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Thread: Will gasoline hit $5 a gallon ?

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    Banned Eric Stoner's Avatar
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    Default Will gasoline hit $5 a gallon ?

    Based on recent Fed policy alone , I would have said : "probably not ". But add in the spreading instability in the Middle East and I have to say that there is a very good chance of gasoline retailing in the U.S. for $5. It's already over $4 a gallon in NYC. What is it selling for in So Cal ? Can anyone out in La La Land fill us in ?

    Oil has already hit $100 a barrel thanks to Ben and company at the Fed. When you create more dollars, those dollars are worth less. Thus it takes more of them to pay for things denominated in dollars like oil.

    The current instability is almost certain to get worse before it gets better. If at all.

    Fasten your seatbelts and get ready for a bumpy ride.

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    Default Re: Will gasoline hit $5 a gallon ?

    This would definitely NOT surprise me at all. This is part of the reason I quit my day job and my husband started driving my Focus to work instead of his F-150.
    I just gotta be me!

    taylor_sweet
    all day today i kept saying this aint burger king or mcdonalds u cant have it ur way till u pay then a guy was all i just want a sample im all this aint baskin robins either

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    Default Re: Will gasoline hit $5 a gallon ?

    ^^^ $5 per gallon US gasoline is a virtual certainty before the end of THIS year. The dual reasons will be a downgrade of America's credit rating causing a notable decline in US dollar 'purchasing power' versus other major world currencies ( thus increasing the US dollar denominated price of crude oil ), plus a high likelihood of post-election 'fireworks' in the middle east disrupting world oil supply.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    ^^^ $5 per gallon US gasoline is a virtual certainty before the end of THIS year.
    and yet again another one of Melonie's doom and gloom predictions, based on her ideology, is way off the mark. Gasoline is closer to $3 a gallon than $5 a gallon. I wouldn't be surprised if it's below $3 in some states.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Eric Stoner View Post
    Oil has already hit $100 a barrel thanks to Ben and company at the Fed. When you create more dollars, those dollars are worth less. Thus it takes more of them to pay for things denominated in dollars like oil.
    So why has the price of oil fallen?

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    Default Re: Will gasoline hit $5 a gallon ?

    ^^^ actually, it's because Europe, China, Japan etc. have experienced a simultaneous 'recession' ( or at least a significant decline in economic growth ) which has greatly decreased global demand for oil. It's also due, in part, to the ineffectiveness of international sanctions imposed on Iranian oil. And where US crude is concerned, it's also due in part to an increase in oil supply due to fracking wells on privately owned land.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by eagle2 View Post
    I wouldn't be surprised if it's below $3 in some states.
    It got down to $2.86 here in the North Dallas area, then it went up slowly and leveled off at $2.99 and stayed there for quite a while. But, it just jumped up to $3.09 this past weekend. 10 cents over night. Ugh.
    xoxo ~ Sarah




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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    ^^^ $5 per gallon US gasoline is a virtual certainty before the end of THIS year.
    Well, only have a few hours left for it to reach $5 THIS year. Currently $3.29 here.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    ^^^ actually, it's because Europe, China, Japan etc. have experienced a simultaneous 'recession' ( or at least a significant decline in economic growth ) which has greatly decreased global demand for oil. It's also due, in part, to the ineffectiveness of international sanctions imposed on Iranian oil. And where US crude is concerned, it's also due in part to an increase in oil supply due to fracking wells on privately owned land.
    China's economy is still growing at 7.5 percent.
    http://www.reuters.com/article/2012/...8AR0CV20121128

    Sanctions against Iran have been very effective.
    http://www.telegraph.co.uk/news/worl...ng-effect.html

    Regardless, things weren't much different back when you said, "$5 per gallon US gasoline is a virtual certainty before the end of THIS year". Economic growth was slow in Japan and Europe. Fracking was going on in the US. China's growth is about the same and so are sanctions on Iran. There has been nothing new that has happened since you made your statement that would have a major effect on the price of gas, and the price of gas isn't anywhere near the $5 a gallon that you said "is a virtual certainty". Your doom and gloom prediction, based on your ideology, was way off.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    ^^^ actually, it's because Europe, China, Japan etc. have experienced a simultaneous 'recession' ( or at least a significant decline in economic growth ) which has greatly decreased global demand for oil. It's also due, in part, to the ineffectiveness of international sanctions imposed on Iranian oil. And where US crude is concerned, it's also due in part to an increase in oil supply due to fracking wells on privately owned land.
    Why didn't you factor those components into your original analysis?

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    Default Re: Will gasoline hit $5 a gallon ?

    Why didn't you factor those components into your original analysis?
    For starters, I was naive enough to think that the US gov't ... after having announced an official act of gov't foreign policy in support of an important ally ... would actually follow through on that official act of policy ( i.e. Iranian Sanctions ). Instead the US gov't has granted waivers to certain allies to continue buying Iranian oil above board, and has ignored 'bootlegging' of Iranian oil ( i.e. direct oil for gold sales which don't show up in your official sanctions effectiveness link ).

    Next, I was naive enough to think that the US gov't and state gov'ts, when faced with a glut of natural gas coming from newly drilled fracking wells, would actually allow the construction of comparatively short natural gas pipeline extensions to connect to those wells. Instead, gov't regulatory opposition has stymied pipeline extensions ... resulting in the well drillers actually shutting off 'dry' natural gas wells and drilling / pumping from 'wet' wells that also produce oil. As a result regional US natural gas prices are up more than 50%, while regional US oil prices are down.

