Gas prices have been going up recently. To anyone who drives a car, that's not news. What is all over the news nowadays is a lot of inane commentary about why the price of oil and gas is going up and what the government should do about it.
Most of this commentary is utter nonsense. Many of these people haven't the slightest clue as to what is really causing the price increase. But it doesn't matter whether they get it right or not, as long as what they say supports their political ideology. Economic ignorance is an equal opportunity affliction - dumb arguments can come from either side of the political spectrum.
Some people like to blame those evil "speculators"! Ooooooohhh..... Others like to blame the President and his energy policy. Of course, there is also the impending war with Iran and general Middle East tension that could be contributing factors.
But the one thing that hardly anyone is mentioning is the impact of inflation. Namely that the price of oil (and gas) in dollars is nominally high, but it's really the value of the dollar that has fallen more so than the price of oil that has risen.
Here is an excellent piece from a local news channel. I'm shocked that this was actually on the news. Great job by Ben Swann.
Here is Ron Paul explaining to Neil Cavuto how you can buy a gallon of gas for a dime. That, of course, would be a pre-1965 dime, which was 90% silver. At current silver prices, this dime is worth about $2.50.
Here is an article and video on the topic of gas prices by Peter Schiff (who predicted the economic collapse). Peter, by the way, follows the Austrian school of economics, which is why he understands the business cycle and why when he sees the artificial credit expansion created by the Federal Reserve he knows that the boom will soon bust.
Lastly, Bob Wenzel from Economic Policy Journal, also an Austrian economist, has an interesting chart of the price of oil in gold. It has actually been on a downward trend for years. Bob has also been predicting serious price inflation for months. (See here, here, here, here, here)
The bottom line?
Speculators, oil corporation profits, drilling policy, pipelines, Middle East tension, etc... all have some impact on the price of oil, but the single biggest thing that accounts for the rise in oil prices is the expansion of the money supply. Nobody in the government (besides Ron Paul) and in the mainstream media wants to talk about it.
