Is this why our gas prices are so high? someone please correct me if i´m wrong.?

Question

the reason gas is rising is because our friends at the federal reserve(bernanke and greenspan) caused a devaluation of the dollar. inflation is inversely related to commodities or oil. that´s why gold and oil is so high right now. the demand for oil is probably the same. the US is the largest consumer of oil and because we bailed out the big banks and cut interest rates, the rise in the price of oil is an after affect.

Answer 1

There is no single cause to the rising price of oil/gasoline. The fact that the purchasing power of the dollar has dropped by about half in the wake of the mortgage mess is part of it. But also:

-- The consumption of oil in rapidly developing countries such as China and India have increased at staggering rates over the past few years. I read recently that China's oil consumption alone has increased something like 26% since the start of 2007, bringing it near to rivalling the US in oil consumption.

-- Most of the easily accessible sources of oil have already been tapped. While companies are trying to develop cheaper methods of extracting oil from the other locations (the oil sands of Canada, or under the floor of the deepest parts of the ocean), it's been slow progress.

-- Production in many of the richest reserves of oil are starting to slow faster than expected. Russia's oil output had been expected to increase at least until 2010 as recently as this time last year, but has already dropped 3% this year, with a total drop of 8% for the full year now expected, simply because the well they have already in place are running dry faster than anticipated.

-- And the biggest cause that is relatively unique to gasoline: The US lost a lot of refining production in the wake of Katrina, and not all of it has been restored. On top of this, virtually no new refinery facilities have been built in the US in 25 years. Given the current profits that could be made on new refinery capabilities, you'd think companies would build more. The problem is that it takes so long to get refineries up and running (5 years minimum, usually more like 10 years) that it's impossible to predict where oil prices will be by then or even how much of our energy consumption will have shifted away from oil by then.

Answer 2

That's part of it.

Here's the other part.  Pretend you're a big investor in the housing market.  You know things are about to go to h**l.

You have to move your money..  Why not dump it into commodities?

If demand for commodity futures increase so does price.  That is basic econ, right?  

In other words, the big part in food/oil increases are caused by speculators with nothing better to dump their money in.  Of course, most of this results from the LAST easy money policy of the Fed, in the early 2000s.

Answer 3

What you wrote is not quite accurate.

1.  Bernanke and Greenspan do not control the market; they can only adjust the prime interest rate.

2.  The current situation is based very much on the subprime mortgage mess.  People who otherwise never would have received mortgages due to lack of income or bad credit history were provided with adjustable mortgages.  As long as home prices continued to increase, it didn't matter.  But something didn't quite work out. Suddenly the adjustable rates increased and homeowner began to struggle to make payments.  Since they did, they put their houses on the market, but since everyone was doing the same, their houses no longer had the same value.  So they actually owed more than the house was worth.

Often the banks were holding mortgages on worthless properties.  So the banks started to be less willing to loan money which made businesses have problems running their businesss.  Often they borrow money in order to manufacture their products.  But now the money was more expensive!

Since business was cooling off, investors looked to other investments which are typically commodities in these types of markets - like oil and gold!

3.  The oil companies are earning ever-growing profits!

Answer 4

I thought it was cuz Bush owns oil wells and was trying to make as much as possible before leaving office.

Setting up his retirement so to speak.

Answer 5

I'd have to suggest that the reason gas prices are so high is that thirty years ago, we were all told that there would be a problem when the gas started to run out, but because we were fearful and spineless, unable to deal with change, we as a nation made no effort to innovate.

Instead we turned toward the fearful and repressive ideas at the root of Republicanism. Afraid of change, afraid of innovation, we just couldn't face the facts. We didn't begin the process of implementing new ideas. We moved toward more waste, bigger cars, faster highway speeds, and we ignored any scientific option that didn't profit the oil industry who we thought of as gods, because their money pile was higher than ours. Our true religion.

Now we pay, because those industries don't really have any new ideas, and we are still afraid. And sadly, that is at a time when the science of new energies is there. But we are afraid.

Fear will kill us in the end.

So don't be afraid... just open up your brain pans and listen to what the scientists, not the oil executives and preachers tell you.

This is the moment. Fail it now, and you fail it forever.