Déjà vu, it's 2008 all over again. Why are gas prices soaring through the roof?
Some are revisiting oil speculation as the culprit. Commodity futures speculation always pops up in the public discourse the minute gas prices go above $3.65, yet nothing ever seems to come of it.
Our usual stupid political tricks, from tapping the strategic oil reserve to the GOP blaming Obama for gas prices, are in full swing. Isn't this all getting rather old? Wouldn't we all just like a stable price fluctuation in a key critical commodity upon which our economy and our empty pockets depend?
We know one thing, $5 gas can literally kill economic recovery. Oil shocks are correlated to recessions, as James Hamilton points out as do others. Below is a quarterly historical graph of real GDP percent change vs. the West Texas Intermediate average Oil Price. Notice the spikes in oil price and the grey recession bars.
Sorry speculative traders in commodities, the Fed actually did a just say no on more quantitative easing. The FOMC meeting minutes for January 24-25th were released last week and some speculative commodities traders still seem to be in denial land.
The FOMC money quote:
The Committee also stated that it is prepared to adjust the size and composition of its securities holdings as appropriate to promote a stronger economic recovery in a context of price stability. A few members observed that, in their judgment, current and prospective economic conditions--including elevated unemployment and inflation at or below the Committee's objective--could warrant the initiation of additional securities purchases before long. Other members indicated that such policy action could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run. In contrast, one member judged that maintaining the current degree of policy accommodation beyond the near term would likely be inappropriate; that member anticipated that a preemptive tightening of monetary policy would be necessary before the end of 2014 to keep inflation close to 2 percent.
Ben Bernanke has come out with a now, now, there, there on the falling dollar:
The Federal Reserve is monitoring currency markets “closely” and will conduct policy in a way that will “help ensure that the dollar is strong”, Ben Bernanke said on Monday in rare comments on the US currency.
The Fed chairman also indicated that the US central bank would not ignore the impact of rising commodity prices when evaluating the outlook for inflation. He said he would not rule out using interest rates to combat new asset price bubbles, even though he did not see obvious mispricing in the US at this stage.
Hmmmm, no obvious mispricing. Does that include the oil speculative bubble of 2008?
Meanwhile Gold is through the roof, in part due to the dollar decoupling.
Here I was, with a nice polite post set to print, when I read the related links to this article at Naked Capitalism. And what do they all say? "Oil is surging because the dollar is tanking."
So excuse me, but I have to toss the politeness out the window and shout, "IT'S NOT THE DOLLAR, STUPID!!!" Here's a graph from Worthwhile Canadian Initiative including a variety of currencies, just against Oil:
OK, smartypants, if it's all about the dollar, then why is the price of Oil surging in EVERY CURRENCY??? And don't give me that "Peak Oil" cr**....
You hear a lot of buzz words these days about shady deals and speculation on oil futures. So, what exactly is this Enron Loophole so many refer to which allows all of this trading on energy to go on with no accountability or regulation?
it has been widely understood that, unless properly regulated, futures markets are easily subject to distorting the economic fundamentals of price discovery (i.e., cause the paying of unnecessarily higher or lower prices) through excessive speculation, fraud, or manipulation.
Sorry speculative traders in commodities, the Fed actually did a just say no on more quantitative easing. The 
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