Tuesday, July 3, 2012

The decline in gasoline is just about over


This chart compares wholesale gasoline futures (orange line) with the AAA nationwide average price of regular gasoline at the pump (white line). Futures naturally tend to lead retail prices, and now that futures prices have been flat for the past month, the big decline in pump prices is just about over. Crude prices have ticked up this past week on Middle East tension, which is more reason to suspect that the decline in gasoline prices is essentially over for now. At these levels, gasoline prices don't present any particular threat to the economy, and may even be a source of some comfort.

4 comments:

Dr William J McKibbin said...
This comment has been removed by the author.
Dr William J McKibbin said...

Until resolutions arrive regarding California and the Eurozone, I believe we can all count on inflation remaining at near zero levels -- moreover, the resolutions the may unfold in California and the Eurozone are likely not going to be inflationary due to staunch central bank resistance to such measures.

The question now becomes, "how do we as investors make money in a stagnant economy that is enduring austerity?"

The answer I propose is to look at this as a once in a lifetime opportunity to make big money in the long-run (i.e., a 30-year plus investment horizon) -- stagnation means that everything is stagnating, which including profits and dividends, which means that stocks and real estate will remain cheap until dividends and rents hike substantially (as in double and triple) -- said another way, now is the time to BUY cheap equities everywhere -- those equities will translate into rich rewards for those with a long-term horizon (30-years plus) -- that opportunity is very real right now in my opinion -- take it or leave it.

As for those trying to make a "quick buck “during the coming 10-15 years, my comment is "sorry, Charlie" – economic events unfolding in the Eurozone and California are not trivial -- much pain will have to be endured by citizens in order to resolve these economics -- that pain will take the form of either: a) devastating increases in taxes; b) tidal wave increases in inflation; or c) savage cuts in government spending -- all of that stuff is going to hurt poor people the most (anyone earning less than $250,000-$300,000 annually) -- however, accredited investors with resources to invest stand to win very big in the coming 30-years -- the same thing happened during the 1930's, when liquid investors bought up the US at bargain basement prices at will -- the same thing is happening right now -- those with world-class jobs and motivation and discipline to invest half of their incomes will be the big winners in 30-years.

Now is not the time to whine about human suffering -- nothing can be done to change what is coming – the powers that be have chosen austerity over monetary expansion or tax increases -- that's fine with me -- I can make money in any of the three scenarios described above -- so can everyone else -- in fact, austerity brings some distinct advantages to the table that monetary expansion and tax increases do not -- I intend to exploit the expanding austerity with my full might.

The future looks bright for accredited investors -- everyone else should already be under cover or on the run to some safe-haven job or place to live in order to weather the economic storm that is falling upon America and the world.

Watch for companies to survive and even thrive in the coming years, even while ordinary Americans and Europeans find themselves in the hardest of times – austerity is the future, whether we like it or not – these fiscal and monetary decisions have already been made by the people and institutions that run the world -- I strongly advise that people take a long-term view and not miss this lifetime opportunity to build a vast estate in the coming decades.

Unknown said...

Automotive News just reported a June auto sales SAAR of 14.1 million. Ward's auto is more specific at 14.08 million.

Big relief compared to last month's disappointment.

Bob said...

Dr. McKibbin,

You sound like a broken record.

And $250,000 a year is not poor.

Let them eat cake I guess huh?

Perhaps you should leave your ivory tower every now and then.

Apologies but, sheeez,

Bob