Gas Prices Heading Down

mame · May 21, 2011

We are the one with an artificial economic policy? Uhm, I seem to remember that it is China that limits interest rates on bank accounts below the rate of inflation, China is the one using price controls, restricting credit, etc...Their weak money policy keeps their trade balance artificially high, while draining from the rest of the world(that means us! Yes, I said it our trade deficit is like this in large part because of China). QE1, QE2 would have been much more effective for example, if China(and other Emerging markets) let their currency appreciate. They obviously dont want to do that because it hurts their trade surplus... They'd rather the advanced nations deflate(which is obviously not a good situation for us). Russia is involved too, maybe you should keep that in mind when watching RT... Putin even went so far as to call the U.S. monetary policy "hooliganism" even though all the Fed is doing is following textbook economics, the emerging markets are simply trying to retain their advantage.

Oh and it doesn't matter that China can blow up our economy - because they wont. They need us just as much as we need them; A ridiculously large portion of their economy is based off of that fucking artificial trade surplus after all. You see, they'd rather the Fed ignore half of it's dual mandate and focus solely on keeping inflation low so they can continue with their manipulation at the expense of American jobs...

Currency wars! Fun.

NoDrama · May 21, 2011

Putin was correct, our economy is run by hooligans. When you figure out that textbooks won't save us you will be one step further to understanding the situation. Still waiting for gas prices to go down and deflation to rear its ugly head.

NoDrama · May 21, 2011

to add: We may very well see a pulldown in the markets with the end of QE2, it will be short lived ( this summer) and QE3 will shortly be implemented before the 2012 election season kicks off.

ChronicObsession · May 21, 2011

jeff f · May 22, 2011

mame said:
I saw 3.94 a few days ago and my GF just filled up on 3.86 last night(been seeing a lot of $4+ here). The ball may be rolling for the prices at the pump to finally drop a bit, and crude prices are holding pretty steady at $97-99 a barrel since the big selloff at the beginning of this month(when this thread was started).

Wheat and corn however, may be more expensive soon... Even more evidence of supply/demand issues being the main driver of commodity prices(not runaway inflation).

oh, and Krugman points out in his latest blog and column the weaker dollar has boosted our manufactoring import/export balance(def. a bright spot in an otherwise weak recovery):
View attachment 1609999

meh

you keep saying corn and wheat will become more expensive but not from inflation. what else could it be? the seeds arent even in the ground yet for these 2 crops.

mame · May 22, 2011

There's an article I linked...

As of Monday, the entire corn crop for the country was 63% planted, when the five-year average is 73%, according to the USDA. But for certain corn-growing states the conditions were much worse. For example, Ohio was 7% planted as of Monday, compared to a five-year average of 70%, while North Dakota reported that 14% of its crop had been planted -- compared to a 55% five-year average.

NoDrama · May 22, 2011

Bah, North Dakota only provides 65% of the Nations Durum and Spring wheat, what could go wrong? Pasta ia made from Durum right? And why is that POS State in the news all the fricking time?

canuckgrow · May 23, 2011

Bottom line the people that own the oil, drill for it, refine it, trade it,sell it...Are all getting filthy stinking rich off of us. Reduce consumption.....Tell those aforementioned folks that B'ah we really don't need that much oil. The only way to do that is alternative fuels and energy sources.....Mark my words though those alternatives will not be cheap and whomever comes up with the next phase of energy sources will be just as stinking rich and powerfull as the oil folks ever were if not more.
Still seeing lots of hummers, F350's,Suburbans used solely to get from point A to point B......I mean who buys a $60,000 vehicle that mainlines gasoline????....A 110 Lb soccer mom with 2 kids and a chiwawa. Thats who.....Or her husband who needs a bigger truck than chuck jones the neighbour just to keep up.....To commute 20 miles of hwy in bad traffic. Still see it all the time people!! Or same goes for the 4500 sq Ft houses with 2 people living in them.....Until we rescind our wastefull ways we are all stuck with the oilcock in our bums.

