GAS Prices Are NOT Rising; DOLLAR is FALLING!
Discussions on this site are very interesting and it may be helpful to understand the nature of the "Dollar"; cause of the falling dollar and rising prices is printing money out of thin air (nothing to back it). So, not only are gas prices rising, so is everything else, at the same rate, and for the same reason. Please read this explanation from Forbes Magazine. Another issue to consider is that the Eastern oil rich countries are no longer using the U.S. Dollar, Iran being the latest. Hillary Clinton said 'we can't go to war with all of them". Iraq proposed the Oil Bourse first, we went to war, now Iran and Syria have followed. They NO LONGER WANT our 'valueless paper dollars'!
In light of ALL this, please review the monetary policies of ALL our Presidential candidates and the ONLY one talking about monetary policies, the printing of money, the bureaucracy and unending expansion of the government, endless invasions (wars), eliminating the Federal Reserve (who is NOT a part of the Federal Govt, but a private international bank) and Federal Reserve PRINTS THE MONEY!
That person in Congressman Ron Paul, whom the media ignores and maligns, gets the largest crowds, more donations from our Military than ALL the other candidates combined (including Obama), gives specifics on cutting the deficit by $1 Trillion dollars the first year, will downsize the govt., eliminate the Federal Reserve, promote private enterprise, and supports freedom and prosperity for all, NOT the elites and corporatists and international banksters!
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Gasoline Prices Are Not Rising, the Dollar Is Falling
http://www.forbes.com/sites/louiswoodhill/2012/02/22/gasoline-price...
Panic is in the air as gasoline prices move above $4.00 per gallon. Politicians and pundits are rounding up the usual suspects, looking for someone or something to blame for this latest outrage to middle class family budgets. In a rare display of bipartisanship, President Obama and Speaker of the House John Boehner are both wringing their hands over the prospect of seeing their newly extended Social Security tax cut gobbled up by rising gasoline costs.
Unfortunately, the talking heads that are trying to explain the reasons for high oil prices are missing one tiny detail. Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more.
What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point.
As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl. All this means is that the market value of a barrel of WTI is 105.88 times the market value of “the dollar”. It is also true that WTI is trading at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different in each case is the value of the monetary unit (euros, yen, and British pounds, respectively) being used to calculate the ratio that expresses the price.
In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.
During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Plotted as a graph, the line representing the price of a barrel of oil in terms of gold has crossed the horizontal line representing the long-term average price (Au0.0732/bbl) 29 times.
At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon.
At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices.
Federal Reserve Chairman Ben Bernanke uses a “core CPI index” that excludes food and energy to guide monetary policy. From Big Ben’s point of view, rising gasoline prices are not a problem. For the rest of us, they are becoming a big problem.
Over the centuries, gold has been “the golden constant”. Eventually, all prices equilibrate with gold. This is why gold represents the best available standard in terms of which to define the value of a monetary unit. Forty-one years ago, when the value of the dollar was defined in terms of gold at $35/oz, WTI was selling for $3.56/bbl.
Right now, the threat posed by rising gasoline prices is not just to family budgets. An even greater danger is that the government will use escalating oil prices as an excuse to do something stupid.
After President Nixon abrogated the Bretton Woods monetary arrangement in stages starting in September 1971, both gold prices and oil prices started to rise. The government responded by imposing wage-price controls. This made a bad situation much worse.
This time around, the stupid policies being considered to “deal with” rising gasoline prices include additional cuts in payroll taxes and higher taxes on energy producers.
During the 1970s, the toxic combination of a weak dollar, high tax rates, and onerous regulations introduced a new word into America’s economic vocabulary: stagflation. Reaganomics banished this word to the history books. Now, President Obama and Fed Chairman Bernanke are teaming up to give stagflation another try. It is not likely that Americans will like it any more this time around than they did 40 years ago
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Replies to This Discussion
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Permalink Reply by George Brown on -
Like.
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Permalink Reply by Linda A on
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The efforts to stifle the freedom and prosperity here is directly related to foreign oil, which the big bangsters and elites have plans to control it all. IF we have our own oil/gas, they could not justify occupying other countries! U.S. is always on both sides of every war, but the ultimate goal is the same.
It's like children of divorced parents, they know how to control each parent in order to get exactly what they want.
We prop up dictators, and give them billions, and when they want a 'divorce', then we attack and insert another dictator. Iraq wanted a divorce, as do/did other oil rich countries because when they learned they could control their own destiny, with selling their oil for foreign currencies, we stepped in to cause turmoil and replacement of leaders, and called it 'promoting Democracy' when they already had duly elected people in charge.
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Permalink Reply by Dan on
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I agree 100% Linda, It is a terrible farse when we boot democractly elected leaders and prop up henchmen leaders in the name of democracy because it is in our nations "interest". But we have a good thing going playing both sides of the fence. We can sell arms and when a section of the world is all torn up we send in the nation builders and private "contractors" and profit from the flip side too. This is not a popular topic. General thought is "We give that country so much money........Why in the world do they hate us"? The big question is where is arms sales and nation building line itemed in the plus side of the budget? Where did the money go?
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when Dick Cheney announced the Billions of dollars unaccounted for in the DOD, just happened to be the night before 9/11 - no one talked about it since! Other Billions disappear and the media is silent - collusion with the establishment, who own them, BTW.
