From EconForecast
Just in time for Christmas, On Wednesday, Dec. 22, U.S. gasoline prices hit an average $3 a gallon for the first time in more than two years, according to AAA’s Daily Fuel Gauge Report…
We’ve been over $3 a gallon here in Las Vegas for couple weeks now. $3.09 is the worst I’ve seen, so far, but the prices seem to go up every couple of days. While the MSM is putting out reports that its the cold weather causing the rise in prices, the reality is that the massive printing by the Federal Reserve has made our money worth less and thus the oil suppliers are demanding more dollars for oil. As the linked article notes, the price of oil is 71% of the price of a gallon of gasoline – so, while cold weather might be playing a role, it is the fact of $90 a barrel oil which is really driving things.
This is a massive tax upon business, the poor and the middle class – a gigantic loss of purchasing power because everyone now has to spend more on fuel and thus has less to spend on everything else. You might recall the actual triggering event for our current economic crisis – $4 a gallon gas in 2007. That hit to our economy ensured that the housing bubble would pop. Now, our economy is in even shakier condition than back in 2007 and here in December – usually a time of low gas prices due to reduced demand – we’ve now got prices for gas we shouldn’t see until July. What will the price be in July? $4? $5? What do you think that will do to all the rosy predictions coming out of the banksters and bureaucrats about the 2011 economy? If we’re lucky, that 2 percentage point reduction in the payroll tax will cover our increased cost of living…
I don’t see a way out of this which is pleasant or easy…if the Federal Reserve finally turns off the presses, the financial system collapses and that kills the economy; if the Federal Reserve keeps the presses running, prices rise for the basics of life, thus killing the economy. Rock and a hard place, my friends.
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