• $6 Gas? Could Happen if Dollar Keeps Getting Weaker
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CNBC $6 Gas? Could Happen if Dollar Keeps Getting Weaker [release]A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions. With the greenback coming under increased pressure from Federal Reserve policies and investor appetite for more risk, there seems little direction but up for commodity prices, in particular energy and metals. Weakness in the US currency feeds upward pressure on commodities, which are priced in dollars and thus come at a discount on the foreign markets. One result has been a surge higher in gasoline prices to nearly $4 a gallon before the summer driving season even starts, a trend that economists say will be aggravated as demand increases and the summer storm season threatens to disrupt oil supplies. "All we have to have is a couple badly placed hurricanes which could constrain some of the refinery output capacity in some key locations," says Richard Hastings, strategist at Global Hunter Securities in Charlotte, N.C. "If you get weakness in the dollar concurrent with the strong driving season concurrent with the impact of one or two hurricanes in the wrong place, prices could go up in a quasi-exponential manner." Using a model that combines "subtle rates of change" with movements in the dollar index [.DXY 73.91 -0.46 (-0.62%) ] and commodity prices, Hastings figures the low dollar is responsible for about one-third, or $1.31, of the total gas-at-the-pump cost. Regular unleaded Wednesday was $3.84 a gallon nationwide, according to AAA. While there's far from unanimity about the dollar's future course, the proportionate contribution that currency weakness makes to oil prices is clear. The dollar as measured against a basket of foreign currencies has dropped 6 percent this year, while regular unleaded gasoline is up about 28 percent. Gas prices also have been boosted from turmoil in the Middle East which in turn has triggered a wave of speculation that traders estimate has added about $15 or so to the cost of a barrel of crude [CLCV1 112.15 ^ 0.70 (+0.63%)], which is now teetering above the $110 mark. astings sees gasoline having "no problem" getting to $6.50 a gallon over the summer after increased demand and storm disruptions come into play. Others, though, say gasoline prices haven't needed any help so far from other events—the moves by the Fed to keep interest rates in negative real terms are enough to boost energy by themselves. Michael Pento, senior economist at Euro Pacific Capital in New York, says there is an almost perfect negative correlation between the falling dollar and oil prices—minus-0.9 to be exact. "When you have negative correlations that strong, it's not hard to understand that the reason why we're having this price spike in commodities is primarily because of the weaker currency and not because of shortages of oil or international tensions or global growth," Pento says. The assertion from Hastings that the weak dollar is responsible for one-third of the total cost for a gallon of gas "sounds very low," Pento says, adding that a barrel of oil should be closer to the $65 to $70 range if priced properly. "That's exactly where it would be if we weren't crumbling our currency," he says. Should events follow their current course, sharply higher gas prices will burden consumers further as they also cope with the rise in food costs this year. Hastings projects the dollar index to test 72 at some point—another 3 percent drop—while Peter Cardillo, chief economist at Avalon Partners in New York, sees the dollar dropping to the 73.50 level. "The global economy is quite strong, and the weak dollar is basically fueling even higher energy prices. That's not transitory," Cardillo says. "Gas prices in the Northeast are over $4 a gallon. How could anyone say that's not a burden?"[/release] [url]http://www.cnbc.com/id/42683030[/url]
in b4 europeans complaining about much higher than $6 gas prices despite living in a much smaller country than the US
anything is possible if you imagine [img]http://i.imgur.com/LmVN2.gif[/img]
Gas prices in Canada are skyrocketing as well.
Australia dollar is best dollar.
[QUOTE=Armyis1337;29331199]Gas prices in Canada are skyrocketing as well.[/QUOTE] It's making our dollar stronger than the US dollar though, which is good if you want to buy shit online
[QUOTE=Pace.;29330947]in b4 europeans complaining about much higher than $6 gas prices despite living in a much smaller country than the US[/QUOTE] How size has to do with anything?
[QUOTE=Crhem van der B;29331425]How size has to do with anything?[/QUOTE] Commute times/average driving distance are probably a bit shorter. Too tired right now to find stats to actually participate.