    As to China's growth rate being an official 7%, that's a major reduction from the 12% they were previously running. Japan's growth rate was devastated by the Fukushima reactor incident. And growth rates in countries which were major Chinese trading partners ( i.e. Brazil ) are down as well.
    Last edited by Melonie; 01-02-2013 at 04:15 AM.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    For starters, I was naive enough to think that the US gov't ... after having announced an official act of gov't foreign policy in support of an important ally ... would actually follow through on that official act of policy ( i.e. Iranian Sanctions ). Instead the US gov't has granted waivers to certain allies to continue buying Iranian oil above board, and has ignored 'bootlegging' of Iranian oil ( i.e. direct oil for gold sales which don't show up in your official sanctions effectiveness link ).

    Next, I was naive enough to think that the US gov't and state gov'ts, when faced with a glut of natural gas coming from newly drilled fracking wells, would actually allow the construction of comparatively short natural gas pipeline extensions to connect to those wells. Instead, gov't regulatory opposition has stymied pipeline extensions ... resulting in the well drillers actually shutting off 'dry' natural gas wells and drilling / pumping from 'wet' wells that also produce oil. As a result regional US natural gas prices are up more than 50%, while regional US oil prices are down.

    As to China's growth rate being an official 7%, that's a major reduction from the 12% they were previously running. Japan's growth rate was devastated by the Fukushima reactor incident. And growth rates in countries which were major Chinese trading partners ( i.e. Brazil ) are down as well.
    Is it responsible to be dolling out unsolicited predictions and advice with such large blind spots in your analysis?.
    Last edited by jimboe7373; 01-02-2013 at 09:59 AM.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    For starters, I was naive enough to think that the US gov't ... after having announced an official act of gov't foreign policy in support of an important ally ... would actually follow through on that official act of policy ( i.e. Iranian Sanctions ). Instead the US gov't has granted waivers to certain allies to continue buying Iranian oil above board, and has ignored 'bootlegging' of Iranian oil ( i.e. direct oil for gold sales which don't show up in your official sanctions effectiveness link ).

    Next, I was naive enough to think that the US gov't and state gov'ts, when faced with a glut of natural gas coming from newly drilled fracking wells, would actually allow the construction of comparatively short natural gas pipeline extensions to connect to those wells. Instead, gov't regulatory opposition has stymied pipeline extensions ... resulting in the well drillers actually shutting off 'dry' natural gas wells and drilling / pumping from 'wet' wells that also produce oil. As a result regional US natural gas prices are up more than 50%, while regional US oil prices are down.

    As to China's growth rate being an official 7%, that's a major reduction from the 12% they were previously running. Japan's growth rate was devastated by the Fukushima reactor incident. And growth rates in countries which were major Chinese trading partners ( i.e. Brazil ) are down as well.
    Melonie,

    You made your prediction in September 2012. China's economy hasn't been growing at 12% since 2009. The Fukushima reactor incident was in 2011. Iran's oil production is way down:



    All of the above factors occurred before you made your prediction.

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    Default Re: Will gasoline hit $5 a gallon ?

    what do you want to hear from me ... my prediction regarding US gasoline prices was wrong. However, to counterbalance, your graph is also wrong since it only counts Iranian oil sold 'above board' in US dollars / Euros, and ignores the large amount of oil now being sold in direct exchange for gold to circumvent economic sanctions.

    PS please note that I haven't personally made a single 'prediction' since the November election, and I don't plan to. Since then, the FED, the big Wall St. banks, US foreign economic policy, US mainstream financial media etc. have a 'free hand' to more or less do or say whatever they wish. I'll be the first one to admit that the old adage 'you can't fight the FED' is still true. I have posted commentary by various authors that do make predictions, but I have also tried to provide a 'for what it's worth' disclaimer to go along with those postings.

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    Default Re: Will gasoline hit $5 a gallon ?

    Quote Originally Posted by Melonie View Post
    what do you want to hear from me ... my prediction regarding US gasoline prices was wrong.
    What I'd like to hear is why it is necessary to constantly make predictions on this site in this forum. Even if you don't make the predictions yourself you post articles that you choose to associate yourself with that do make predictions. Almost every one of these predictions wind up being incorrect, why is it necessary to post them in the first place?. Since the majority of them wind up being erroneous, who is served?.

    You've made your point on policy and economics very well know in thousands of posts over many years- why is it necessary to keep reminding people daily?. You have all kinds of really great, pertinent advice to share with people that doesn't fall into these categories, why can't you post about that type of stuff in this section as it belongs here and post about your economic and policy theories and views in another forum or section where it is better suited?.

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    Default Re: Will gasoline hit $5 a gallon ?

    Oil prices are down because demand is stable and supply is up. For now.
    If the Middle East blows up ; if Venezuela cannot do a smooth transition from Chavez to somebody who knows what he is doing ; IF THE DOLLAR WEAKENS; then who knows ?

    In the three plus months since the original post, gasoline has dropped about $.25 a gallon in NYC. From about $4.00 a gallon to $3.75.

    Will it hit $5 ? I never said that it would but I did raise the issue and ask for other thoughts. It LOOKS like we are going to have relative price stability BUT demand for home heating oil looks to be much higher this year than last i.e. we are getting a colder winter.

    The above illustrates why I NEVER invest heavily in commodities.
    Last edited by Eric Stoner; 01-03-2013 at 09:06 AM.

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    Default Re: Will gasoline hit $5 a gallon ?

    ^^Well put Eric.

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