Friday, February 24, 2012

Oil prices: Expect gasoline prices to rise for a long time moving forward

There are several factors that are leading the way in higher oil prices, and for the American people, higher gasoline prices.  These factors are so powerful and so numerous that there is little expectation they will fall anytime soon.

1.  Growing concerns with Iran and the Middle East

With Israel, the US, Syria, Iran, and now Turkey all hedged for a showdown in the Middle East, one small event could trigger an instant stop in the flow of oil to both Europe and globally.  Iran is already cutting off oil shipments to Britain and France because of economic sanctions, and this has led to a rise in WTI where record highs are already taking place in respect to Euro prices.

2.  US exporting more oil than it imports.

You would think that the US government would consider its people first when it comes to the economy and to gasoline prices, but a new study proves this is not the case.  For the first time ever, US oil companies exported more oil than we imported, and validates concerns that the Obama administration is bought and paid for by the oil cartels.  All one has to do is go back to last year when the President loaned Brazil $2 billion to help their offshore drilling, while at the same time, cutting off our own drilling in the Gulf of Mexico.

3.  Devaluation of the dollar and price inflation.

Unlike 2008 when Congress declared the need to print money to stave off bank insolvency, the Federal Reserve is not publically announcing their bond buying and QE efforts.  However, the markets are now showing exactly what the Fed's actions are resulting in.  Food price inflation, coupled with the massive rise in gasoline prices is intimately tied to how central banks are devaluing the dollar.  Simply look at this.  In 2007, when oil reached a new high of $145 per barrel, gas prices were ranging between $4.50 and $5.00 nationwide.  Now, oil has only risen to $108 a barrel, and yet in some places in Florida and California, the price has crossed $6 a gallon.

4.  Keystone pipeline

President Obama has nixxed the building of a pipeline coming from Canada which would increase oil imports at lower prices into the US, and instead has chastised oil companies and speculators as being the problem for gas prices.  This of course is simply a scapegoating mechanism by the President in an election year, and the markets are rejecting his assertions by going higher... almost by the minute.  You can see this video by ABC where a reporter talking about gas prices has the prices change by .10 in less than 2 minutes while on the air.

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Like in 2007, America is coming to a crossroads in energy prices, inflation, and a coming crisis that today's gridlocked Congress, and denying President are ill prepared to address.  Leadership requires acknowledging the problem, understanding the problem, and offering solutions to the problem.  That is, unless like President Obama's prior actions, he and Congress are part of the problem.

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