Oil’s traded internationally. And since we liberalized our trade laws, and started sending tons of money to Asia for manufactured goods, there are now far more oil consumers than there were 20 or even 10 years ago.
Oil consumption in Pacific Rim countries has more than doubled since 2000. That means we have alot more competition every single day for every barrel of oil coming up out of the ground. Per-capita oil consumption in Pacific Rim countries remains low compared to US standards, but they a whole lot more ‘capita’. Pac Rim Asia now consumes more oil than the US by a fairly large margin. So really, it’s Asian demand more than anything else setting global prices for crude (and most other commodities) right now.
So when you combine the new overseas demand with all the new money creation going on here in the US, it’s really a wonder we’re not paying more than we are.
$2/gal gas is gone for good absent some major worldwide deflationary event (like a genuine global economic crash). And really, 5 years from now I think we’ll be looking at today’s $3/gal as being “the good ole days”. Wouldn’t surprise me a bit to see $5/gal unleaded come New Year’s Day 2015.
It is what it is. If we want to point fingers, we can thank Fed monetary policy over the last 15 years, globalization, Clinton, Bush, and Obama (and Wall St). Plenty of blame to go around.
“It is what it is. If we want to point fingers, we can thank Fed monetary policy over the last 15 years, globalization, Clinton, Bush, and Obama (and Wall St). Plenty of blame to go around.”
NO question that monetary policy has had a major impact on oil prices. But I doubt that that’s the entire story. This administration has done everything it could to stifle any meaningful way that we could increase our domestic supply. Plus they are whoring up the major sources of food with all this nonsense of putting corn-derived alcohol into our motor fuels. That is screwing the consumer in several other ways. Higher food prices because corn producers get more for their crops selling it for fuel than is the case for foodstuffs. And since the heat content of alcohol is a lot lower than gasoline, people are getting poorer mileage to say noting of the potential for substantial costs due to corrosion in their engines.