There’s one place holiday shoppers probably won’t find a bargain this year: At the gas pump.
There is plenty of oil and gasoline on hand, and pump prices usually fall this time of year. So what’s causing the run-up? Most analysts point to the Federal Reserve’s $600 billion economic stimulus effort.
The national average for a gallon of unleaded gasoline was $2.806 Thursday, according to AAA, Wright Express and Oil Price Information Service. That’s about 7 cents more than a month ago and 12 cents above a year ago. It will probably keep rising. Some analysts think the price could be a nickel to a dime more by Thanksgiving.
The strength of the dollar and the price of oil are closely linked. The dollar has been getting weaker against other currencies for weeks before the Fed decision and will probably continue to fall as more dollars pour into the economy.
Oil is priced in dollars and becomes cheaper for holders of foreign currency when the dollar falls. Europeans, for example, get more dollars for their euros and can buy more oil for fewer euros. Since oil is cheaper for them, they buy more, sending up the dollar price of oil.
Energy traders expect this to happen, so they buy oil when the dollar falls, boosting the effect.
Benchmark crude for December delivery rose $1.69, to $86.38 a barrel in Thursday afternoon trading on the New York Mercantile Exchange.
When the dollar weakens, investors would rather hold hard assets such as oil and other commodities to protect themselves against more weakening and inflation.
The likely outcome for consumers will be higher prices at the pump and for basics like food.
“Effectively, what the Fed did yesterday was impose a new tax on consumers,” Cameron Hanover analyst Peter Beutel said.
Oil prices hit a high for the year of $87.15 a barrel in intraday trading in early May, when pump prices were around $2.90 a gallon. They’re heading back there again.
For every penny the price at the pump increases, it costs consumers an additional $4 million, Beutel said. If the price rises a dime, it means consumers pay $40 million more each day 10-cent hike is in place.
At the current national average of $2.80 per gallon, a typical motorist using about 50 gallons of fuel per month will spend about $140.
“Gasoline prices are almost probably, in my opinion, double what they ought to be,” said Beutel. “So the question is: those people who have jobs, how much longer can they afford to pay ever-higher prices at the pump?”
Higher gas prices have prompted consumers to cut back on discretionary driving, said John Gamel, director of economic analysis for MasterCard Advisors SpendingPulse.
It’s similar to the trend in 2008, when consumers started conserving on travel as gas prices first rose above $3.15 a gallon and then spiked over $4 a gallon.
Still, that doesn’t mean consumers will cut back in other areas. Holiday shoppers, unlike summer vacationers, have options such as buying online, said Kamalesh Rao, director of economic research for MasterCard Advisors SpendingPulse. In many cases online prices are lower than in stores.
Typically, about 10 to 11 percent of all retail spending is spent on gas in the winter. That rise to 15 to 16 percent in the summer when more Americans take driving vacations, Rao said.
In other Nymex trading in December contracts on Thursday, heating oil added 4.40 cents, at $2.3719 a gallon, gasoline gained 3.64 cents, to $2.1744 a gallon, and natural gas fell 5 cents, to $3.786 per 1,000 cubic feet.
In London, Brent crude climbed $1.55, to $87.93, a barrel on the ICE Futures exchange.
Go figure, It’s Thankgiving and people are traveling It’s all about greed.
Linda hit the nail on the head.
Gambling on commodity prices should be banned. I don’t see why someone can’t legally bet on a football game, which only affects one person, but we actually act like betting on prices of commodities, which affects the entire economy is not only acceptable, it’s considered honorable. It’s just gambling, just like throwing dice in the alley, except the results of the dice game don’t come at society’s expense.
the assertion that oil is closely linked to the dollar is totally false. Oil is linked to whatever bad news the gamblers can use to drive up the price. Chicago has a pipeline out for a week with no shortage and gas goes up 15 cents and never came all the way back down. You can’t sell me on the dollar being the primary driver.
It’s time to remove oil from the commodities exchange.
14 cents by my house since this morning. And the delivery truck hasn’t been there. Pure unbridled greed.
Now I have to look to the relationship of the dollar to the euro and other foreign currencies to understand why Acmed and Stan at the local Shell have cranked up gas by 15-20 cents this week?
And this is on top of the usual weekend spike on Friday morning !!
