Chevy Volt a Failure - GM to Layoff 1,300

Our use of the strategic petroleum reserve is as insidious as anything that OPEC has ever done. At any time, the U.S. government can come in and manipulate the market, which is patently unfair.

All of those geopolitical concerns do impact the price of crude oil, which is the underlying component of gasoline, but more than anything, the price of gas is at the whim of another kind of manipulation -- monetary manipulation. We have the Eurozone pooling money and buying toxic debt, through its central bank, which they do by simply printing more money. We have the U.S. Federal Reserve in a perma-zero interest rate policy that is never going to end, and they have been through two rounds of quantitative easing (which makes our dollars worth less) and are beginning QE3. Forget the corrupt nature of it -- QE3 is targeting mortgage-backed securities (buying these assets from banks, thereby giving those banks a gift thanks to their government cronies). What makes it even worse is that all of this has had the effect of devaluing the dollar. And it is just going to continue, because fiscally we have put ourself on the edge of a cliff (as has Europe) and politically we are doing nothing to become fiscally responsible. The geniuses at our Central Bank, as a result, are then called upon to inflate away some of our debt with that policy -- to at least keep us from coming to the edge of a default. To the extent we are seeing any economic growth, it is a mirage. It has all come on the back of dangerous monetary policy, which is creating all new bubbles (look at investment in junk bonds right now, as people reach into risky assets they don't understand to get the yield the central bank won't let the market determine itself). They do decrease the real value of our debt with that policy, but the flip side is that they have created inflation (and they just change the way they measure it, so they can deny it). But you see it clearly in gas prices. The IMF yesterday stated the obvious -- the world's economies have been slow and we are on the precipice of a disaster next year if the U.S. and Europe continue to keep their heads in the sand. With world economies so slow, demand for oil has clearly slowed down. Supply of oil is decreasing, because there are no new reserves (which is why oil will keep becoming more expensive over time), but the decrease in worldwide demand from where it was in 2006 / 2007 is so pronounced that you'd think logically that all things being equal WTI crude should NOT be trading as high as $95 a barrel and constantly flirting with $100 a barrel. But it is. And the reason is that all of these central banks have been shitting all over their currencies, so the cost of everything is going up as the result of inflation. And it is really noticeable in oil / gasoline.

So you can talk about the strategic reserves and how the president manipulated the market with a dump, and how it wasn't any different than how OPEC manipulates the market. But really, the biggest hindrance to the oil market has been central banking, which is driving up the cost of EVERY raw commodity, and therefore making everyone's money buy less -- less gas, less food, less just about everything.

 

I wasn't quite following the post you responded to about "traded" things being evil. I trade dollars for milk. Is milk evil?

The funny thing about it is that last year into this past spring, I traded (how evil!) natural gas futures contracts from about $3.80 per mmBtu (it topped out close to 4, and I got it as it started its way down), all the way down to a low of about $1.92 per mmBtu (it actually got below that). The price just plummeted, and I was short the whole way. The whole "evil speculator" thing didn't come into play, because people don't realize as I point out all the time on here that anyone who trades (or tries to buy or sell something and then sell or buy it back for a profit) has no vested interest in the prices of things going up. You can make just as much money on something declining in price as you can on something going up in price. I was trading based on price momentum, but the fundamentals behind the market were a supply glut situation, which you are pointing out. I wouldn't expect the price of natural gas to remain low indefinitely as demand catches up, and some supply comes off the market (and in fact, over the last few weeks, the price has jumped dramatically).

Compressed or liquified natural gas vehicles exist, and they burn cleaner than petroleum and we can derive the fuel here rather than having to rely on foreigners. So it's actually a way some people have been thinking. The main drawbacks are that the usable range before refueling is limited (150 miles or so), and there aren't any CNG or LNG filling stations anywhere. So even if you do invest several thousands of dollars for a home fueling solution, the use of that car is limited. If the cars ever became more popular, or a standard, the prices would come down. Right now, they are really expensive. But it's a chicken and egg thing. To throw out our current infrastructure of gasoline filling stations, and somehow get people to invest in a nationwide network of CNG or LNG filling stations would cost a fortune -- and nobody is going to bear that cost until there is the demand. There isn't going to be that demand, because the cars as they exist are so expensive. And then there is no guarantee that natural gas remains as relatively cheap as it is, especially as demand for it has been picking up worldwide as an alternative fuel -- the U.S. is actually a net exporter.

I don't see it happening, but it could... somewhere off in the future, though.