L.A. Liberty

A Libertarian in Leftywood

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I took this picture this morning. When I passed the same station on my way home tonight, less than 12 hours later, regular was up to $4.29 and supreme was at $4.49. The economically ignorant (there’s really no polite way to say it) like to blame so-called “speculators” - the same boogeymen allegedly responsible for seemingly every socio-economic malady. The greater culprit (though certainly not the only one) is the dollar itself:  What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point. … At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon. At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices. Federal Reserve Chairman Ben Bernanke uses a “core CPI index” that excludes food and energy to guide monetary policy. From Big Ben’s point of view, rising gasoline prices are not a problem. For the rest of us, they are becoming a big problem.

I took this picture this morning.

When I passed the same station on my way home tonight, less than 12 hours later, regular was up to $4.29 and supreme was at $4.49.

The economically ignorant (there’s really no polite way to say it) like to blame so-called “speculators” - the same boogeymen allegedly responsible for seemingly every socio-economic malady. The greater culprit (though certainly not the only one) is the dollar itself: 

What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point. …

At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon.

At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices.

Federal Reserve Chairman Ben Bernanke uses a “core CPI index” that excludes food and energy to guide monetary policy. From Big Ben’s point of view, rising gasoline prices are not a problem. For the rest of us, they are becoming a big problem.

Posted in ∆ the fed | comments || home

Notes:

  1. nomosshere reblogged this from thegayrepublican
  2. worldwithouttruth reblogged this from antigovernmentextremist and added:
    That makes me want to cry. Where is this?!
  3. thegayrepublican reblogged this from antigovernmentextremist and added:
    The Gay Republican Hope, and Change baby. Obama 2012
  4. antigovernmentextremist reblogged this from privilegedwhore
  5. privilegedwhore reblogged this from 100percenthipster
  6. itsalwayssunnyinnate reblogged this from laliberty and added:
    last few sentences are
  7. alwaysandforever-analbeads reblogged this from snorlax-faps-to-anything and added:
    never thought i’d say this, but i’m glad gas is only like 3.50 where i live.
  8. voluntaristmormon reblogged this from laliberty
  9. lepoisondeminuit reblogged this from laliberty
  10. kmonstermash reblogged this from 100percenthipster
  11. worfenmeyer reblogged this from laliberty
  12. j0sh6 reblogged this from racetobitchmountain
  13. snorlax-faps-to-anything reblogged this from colonel-hans-landa-of-the-ss
  14. pictur reblogged this from 100percenthipster
  15. burningtheoldyear reblogged this from 100percenthipster and added:
    The fuck, bruh? These prices are normal/low where I live.
  16. neverdeadned reblogged this from laliberty
  17. nocturnals-anonymous reblogged this from laliberty
  18. satans-advocate said: hey, that info looks familiar! haha
  19. inquisitionsandanomalies reblogged this from terrorofexistence
  20. savemaul reblogged this from 100percenthipster and added:
    It jumped $0.24 in a day by my house. It hurts me.
  21. -134 reblogged this from laliberty
  22. racetobitchmountain reblogged this from laliberty and added:
    thought paying $3.49...Costco was a lot lol
  23. timazing reblogged this from 100percenthipster and added:
    THIS SERIOUSLY MAKES ME WANT TO CRY. I CAN’T EVEN GET 1/2 A TANK ANYMORE WITH JUST $20.

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