Sounds like more B.S.
Gas went up 12 cents a gallon overnight near me. It’s all greed. And don’t look now people but Exxon Mobil just had another 7 billion dollar quarter. And that’s straight profit.
wait until john ‘the tanman’ boehner and his minions really take over in a few months. they love big oil. and big oil loves them. prices will be $5 a gallon within a year. mark it down.
Ah, the wondrous “Free Market”, brought to you enthusiastically by Republicans and the Tea Party (and the behemoth corporations which own both of them). I’m sure when gas at the pump was under $2.00/gallon less than 2 years ago and the Euro simultaneously was near all time highs against the dollar, there was a perfectly good explanation for that, too. Oil speculators and good old fashioned free market greed.
Oh you poor folk. You’ve made your decision and you’ve chosen poorly on Tuesday, so be prepared to live with padding Big Oil’s pockets. Remember, every dollar spent on your car is one less dollar going into your child’s stomach by way of food.
Funny how everyone on here says “greed”…like everyone that is rich is evil. By the way there is no “free market” for oil, not because of “greedy” speculators or “evil” oil companies, but because of our FEDERAL GOVERNMENT. A true free market wouldn’t have all the draconian restrictions on US companies getting US oil out of US lands. Supply would be more than abundant and prices would be low. For all of you naysayers that like to retort that “even if we drill now, it will be 10 years before we get oil”, I’ve heard that crap for 10+ years now. If the Dems and the wacko environmentalist lawsuits would get out of the way, we’d have tons of US oil online already. You should thank God every single day that other countries don’t do this foolishness to their own oil companies because a lot more than gasoline comes from oil and if we woke up someday without oil our lives would be hell.
The Federal Reserve Bank is buying up 600 Billion, that’s BILLION with a Great big B. That is to say it is buying 600 billion of our debt,with 600 billion of worthless dollars we have to print; 600 billion the Red Chinamen don’t want to touch, because they know we are not good for it.
We are a bad risk because we are a a country of super-pigs who feel intitled to everything. And must have it all NOW. It does not matter that we are broke, just put more stuff on our place, we are INTITLED to it, slurp-slurp, belch, belch, grunt, grunt, spend and do some more booze and dope.
Buying our debt with fiat money, hot off the presses, is like drinking sea water in a lifeboat to keep from dying of thurst.
Think pouring two trillion dollars down a ‘Stimulus’ rat hole was going to be done without paying a price? Well, stupid, get ready to pay for it trough inflation.
What does 10% inflation mean to you? Got $10,000 in the bank? Congratulations genious, you now have $9,000. ($10 now equals $9 after 10% inflation. Thought I’d better reduce the example because most of the broken deadbeats think 10 grand means the 10 grander is rich.)
The Hope & Change has arrived. And it is not going to stop at the $200 or 250K folks like all the low class grubs were yelling for. It is coming to everybody, even the union weasels, the ever so privliged UAW, SEIU and all the rest of the mental midgets in labor. DFon’t like it? Try telling that to your President? ‘57 or 58 states’. Or better yet, choke to death; you’ll be doing everyone else a favor in 2012.
Why Mr. Rance you seem to have risen on the mean side of the bed today. I still will be voting for our beloved president in 2012. And praying to Planned Parenthood they abort the next one like you. There is nothing wrong with printing more money, after all, isn’t money what pays for the stuff we need? I would not be able to lay down in my business with out it. I think we need more like MR. O and his highly trained staff and Chicago friends. Although, I ofen wonder why so many of the men leave their hats on indoors.
Look at what the consumers pay, and then look at the companies profits. The only people having a rough time are the customers, and the oil companies could care less because they know people need the fuel. It seems like the consumer is paying more than their fair share for the actual costs. How much do you want to bet that we are going to see higher profits from this move? Oh wait, we can’t gamble, only Wall Street can.
Really? It’s the Republican’s fault that oil prices are going up? Let’s see, who has been in control of Congress since 2008 and the White House since 2010? I didn’t see any dramatic decreases in gasoline prices. As a matter of fact, if our President has his way, prices will rise even higher and faster. That’s his way of making sure that people drive less, or will switch to electric cars. He would like nothing more then to add exorborate taxes on top of what we are already paying for gas to punish us poor working people who have to drive into adopting his way of thinking.