Yes I am making generalizations but hells bells I see it often enough to logically conclude that a good number of us are just blind to the solution. Or we just don't give a shit.

mame · May 23, 2011

Goldman Sachs economists are predicting (via CNNmoney):

Oil prices could surge again by the end of 2012, economists Jan Hatzius and Andrew Tilton wrote in a note to clients this past weekend. They say the snail-like pace of global oil supply expansion – which Goldman projects at 1% or so annually – can't keep a petroleum-addicted world economy rolling without prices rising, perhaps sharply.

More supply/demand shit.

"The fundamental story of increased oil scarcity is unchanged, and our commodity strategists now see distinct upside risks to their current forecast of $120/barrel for Brent crude by late 2012,"

120 per barrel is like $4.10-$4.20-ish, this estimate is slightly higher than estimates I've posted in this thread (I believe the highest estimate was a peak of $114 a barrel)... Goldman probably has the best overall team of economists in the nation at the very least so it's worth accepting the possibility they're right... The fundamentals are the same though, supply and demand are the main drivers of price increase - not inflation (although they do admit that the loose monetary policy doesn't help prices at all)... They go on to justify the feds policies here:

High joblessness and weak inflation will keep the fed funds rate near zero at least through next year and perhaps longer, Hatzius and Tilton write. That should help keep pushing unemployment slowly toward its long-run average of around 6%

Seems Goldman's guys think inflation is a non-issue ATM as well...

mame · Jun 7, 2011

more than a month later, and gas is still floating around $98 a barrel.

Oil prices the Fed's fault? Bernanke says no:

...the Fed chief pushed back against the critics of loose Fed policy, who blame the central bank for reducing the value of the dollar and fueling a big rise earlier this year in the prices of oil and other commodities.

They do so wrongheadedly, he said. While demand for oil has surged thanks to global growth, supply remains below 2008 levels.

"With the demand for oil rising rapidly and the supply of crude stagnant, increases in oil prices are hardly a puzzle," Bernanke said.

What's more, Bernanke noted that while the trade-weighted dollar has lost 15% of its value since markets bottomed out in early 2009, the oil price has surged 160% and the price of a basket of nonpetroleum commodities has surged 80%.

This suggests "that the dollar's decline can explain, at most, only a small part of the rise in oil and other commodity prices; indeed, commodity prices have risen dramatically when measured in terms of any of the world's major currencies, not just the dollar," Bernanke said.

NoDrama · Jun 7, 2011

Nothing is ever the Fed's fault, just ask them.

jeff f · Jun 8, 2011

Don't worry Nd, QE3 is going to fix everything! When are you going to learn?

It's dejavue all over again.....

mame · Jun 8, 2011

Nothing is ever the Fed's fault, just ask them.

It's not who said it, but what he said, especially this part:

the trade-weighted dollar has lost 15% of its value since markets bottomed out in early 2009, the oil price has surged 160% and the price of a basket of nonpetroleum commodities has surged 80%.

I mean, unless you've got some sort of explanation to shoot down this reasoning? Seems he is making a similar argument to what I was making in this thread...

Don't worry Nd, QE3 is going to fix everything! When are you going to learn?

It's dejavue all over again.....

QE3 will probably help but it'd but much better to pass stimulus(if it were me, I'd attach a stimulus package to a delayed austerity program to deal with government debt over the long term). Furthermore; for the next couple years(cut short if needed), if I were Bernanke, I'd be shooting for a 3-4% inflation target instead of 2% to help those in debt and discourage saving by all.

And what do you mean "when will I learn"?

jeff f · Jun 8, 2011

That was sarcasm directed to nd.

Until the govgovt gets pro growth/business, all the stimulus and QE isn't going to matter. Socialistic policy will lead to Socialistic economy. Sluggish and poor just like most of eu.

Sad thing is there is no need for it.

mame · Jun 9, 2011

jeff f said:
Until the govgovt gets pro growth/business,

You realize that the U.S. is actually quite pro business? Why do you think we have all the giants like google, apple, etc in the U.S.? If your talking labor outsourcing, no amount of U.S. policy could get those jobs back without first lowering the American standard of living to levels comparable to China and other cheap labor countries... Not going to happen.

all the stimulus and QE isn't going to matter. Socialistic policy will lead to Socialistic economy. Sluggish and poor just like most of eu.

