What the *bleep* is going on? - gas prices (Durham: how much, buy)
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1) You think that the devaluation of the dollar is the sole reason for higher prices? In other words, do you not think there's any (or little) manipulation of the market?
2) Not that there's the will to do it, but what's the solution? Tie the dollar to gold, somehow?
3) Do you foresee this getting much worse in the near future?
Answers to your questions:
There is both because of the $ printing. First, it devalues the only asset that countries can use to buy and sell oil, the USD. Second, the literally 100s of billions of $s flowing into the Finance Industry via all this money printing has to go somewhere. It's being used to push up stocks and it's being used to hedge commodities, namely oil. It's the other side of keeping interest rates at ~0%.
There is no easy solution. Cutting off the $ printing, will require the Federal Government to stop its obscene levels of spending. It would take down the TBTF banks. It would cut off cheap mortgages for houses. Nobody wants to go here, so people delude themselves that Oil is being driven up by demand.
Yes, though it's very difficult to predict it from month to month. The USA is printing Trillions/dollars year that it doesn't have, and we are now in uncharted territory as this has never happened in the nations history. Oil won't be, and isn't, the only thing affected.
Thank you for the questions. Most won't even contemplate this is the real reason for these price swings.
Drilling is not going to solve the problem.
Only reducing Oil Consumption in the US will begin to solve it.
What about China and every other country that is using oil? Their consumption doesn't matter?
Quote:
Originally Posted by Geologic
I am not sure why you think that? My main idea (for the US): is to move towards "car-light" living, as you see in much of Europe. That means smaller cars, with greater fuel economy, and much more mass transit - commuting by trains and buses.
Those things are already happening in many places in the US, particularly using cars with greater fuel economy.
But isn't gas already $10/gallon in Europe, with half of that being taxes? If gas here gets to $10/gallon, so be it and people will need to seek other alternatives, but I think it's wrong to force people's hand by doubling the price with tax.
What about China and every other country that is using oil? Their consumption doesn't matter?
Of course it matters!
The US is going to have to CUT consumption, to make way for China -
I am sorry to tell you. Can you not see why that is the case?
Quote:
Originally Posted by GoPhils
Those things are already happening in many places in the US, particularly using cars with greater fuel economy.
But isn't gas already $10/gallon in Europe, with half of that being taxes? If gas here gets to $10/gallon, so be it and people will need to seek other alternatives, but I think it's wrong to force people's hand by doubling the price with tax.
Indeed.
You are right: Things are happening:
+ The US is producing more oil domestically, and was able to cut its imports from 10 million bpd, to "only" 7-8 million bpd (But I doubt that this oil rush can be sustained for long.)
+ The fuel economy of the US car fleet is improving year-to-year
+ People are fleeing from their McMansions in the outer ring suburbs, leaving a property crash in their wake
Despite all these positive changes, oil prices are creeping higher, and we have not yet seen the "damage" to happy motoring that will be done by a sliding dollar. The dollar-related oil crisis still looms in out future.
The US has goofed IMHO. Instead of raising the price through increased taxes, we are waiting for the market to do it. So the US has missed out on:
+ The tax revenues that would have come from a gasoline tax, maybe relieving the need for higher income taxes, and
+ Has experienced a long delay (therefore) in addressing its excessive addiction to imported oil.
Politicians in the US lack courage (does that surprise anyone?), or they would have raised gasoline taxes long ago when European countries did.
Of course it matters!
The US is going to have to CUT consumption, to make way for China -
I am sorry to tell you. Can you not see why that is the case?
So other countries can demand oil, but the US can't. Got it.
I admit I don't follow what's going on in Europe, but isn't their economy doing much worse than the US? Seems those ridiculous gas taxes haven't helped much.
Uncontrolled capitalistic greed...This is the "new" america.
Where do you come up with this nonsense.
We the USA, are Dependent on Foreign Oil !!! There lies the problem. If USA companies could
compete by drilling and obtaining our own oil, prices would be post Bush again.
So other countries can demand oil, but the US can't. Got it.
I admit I don't follow what's going on in Europe, but isn't their economy doing much worse than the US? Seems those ridiculous gas taxes haven't helped much.
Anyone can "demand" oil.
The US (per capita) is taking 5X as much as the average of the entire globe.
But the US is not paying for that oil with exports - as China and most other countries are doing - it is paying for it by printing its own currency. So far, it has cajoled the world to investing those surplus dollars it sends out into Us Treasuries.
Were you unaware of this? Do you think it is sustainable - that the demand for US treasuries is insatiable?
I was looking for something more up-to-date, but from this you can see that China has stopped growing its holdings of US debt
As foreign appetite waned, the US needed to find another buyer. It did... The Fed.
BTW, the Europeans have other problems with their economies, but the massive per capital addiction to oil imports that the US gas is not one of them.
....
Were you unaware of this? Do you think it is sustainable - that the demand for US treasuries is insatiable?
...
You are confusing the purpose of US Treasuries with USD currency. US Treasuries are obligations of the US Government and are not currency. USD is an obligation of the Federal Reserve and is current official currency of the USA. The US Treasury has not directly issued currency since 1971. The "petrodollar" system came into being shortly after this change.
USD = United States Dollars = Federal Reserve Notes = petrodollar
The world buys and sells oil in USD i.e. United Stated Dollars. Every country has to acquire USD currency in order to sell oil or buy oil. Until this changes, all countries, including China, must acquire USD for oil sales.
Treasury notes are debt instruments and not currency. Since China does not allow the Renminbi to openly trade on the currency markets, it has to buy foreign currency assets in order to sell it's exports. All of the central banks of the world balance their base money against real financial assets. China does this to keep their currency from rising and hence their exports unattractive. The model is just as unsustainable as the one where the USD exports Treasury notes. However this is not an Oil issue.
What do you suippose happens with the surplus US dollars that China earns in trade?
China has to buy raw materials for it's exports. It has to buy oil for energy. It has an unsustainable population (an extra billion) which it has to support even at a poverty level. It has a large mostly corrupt Communist government that is using the money for private enrichment. It has a large military that is currently engaged in saber rattling with Japan. There are plenty of places for these $s to be absorbed.
It should also be noted that a good portion of that money is going to US corporations who have partnered with the Communists.
As long as China has a population that is well beyond it's ability of local resources to support, it's got to spend money just to survive.
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