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According to google gas was $2.84 / gal here in 2010
today its $3.69 (up 12 cents since Wednesday)
Major recession do cause commodity prices to drop. Recovery from the Bush Recession has petroleum prices up from their depth. They are still lower than before the Bush Crash.
Supply and demand does not take oil from $145 to $38. It doesn't take gas from $4.25 to $1.85. Or even more recently $4.00 back down to $3.00.
What the Fed does plays a lot bigger role than just that. Am I arguing that S&D plays absolutely no role? Of course not but S&D is not causing the volatility.
I think demands are a much stronger driver than the value of the USD, and the main player here.
Gas prices dropped precipitously in the summer/fall of 2008, due to lack of worldly demands. And certainly speculation shenanigans. But not because the USD was suddenly going tizts-up! Nor due to the Fed.
That's my point. The Fed did not and has not flooded the market with money. The Feds policies have encouraged equity investments via its QE and interest lowering effect. But that in and of itself cannot be anything but a weak effect on the price of oil.
That's my point. The Fed did not and has not flooded the market with money. The Feds policies have encouraged equity investments via its QE and interest lowering effect. But that in and of itself cannot be anything but a weak effect on the price of oil.
Yeah, O.K.
An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.
The only problem, it didn't go to loans, it went into the markets.
Supply and demand does not take oil from $145 to $38. It doesn't take gas from $4.25 to $1.85. Or even more recently $4.00 back down to $3.00.
What the Fed does plays a lot bigger role than just that. Am I arguing that S&D plays absolutely no role? Of course not but S&D is not causing the volatility.
O&G is a commodity so there is speculation as well. But yes, it makes sense that gas would drop that low during the worst global recession in modern times. It didn't stay low for too long. Not sure why you refuse to believe this.
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