Sad thing is there is no need for it.

Stimulus and Monetary policy are not socialism; They are simply policy tools designed to ensure stability and growth.

You see, this is exactly what I have been constantly harping about almost the entire time I've spent on these boards... Stimulus is not socialism. Monetary policy is not socialism. You seem to think that because I support government actions to spur private investment (which eventually leads to full employment) that I'm some kind of big government socialist but that's not it at all.

I believe markets generally lead to desirable results, and that it is the role of government to maximize potential while minimizing risk. Government should be actively involved in promoting stability via fair rules and regulations (that means getting rid of bad regulations as well as enacting needed ones) and government should actively fight recession. I do not believe Government is the answer to everything as you obviously seem to think with your cries of "socialism".

Sad thing is, those who follow textbook economics (which has been absolutely right so far) are considered crazy - but for some reason those who make up theories on the fly and rely heavily on idealogy are the Very Serious People in the world. Backwards?

lowrider2000 · Jun 9, 2011

gas prices have been $5 a gallon in europ for a while........why you think they have such little cars......Buy a smaller car chances are most people are driving a big ass truck for no reason. Americans tend to have a big ass Ford f-450 superduty dully......no boat to pull with it and work in a fucking call center and wont even put it through some mudd.....on a lighter note my car dose 45 miles to the gallon hate on me!!!!!!!!!!!!!!!!!!!!

NoDrama · Jun 9, 2011

mame said:
It's not who said it, but what he said, especially this part:
I mean, unless you've got some sort of explanation to shoot down this reasoning? Seems he is making a similar argument to what I was making in this thread...

QE3 will probably help but it'd but much better to pass stimulus(if it were me, I'd attach a stimulus package to a delayed austerity program to deal with government debt over the long term). Furthermore; for the next couple years(cut short if needed), if I were Bernanke, I'd be shooting for a 3-4% inflation target instead of 2% to help those in debt and discourage saving by all.

And what do you mean "when will I learn"?

Well first off, you are confusing government with the Fed. the Fed does what it wants regardless of what the president or congress says or does. They will do what it takes to save the private banks and that means QE infinity. As far as government goes, you cannot do any future planning, the budget gets voted on and planned EACH single year, you cannot make budget considerations in the future, it just won't fly, it is meaningless and a farce.

I certainly expect Bernanke to attempt to devalue, once the Forex goes below 72, I think the inflationary forces will rear their ugly heads with full force. Instead of $100 a week in groceries, try $300. Gas will be $6-$7 a gallon.

As far as stimulus goes,. any spending above and beyond the income will be directly monetized by the fed, causing even more inflation. You will have your wish(3% CPI), and then some.

mame · Jun 9, 2011

NoDrama said:
Well first off, you are confusing government with the Fed. the Fed does what it wants regardless of what the president or congress says or does. They will do what it takes to save the private banks and that means QE infinity. As far as government goes, you cannot do any future planning, the budget gets voted on and planned EACH single year, you cannot make budget considerations in the future, it just won't fly, it is meaningless and a farce.

First off, I am not confusing the Fed and the government, going back to my post I said "QE3 will probably help but it'd be better to pass stimulus"... I never said the Fed was passing stimulus, it might have read a little like that but my intent was along the lines of "QE3 would help but it'd be better if congress passed a stimulus bill."

As for budget considerations for the future being a farce, allow me to explain what I'm advocating for: Let's say Republicans and Democrats agree to a $4 trillion reduction plan over 10 years. Now, currently it's looking like they would enact these cuts immediately and 10 years from now the government will have made $4 trillion in total cuts. Now, I'm not against cuts I'm against cuts right now. If this $4 trillion in cuts is held off till say, 2020, and had a stimulus attached to it to deal with our short term economic problems (EMPLOYMENT) I'd be right there.

The thing is, Austerity is not a growth tool as Republicans have been arguing; It's a debt reduction and structural tool. Austerity hurts in the short term, and if done without a strong, fully employed and producing economy - Austerity can and will create a more dire economic situation. Stimulus first, Austerity later.

I certainly expect Bernanke to attempt to devalue, once the Forex goes below 72, I think the inflationary forces will rear their ugly heads with full force. Instead of $100 a week in groceries, try $300. Gas will be $6-$7 a gallon.

