The View From 1776

Why Are Gasoline Prices Rising Again?

Speculators and oil companies are not to blame.  The guilty parties are environmentalists, politicians, and the U.S. monetary authorities.

Posted by .(JavaScript must be enabled to view this email address) on 05/03 at 12:43 AM
  1. Thomas,

    Of course some of the rise in oil price is due to inflation. But this is a circular argument. One huge driver of inflation is a negative balance of payments. And what, do you suppose, is the principal item we import? You guessed it! Oil!

    The USA has less than 5% of the world's (declining) oil reserves and yet we consume 30% of the petroleum produced. So, it should be obvious to the most feeble mind that we cannot "drill" our way out of our oil addiction and our negative balance of payments and our consequent inflation problem.

    So, how do we reduce our negative balance of payments? That right! Reduce our dependence on imported oil!

    And what is the quickest way to that goal? Conservation! Followed by alternate energy sources!
    Posted by .(JavaScript must be enabled to view this email address)  on  05/03  at  11:08 AM
  2. Mr. Jay, please explain your thesis that, "One huge driver of inflation is a negative balance of payments."

    In all economic theories I have encountered, save possibly for Ben Bernanke's hotly disputed "world wide savings glut," a negative balance of payments is regarded as a consequence, not a cause, of inflation.
    Posted by .(JavaScript must be enabled to view this email address)  on  05/04  at  01:11 PM
  3. whatever the reason, the rising cost is really a big concern for all of us.
    Chris Harris
    Posted by workers comp refund  on  05/07  at  08:58 AM
  4. Thomas,
    When we import more than we export, we have to make up the difference by depreciating our money value.

    Take the case where the total cost of a country's imports is more than the value of its exports. This means that more is being spent on imports than is being earned from exports. We see a payments deficit which needs to be made good as imports have to be paid for, and we pay using our money, that is we pay from our foreign currency reserves.

    The value of our currency depends on the assets backing it and on the amount of money in circulation.

    Included in our assets are our foreign currency reserves. When these reserves drop then the value of our assets drops accordingly, and so does the value of our currency as each currency unit is then backed by fewer assets. Our currency becomes weaker compared with other currencies and in effect we have experienced inflation.
    Posted by .(JavaScript must be enabled to view this email address)  on  05/15  at  05:54 PM
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