Still with the crazy talk of war, things could change overnight in a flash.


    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.


    Then again I could be sadly mistaken.

    I do remember thinking that if people could price gas higher to stretch it until they could get more we wouldn't of had the lines.I guess that is pretty much what we got.
    Last edited by Carson; 02-20-2012 at 11:55 PM.

  12. #41

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    Quote Originally Posted by Madison320 View Post
    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

  13. #42
    Site Staff - Moderator Brian4Liberty's Avatar
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    Quote Originally Posted by Narmical View Post
    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".
    Last edited by Brian4Liberty; 02-21-2012 at 12:26 AM.
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  14. #43

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

  15. #44
    Last edited by dustup; 02-21-2012 at 02:09 AM.
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  16. #45

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    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 .

  17. #46
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    Quote Originally Posted by Carson View Post
    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.

    Last edited by enoch150; 02-21-2012 at 04:25 AM.
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  18. #47

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    Agree with OP and others. It's inflation.

  19. #48

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    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 .
    Last edited by ILUVRP; 02-21-2012 at 08:30 AM.

  20. #49

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    Quote Originally Posted by Zippyjuan View Post
    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.

  21. #50

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    nvmnd
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  22. #51

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    [}{]
    Last edited by iGGz; 08-13-2012 at 09:15 PM.


  23. #52

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    Quote Originally Posted by iGGz View Post
    How do you figure that demand is low? Demand outside the US is high, isn't it?
    Where do you see that?

    http://globaleconomicanalysis.blogsp...-gasoline.html
    What I say is for entertainment purposes only!

    Mark 10:45 The Son of Man did not come to be served, but to serve, and to give His life as a ransom for many.

    "If you want to make a lot of money, resist diversification." - Jim Rogers

  24. #53

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    Quote Originally Posted by iGGz View Post
    How do you figure that demand is low? Demand outside the US is high, isn't it?
    Quote Originally Posted by cubical View Post
    Check the Baltic Dry as well. Has crashed past several weeks.

    http://www.bloomberg.com/quote/BDIY:IND/chart
    E che sospiri la libertà!

  25. #54

  26. #55

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    — The volume of fuel exports is rising. The U.S. is using less fuel because of a weak economy and more efficient cars and trucks. That allows refiners to sell more fuel to rapidly growing economies in Latin America, for example. In 2011, U.S. refiners exported 117 million gallons per day of gasoline, diesel, jet fuel and other petroleum products, up from 40 million gallons per day a decade earlier.

    thanks big oil , these hoes will do anything to make a buck , we should give them more tax breaks i guess.

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