As a comparison, crude oil was selling for around $70/barrel one year ago. Oil being a globally traded commodity, one would normally think limited supply with increased demand created such a dramatic increase in pricing, but that's not the case. Actual world consumption, even with the economies of China and India expanding at a rapid rate, increased only 1.5% in 2007, the same rate of increase forecast for 2008.

http://www.opec.org/home/Monthly%20O...f/MR072007.pdf

So what's driving oil prices? The failing US Dollar. Credit market bailouts by the Fed, the failed US wars in Afghanistan/Iraq and ongoing US government fiscal irresponsibility (minimum $500B deficits forecast for FY 2008 and 2009) have shattered world confidence in the USD and most oil is traded in USD. The USD has fallen to a record low against the Euro and is expected to continue deterioration through 2008/9 due to the slowing US economy.
Investors have discovered/decided oil futures now achieve ROIs far superior to bonds or equity investments and at the same time eliminate the world tax on oil imposed by devaluing USD.

This circumstance, and the future ramifications from ongoing US fiscal irresponsibility, is virtually ignored by the US media, our presidential candidates and current administration. The US consumer takes the brunt of these price increases, not only in escalating fuel costs, but in food production and other necessities as less than 50% of crude oil is used for fuel purposes.

Is there a solution? More oil won't do it as future markets are global and there's currently no shortage of supply. What do we do about our irresponsibility, continue ignoring it until bread is $20/loaf?

The next time you think gas is expensive here, go buy a gallon of gas in Canada...

Or England and anywhere in Europe.

For an extra thrill buy it with USD in any of those countries at the current exchange rate. If they'll take your USD.

We had a poll on another site I frequent, it was a 14 months ago ( I just checked)...I predicted it would not go above 100.00, I was quite emphatic about it too....ugh, what a mess…..the dollar is the real the culprit here, by and large.
Congressman and senators, are the last people on earth , unless they have an advanced degree in economics to be riding this bronco, but that’s who we are stuck with.
It appears, appears mind you the one who will be successful will be the one who takes advice from the experts, and leaves politics out of it.
Yea, I know, that ranks up there with me, Mariah Carey and the end of the world….

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

I don't see what the hubbub is all about. The government can just print more dollars and give them to the American people to keep up with inflation...

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Is our children learning? -George W. Bush

"I think—tide turning—see, as I remember—I was raised in the desert, but tides kind of—it's easy to see a tide turn—did I say those words?"—Washington, D.C., June 14, 2006

"[T]he illiteracy level of our children are appalling."—Washington, D.C., Jan. 23, 2004

But who are the experts? And what are their priorities? It is my impression that economics is just another psuedo-science like sociology and you can shop the "experts" in the feild until you find the politically convenient answer. Besides aren't the answers to all the questions just as much political as they are economical? If we had the political will to stop using oil we would have taken our warning from 1972 and this whole discussion would never take place.

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A nation of slaves is always prepared to applaud the clemency of their master who, in the abuse of absolute power, does not proceed to the utmost extremes of injustice and oppression.
Edward Gibbon

Which begs the question.... Are gas prices in Canada going up at the same rate as here in the U.S.?

European gas also on the same incline?...

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Congratulations President-Elect Obama

gee...you guys don't think it has anything to do with OPEC nations pumping below capacity?
given the falling dollar absolutely is apart of the problem, isn't purposley pumping less also contribute?

Based on my experience, yeah.

I was in the Toronto area last week, and was paying $1.14 per liter, which works out to about $4.32 per gallon...

It's got to really suck in London... I thought their gas was at least twice the price of ours back when ours was reasonable.

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Congratulations President-Elect Obama

Perhaps this is an oversimplification, but back in March 2005, gas prices here were right about $2.00 per gallon.

At that same time, in the UK, it converted to $5.79. per gallon.
CNN/Money: Global gas prices

Assuming the same proportional relationship, our $3.42 per gallon gas of today should cost close to $10 per gallon in London..... Over $11 per gallon in Amsterdam.

In the news, I saw them speaking about 5 pounds per gallon gas...at an exchange rate of about 2 American dollars per pound, that puts it right at $10.


So world gas price increases seem to be right in step with our domestic gas prices. I guess it feels a little better to know that we're all getting screwed.

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Congratulations President-Elect Obama

In London and Amsterdam (and most of Europe) you don't really need a car, though. Gas prices don't affect the average person as much there as they do here.

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When they come a wull staun ma groon
Staun ma groon al nae be afraid
Thoughts awe hame tak awa ma fear
Sweat an bluid hide ma veil awe tears

Which reminds me of when crude oil prices surged to over $20/barrel when Clinton was in the White House, forcing gas prices up to $1.25/gallon, and Dick Cheney pointed out that if we had a Republican Administration, they would be pressuring our Saudi Allies to pump more oil to keep the price down to a reasonable level, so you know, that would never happen with a republican president.
I thought of that last week as I read that the Saudi King said "when they find a new oil field and ask if they should drill, I say No, leave it in the ground for our grandchildren", as Saudi Arabia announced cutbacks in production to deal with the current "oversupply".

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

I think some are missing the point.

If one bought a barrel of oil for $95 in December of 2007 and took delivery today in Euros that's an exchange gain of 7% in four-months just on USD devaluation. If it was sold (crude is traded right to the point its off-loaded) for $114/barrel the gain would be currency of 7% and 17% on the oil, or 24% in four months. The failing USD is what's driving the price of oil. Where else can you get a 24% gain in four months?

Comparing the consumer cost of fuel between the US and Europe is not an apples to apples compassion due to the differences in taxation. The US has almost laughably low fuel taxes to let the public believe they're getting a deal while our currency and standards of living crumble as we live on credit from irresponsible government management of our country.