No one talks about the private militia in our foreign countries - no control except big pay checks for all and do the bidding of our govt.! Our military give their lives while the private militia hide then cause havoc to invaded country.
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Permalink Reply by 015334grltd9m on
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In Asia in the 70's , my parents rec'd their pension in US dollars so I was taught currency fluctuations at an early age. Many times when my mother gave me a dollar, I knew right away to run straight to the money changer, not the bank and exchange my dollar for a higher exchange rate on the real time market.
Now, here is wisdom...forget the dollar and use your NG, wet gas, oil or land as your currency.
I have an acre in Mahoning county, it is worth $5K to $6 an acre "today". As oil goes up, the source will follow.
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good advice, ron, are you now exchanging those worthless flat dollars for physical silver and gold? or for other foreign currencies? The rate of exchange between U.S. and Canada used to be about 30% - what is it now? Federal Reserve will continue printing money faster than anyone wages can go up and faster than our land resources can keep up!
Notice how very successful people (movie actors/actresses are the ones we hear about in the news) and people own homes in foreign countries? The U.S no longer allows large sums of dollars to be exchanged for foreign currency w/o notification. But if you own property outside the country, they have no control.
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Actually, the Federal Reserve was created just for the reason used today - even though not a Federal Agency.
Their goal, to control interest rates and the printing presses (of money), it's silent taxation. If Americans realized it is no different than taxing, there would have been a 3VOLution a long time ago.
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Permalink Reply by randall gottus on
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Linda... Bloomberg T V talks about it all the time. In about six years the dollar will no longer be the major currency. You are correct in stating that the reason why gas and other commodities are /have been going up is due to the weakening dollar. Just a few weeks ago when the Fed stated that the rates will remain low until late 2014 kind of sewed the deal. And yes, vacant land ,with all the gas/ mineral rights, is a commodity. There are other valauable resources/minerals, etc. yet to be discovered in vacant land... one recent finding...rare earth minerals...once thought to be only in China...new research has found out (seeking Alpha) that we have it here also in the U S . It is used in making high tech stuff, etc. The price of vacant land will start/has been going up in value as the dollar continues to weaken. There has been talk that China and other countries in Asia would like to buy/have our land , instead of holding our dollars. ...Oh, by the way, Ron Paul s economics advisor was Peter Schiff, who has written many books about the demise of the dollar, stagflation, rising commody prices, rising inflation AND how our government (both parties) always gets it wrong.
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Permalink Reply by Chartist on
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Using only the demise of the dollar to explain rising oil prices tells only half the story. I mean, the Saudis could continue to accept $80 oil in perpetuity even though it will buy less on the world stage. Somewhere someone said, we want $100 per barrel oil based on 2012 purchasing power. And, if the dollar falls, we'll want more to make up in lost purchasing power, supply/demand economics be damned.
The wall street speculators do the bidding for the US/Saudi governments. I see the saudis are saying they'll pump more oil. Well, I doubt that but they are getting pressure from the US to at least say something for all the price propping we do for them.
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Permalink Reply by Chartist on
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The US has an energy policy, we just haven't been told about it. But it goes something like this:
Use all of the oil other country's have, then use ours. The US will not drill ANWR until the middle ease is out of oil. And they shouldn't, imo. The cure for high gasoline prices is high prices. People will cut back....
Oil is a different animal. It's a controlled price, imo. At least the downside price action is controlled. High oil revenue leads to high defense spending by foreign governments. It leads to high airplane sales, higher sales for pharmaceuticals in countries where healthcare is more socialist. High oil prices is another tax we all pay to support the markets of US corporations.
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the fact remains that most countries are now refusing our worthless dollars and are trading in a multitude of other foreign concurrences. More war to come in an effort to thwart the oil producing countries from reducing the U.S. to a third world country.
Google "oil bourse" or the "Iranian Oil Bourse" for addition info...
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Permalink Reply by Dan on
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Jim, I agree, prices have always gone up, sometimes faster and sometimes slower. The way our commodities are traded can allow a few to munipulate prices almost over night. This along with the fact that we are currently exporting refined oil products right to the edge of shorting our own supplies keeps futures going up. To keep the Saudis GNP consistant and many oil plays profitable they want oil to trade above $100 a barrel. Russia needs about $140 a barrel to keep their economy afloat. Think they have an interest in Iran F%%$#*g around with the Straight of Hormuz? I think it was in 2010 Goldman Sachs kept buying Red Hard Wheat futures over and over and over, never putting any futures up for sale until the price went so high millions of the poorest in the world just starved to death even though it was sitting in abundance in silos. Then Goldman Sachs sold making billions........... they were fined by the SEC for $550 million. Almost everything we eat and use is traded thru brokers. Prices are no longer controled by actual inventories in supply and demand but by what the price someone is willing to pay next week, next month and next year. A country with vast amounts of wealth could just inflate the futures market today and starve out their enemies along with a big chunck of the rest of the world tomorrow. The pen is mightier than the sword. Each time we enter the middle east we create an enviroment that makes our potential oil rich enemies even wealthier as oil prices rise only to escalate our next problem there. Our best security for our country is everyone of us accumulating wealth and our resources, and not just for a few trading companies we bail out so they can keep sticking it to us or the dead beats abusing the system. I would say good luck Ron Paul and good luck Obama but today comdems and slander seem more important to our country. It is the rest of us that need the luck.
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