This is probably the worst argument for higher prices in the EU I've ever heard.
This is because of Finlands elections.
Pfft, you still ain't got it so bad.
[QUOTE=Pace.;29330947]in b4 europeans complaining about much higher than $6 gas prices despite living in a much smaller country than the US[/QUOTE] What? You got to be kidding me.
[QUOTE=Kagrenak;29331436]Commute times/average driving distance are probably a bit shorter. Too tired right now to find stats to actually participate.[/QUOTE] Small country, small population, jobs are packed into big centers called cities, not everyone lives in the city and maybe your city doesn't have jobs for you so you have to drive to another city daily to get to work. Hell, I had to take a 30-minute drive 40km drive twice a week to another city for my work placement period in school.
[QUOTE=Pace.;29330947]in b4 europeans complaining about much higher than $6 gas prices despite living in a much smaller country than the US[/QUOTE] That's a terrible argument, what about Bahrain? It's small yet before the protests gas was piss cheap.
So when will the US dollar become stronger again? Gotta enjoy these awesome import prices while they last here in Australia. Back when I got the Valve Complete Pack in early 2009 although it was $99US it cost me well above $130AU, but if the Valve Complete Pack was still on the AU store, it would only cost $95AU or so if it was $99US.
Predictions are that the end of this year, gas prices will end up as $7 maybe higher.
Oh look its a trend. [img]http://3.bp.blogspot.com/-_KuUh8iKx_c/TX_URc8gLpI/AAAAAAAAA6M/ES2msXT72PI/s1600/U.S.%2BYearly%2BInflation%2Bsince%2B1900.jpg[/img]
A gallon of petrol costs us $10.95, deal with it.
It's roughly about £1.30 for a liter of petroleum.
[QUOTE=Mr.Campin;29332855]It's roughly about £1.30 for a liter of petroleum.[/QUOTE] A Gallon is multiple liters though.
Britain's is high because of tax, it could be as low as 40p a litre without tax, it's not to do with the strength of the pound
Time to buy a bike
It's heading for 1.50 Euro in Ireland. Just a few years ago it wasn't even a Euro.
[QUOTE=nikomo;29332103]Small country, small population, jobs are packed into big centers called cities, not everyone lives in the city and maybe your city doesn't have jobs for you so you have to drive to another city daily to get to work. Hell, I had to take a 30-minute drive 40km drive twice a week to another city for my work placement period in school.[/QUOTE] Which isn't very far at all. I do more than that daily.
[QUOTE=Zeke129;29331216]It's making our dollar stronger than the US dollar though, which is good if you want to buy shit online[/QUOTE] And only online, in Canada, prices are still higher for some products (and only in stores). I don't have source but I heard on the radio that a baby carriage somewhere in Canada was $700, and the identical product in the U.S. was $200.
Also the reason Europeans pay exorbitant amount of money for gas is because of high taxes on gas. We don't have those taxes, so its cheaper. For example, gas is cheaper here in Florida as compared to Georgia because we have lower taxes than Georgia.
It's already at ~4 dollars at Hess in my town, closer to $5 than $4 if I'm not mistaken.
[QUOTE=bull3tmagn3t;29335099]And only online, in Canada, prices are still higher for some products (and only in stores). I don't have source but I heard on the radio that a baby carriage somewhere in Canada was $700, and the identical product in the U.S. was $200.[/QUOTE] When I worked in a dairy I remember an American talking about how the Velveeta cheese (tastes like shit but I digress) costs like 2 dollars back home but 14 here
[QUOTE=Zeke129;29341199]When I worked in a dairy I remember an American talking about how the Velveeta cheese (tastes like shit but I digress) costs like 2 dollars back home but 14 here[/QUOTE] as an american who has eaten velveeta plenty of times, I'd have to say your observation that it tastes like shit is fairly accurate
[QUOTE=JDK721;29341254]as an american who has eaten velveeta plenty of times, I'd have to say your observation that it tastes like shit is fairly accurate[/QUOTE] Velveeta isn't even real cheese, it's like made out of newspaper or something.
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