Let get the government off it’s butt, it’s price fixing -when every gas station goes up the same – it’s called a monopoly and it’s against the law. Too bad the AH that run this country will not see it – but then they get paid off. MAD as hell and I’m not going to take it anymore.
but then they get paid off. MAD as hell and I’m not going to take it anymore.
Oh yes you are. You can yell and rant and scribble in a forum nobody worthwhile reads, but you will take it for the rest of your worthless little life. It’s called life on earth. Unfair, and grossly tough. Like it or croke.
As much as analysts want to pinpoint a reason for gas going up, there is never a good reason. One owner raises his price for whatever reason and they all do it.
The republicans must be happy. Giant oil companies stand to make even bigger profits. That means more money to Republicans. Way to go. Open up and your wallets, your about to pay more. Don’t feel too bad, it’s going to the rich, they need it more than you do. Plus they will create jobs with the extra cash you give them
The price of gas slipped over the last three weeks, maybe a dime. Someone in our government would like us to think they’re working for us.
Then the election. Two days later, naturally the price goes up.
In our area, they hold back the September property tax bill till, you guested it, until after the election.
Politiical? maybe.
Must be Bush & Cheney, those awful oil guys.
Oh, wait, they’re no longer in power. We’ll just have to find smoe mo new boggymen. Hey, hows about president shuffle along, with the big white toothy smile? Perhaps he can get his brother Georgie boy to leave his grass hut and take over the greedy oil industry. What this country needs is another czar, this one in a grass skirt and a big bone in his nose!
Ever since the 1973 oil embargo, we’ve known we should greatly improve our energy efficiency. Yet we’ve done so little. Political cowardice rules in energy efficiency. Only President Carter tried to make real strides here, and he was hammered for it (plus he wasn’t the greatest leader, either). Now once again we are griping like crybabies – but do we talk about increased efficiency? No, just a lot of crying and blaming everybody but our wasteful selves.
Not a single Republican has taken the oath yet. The only person to blame is Obama and his thugs at the Fed. The guys is just bad news! Period!
Those little cars are death traps.
When ever I go out drinking, I always drive one of my family owned company’s five ton dump trucks. That way I always have the hammer. We can argue the small details in court, after, and when I’m still alive.
Big oil saw the Republican wins as a mandate to do whatever they want. They know that the GOP will look out for them. It’s no secret that the Republicans only care about the super rich. Screw the middle class should be their motto.
Ride a bicycle! The price of gas won’t bother you.
In fact, if gas rises then traffic will be reduced and fewer accidents will happen. So rising gas prices can produce some good results.
Oil makes big profits? Try the government!!! Government takes 18.4 cents per gallon of gas for doing nothing while oil companies that actually get the oil and refine it to gasoline earn around 9-10 cents per gallon of gas. WHO IS THE REAL CROOK – the oil company or the federal government?
some blame the republicans some blame the president some blame the oil industry for the high prices, well i got news for you! you the people of this great country are to blame for not sticking together and say NO we won’t pay this high price. more and more there are middle class that are now in the low class 12,000 a year income how do people feel about taking every one and making them the same as the lower income for just one month and see what changes there might be in the way that we are treated at the gas pumps stores and other things
Republicans get in and Gas goes up.
A lot of ignorance here. It’s like watching people complain about some aspects of computers when they know so little about them.
The oil industry is big and complex. A lot of things affect the prices. What’s happening now is Obama and the Fed are devaluing the dollar. A lot of countries are angry because we’re screwing them too. See http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14NBCFg8i
This is a lot bigger than the simple liberal meme of blaming Big Oil.
Our problems are Big Government. Oil isn’t the only thing that will be going up in price. All sorts of things are affected by this liberal lunacy.
boycott gas…said and done. hurt the republicans where they need to be hurt.. in their pockets. it is way too funny that the republicans win the house and gas rises a few hours later…. I said this was going to happen 2 weeks ago if the republicans won the house. this country is in shambles. unemployment is not going down. people are not getting jobs. yet companies get tax breaks when they outsource to other countries, when in reality they should be taxed more. When are we as American’s going to stand up for our rights and fight back. We are the only ones that can stop this madness.