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August 8th, 2008

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11:58 pm - The only direction is up it seems

gas prices

Not quite two years ago I made this post about gas prices, pointing out a number of things that have since come to pass, like the housing debacle-in-progress that currently occupies the headlines.

Since then we have had oil prices that have gone to more than $140 a barrel, more than twice the price it was when I wrote that piece. Gas prices by me have risen to almost $4.50 a gallon and I try to drive as little as I can now, hoofing it when the weather is good, but more often just not going out at all, since the prices of pretty much everything have jumped tremendously in the past year.

Prices for crude oil have been falling lately, with today's price being at $115 a barrel. Yet the cost of gas by me remains near $4.50 a gallon. By the laws of supply and demand, it should have fallen at least somewhat by now -- yet it hasn't.

Somehow I don't think the prices of anything, other than that of houses, will be going down any time soon, despite the decrease in the price of oil. And the only reason house prices will continue decrease is because people are being foreclosed on since they can't afford to pay their mortgages and the banks are flipping the properties for whatever they can get in a flooded marketplace, thereby depressing prices for real estate even further.

I'm pretty sure the oil price bubble has burst, at least for now, barring physical disruptions to the supply, like refinery shutdowns. The hedge funds and other market forces manipulated the price of oil to its record highs, mostly as a result of financiers engaging in momentum investing, which is only good for a short while and only pays off if you are good at getting in on the upside and exiting before the waves crests and breaks, as it appears to be doing now.

Unfortunately, prices for things for ordinary folks don't seem to have any realistic hope of decreasing, since inflation only goes in one direction -- up. And nobody wants to deal with the consequences of a genuine depression, which would cause prices to drop across the board. I for one have no desire to see a repeat of the 1930s.
Current Mood: pessimisticpessimistic
Current Music: "Hell and Scissors" -- Rafe Stefanini

(1 seed eaten | Eat a pomegranate)


[User Picture]
Date:August 9th, 2008 10:27 am (UTC)
I think housing will be stabilized because there is too much money being pointed at congress to get it done. But thats a three page post.

I genuninely do not want a full out GD2, thats guns gold and hoarding type talk and if we get there it will be so nasty and scar another generation for life.

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