I was driving home yesterday when I got so distracted I nearly
ran a red light. What caught my eye? The prices at my local gas
station. They must be at an all-time high. I went online, and
did a little research. Measured in today’s dollars, we have not
quite met the peak gas prices of March 1981 (that was the start
of the Iraq-Iran war). But it’s very close.
It doesn’t help that I live in California. We’re neck-in-neck
with Alaska for the highest gas prices in the nation. The lowest
are in New Jersey and Missouri. If you want to see how your area
compares, check out the interactive map at GasBuddy.com. If it
seems to you that prices shoot up fast but come down slowly,
you’re right.
Why are gas prices so high? It’s Economics 101, a simple case of
supply and demand. The OPEC nations haven’t expanded their
production capacity much since 1979. (What are they doing with
all the money they rake in - building ski slopes in the desert?)
Meanwhile, the worldwide appetite for gas is skyrocketing.
(Thank you, China and India!) And it doesn’t help our prices
that the dollar is so weak.
What happened to our domestic production? Some of you may
remember the gas shortages of the mid 1970’s. That’s when our
government imposed price controls on domestically produced oil.
Although that did help consumers at the time, we’re paying the
price now because it limited U.S. exploration and production.
The gas companies said why invest big bucks to find new oil if we
are limited in the price we can sell it for. And believe it or
not, we’re still recovering from the impact of the 2005
hurricanes on oil production in our gulf states.
So what can we do to soften the blow dealt by high gas prices? I
guess we could all buy a hybrid car, but just keeping your old
car in shape (checking the air pressure in the tires and changing
the oil and filters) also helps your mileage. Drive sensibly (no
“jack-rabbit starts”), drive less (consolidate trips), or how
about working from home? Commuting puts more miles on your car
than anything else. As you know, I w.ork fr.om home a lot as a
day trader. You’d be surprised how long one tank of gas will last
me. One final note to make you feel better - today gas hit $8.50
a gallon in Germany.
All the best,
Manny Backus
P.S. It’s these gloom and doom times, laden with huge trading swings and stunning volatility in the markets, that make for ideal active day trading opportunities. Join us for trading at:
Sphinn
Digg
Stumble
Leave a Reply