Burning cash with gas

The Washington Times ^ | February 26, 2012 | Ted Nugent

[Cincinatus' Wife]

.........America’s economy is intrinsically aligned with fuel prices because the lifeblood of our economy is oil. Four-dollar-a-gallon gas will not just sting at the pump but also will put the squeeze on every American for milk and cookies at the grocery store and every product we purchase because they are all delivered to stores by truck.

...As gas prices continue to rise, consumer debt probably also will rise as American families, already strapped for cash, will use credit cards to pay for the increased fuel costs.

Ultimately, higher gas prices put the squeeze on all things related to the economy, including job creation.

Interestingly, demand for gas in America is down. Typically, when demand for something such as gas is down, prices fall. But not now. Prices at the pump continue to rise.

Whatever you do, do not blame Big Oil for the price at the pump, as Bill O'Reilly mistakenly does. The oil companies have nothing to do with setting the price of gas. Gas prices are set by oil price futures, which are the prices fuel investors think oil will cost in the future.

There are other things in play besides oil futures that are causing the price to rise. Demand for oil around the world is going up as other nations are using more of it. The higher the demand, the higher the price.

Another reason oil prices are high is the deterioration in the value of the U.S. dollar....

At four bucks a gallon or even higher, the economy will enter a severe stall... But tightening our belts and reducing spending will slam the brakes on our economy, which is, at best, only in first gear...

[SuzyQue]

Yes, but it might help to make up the minds of the otherwise empty-headed “independents”. When they start feeling the pain, they just might start to understand.

[Smokin' Joe]

I'm not sure about elsewhere, but there has been a virtual moratorium on Federal Leasing in the Rocky Mountain States. The oil being drilled in the Bakken Formation in North Dakota and Montana is primarily NOT being drilled on Federal Land, the leases are for private mineral rights, and the development has been superb.

The market works if the Government will let it.

As an aside, I remember $.20 per gallon gasoline. Of course, those two dimes were 90% silver then, and today would be worth $5.11 (spot price today on the .2*.72 ounces of silver present in two dimes back then).

Compared to silver, the price of gasoline has gone down.

The reality which the politicians want to evade is that they have trashed the value of the dollar--the oil companies didn't do that. You may have noticed the effects of the politicians' actions at the grocery store as well, from downsized units of sale (remember 6 oz cans of tuna?) to the increased prices. While shipping costs are a factor, they don't account for all of the increases in the prices of other commodities. A devalued dollar, on the other hand, does.