As far as stimulus goes,. any spending above and beyond the income will be directly monetized by the fed, causing even more inflation. You will have your wish(3% CPI), and then some.

Wow so you're doubling down? All lights are green for GO for QE3. All economic indicators - especially now that the main driver of the commodity bubble, gas prices, have backed off... Look, in other threads you admit that the Fed holds the most control over the economy... Why are so you against them doing their job?

I dont think I've ever spent $100 for a week of groceries, either. You feeding several mouths? I consistently spend $50 a week at the grocery store.Besides, if the dollar has lost 15% of it's value lately due to QE as Bernanke says, how the fuck can you be telling me food prices are set to triple with QE3? That's pretty far away from what arithmetic would have you believe...

edit: The guys on this episode of Charlie Rose are advocating essentially for the same policies. Pretty insightful stuff IMO... One of my fav Charlie Rose episodes of recent memory (he had a really good Jazz band on a while back that was SWEEEET as well).

NoDrama · Jun 9, 2011

mame said:
First off, I am not confusing the Fed and the government, going back to my post I said "QE3 will probably help but it'd be better to pass stimulus"... I never said the Fed was passing stimulus, it might have read a little like that but my intent was along the lines of "QE3 would help but it'd be better if congress passed a stimulus bill."

As for budget considerations for the future being a farce, allow me to explain what I'm advocating for: Let's say Republicans and Democrats agree to a $4 trillion reduction plan over 10 years. Now, currently it's looking like they would enact these cuts immediately and 10 years from now the government will have made $4 trillion in total cuts. Now, I'm not against cuts I'm against cuts right now. If this $4 trillion in cuts is held off till say, 2020, and had a stimulus attached to it to deal with our short term economic problems (EMPLOYMENT) I'd be right there.

The thing is, Austerity is not a growth tool as Republicans have been arguing; It's a debt reduction and structural tool. Austerity hurts in the short term, and if done without a strong, fully employed and producing economy - Austerity can and will create a more dire economic situation. Stimulus first, Austerity later.

Wow so you're doubling down? All lights are green for GO for QE3. All economic indicators - especially now that the main driver of the commodity bubble, gas prices, have backed off... Look, in other threads you admit that the Fed holds the most control over the economy... Why are so you against them doing their job?

I dont think I've ever spent $100 for a week of groceries, either. You feeding several mouths? I consistently spend $50 a week at the grocery store.Besides, if the dollar has lost 15% of it's value lately due to QE as Bernanke says, how the fuck can you be telling me food prices are set to triple with QE3? That's pretty far away from what arithmetic would have you believe...

edit: The guys on this episode of Charlie Rose are advocating essentially for the same policies. Pretty insightful stuff IMO... One of my fav Charlie Rose episodes of recent memory (he had a really good Jazz band on a while back that was SWEEEET as well).

I see what you are saying about congress, but its a bad idea in my opinion.

It does nothing to have a budget reduction over 10 years when all you can do is the current years budget, that same budget cut over 10 years will have to be re argued every year for the whole 10 years. The US does its budget yearly, anything planned that takes more than 1 year to implement is unfeasible, the next goof ball in office will line item vote it out, that simple. Budgets are done yearly and voted on yearly. They do not vote on budget measures that affects more than the current years budget. Any plan more than 1 year to implement will NEVER pass, since by mandate it cannot be voted on. Smoke and Mirrors to keep you distracted.

I feed multiple mouths, 5 right now. I spend $40 a week just for milk, wish I had my own cow, but you know that raw milk is the equivalent to Plutonium?

All lights are green and go for QE3, it is the only choice available and has been the only choice available for 3 years now. I have 90% of my chips riding on this.

The main driver of Prices is not gasoline or oil, it is money printing by the fed.

Ernst · Jun 10, 2011

Opec has voted and will not increase supply so a barrel of oil is above $100 and may stay there.

Saudi Arabia is the only producer with excess capacity so the question remains will the Saudis defy the Opec vote and increase supply and lower the cost of oil?

Source PBS News Hour Thursday, June 09 2011

Gas Prices Heading Down

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