FW: Economics 101: The Price of Gas

Almost sounds like an apology of some sort. Of course he doesn't attempt to explain the recent sudden rise in gas prices, despite lack of shortages in oil or gas (from either the demand or supply side). As far as I know, gas taxes have not increased this year.

Great article published earlier this month -


Wallace is spot on, but I don't think he realizes how much inflation has accelerated in the past 5 month.. And of course increasing inflation generates increasing levels of hoarding and expectations of future such actions, which the oil futures market is exposing. Not to mention the need to dump leveraged assets into anything else before they all implode.

The other odd factoid I keep hearing about in regard to USD comparisons and various commodities is that they always compare commodity growth to the US $ index showing some huge desparity. The quoted 30% decline in the dollar since 2002 is only relative to other currencies - all of which are also depreciating like mad, just at a slightly lower rate. So when you compare the dollar to a basket of commodities it's a completely different picture.

here's one of my favorite charts of the CRB index, aggregating 23 commodity spot markets - http://www.crbtrader.com/crbindex/images/crb-b7.gif

like the part where it goes straight up :slight_smile: