Yeah, I parked my old diesel Mercedes in the driveway and there it sits.  It's just too expensive to fill it up.  I'd like to take up bike riding too but the bike I want has a big air cooled V-twin motor and 18" ape hangers .

ps, but for now I'll have to stick with my Honda Civic.

No thingy, I understood your meaning ( and I agree ) I was just broadening the definition of "bike" to include my interest in motorcycles.  

If you track the crude spot prices in Euros and dollars, this is the chart that you get:
http://europe.theoildrum.com/node/3753

As you can see, oil in both currencies increased at about the same rate, but eventually the spread between USD and EUR gets wider due to problems with the US dollar.  Oil prices are a function of what the sellers charge the buyers, which tends to be influenced by supply and demand, but not always.

As thingy pointed out, demand is increasing in other countries.  Some of those countries are creating a new middle class, which involves a powerful economic change that stimulates demand.  This alone can cause oil to increase in price, but we also have a major issue with the USD.  Several people I trust for accurate economic views are stating that a hyperinflationary depression for the US is possible (in other words: almost complete depreciation of our currency).
http://www.shadowstats.com/article/292 (I am a subscriber here)
http://www.europac.net/ (I have several accounts with this firm)
I also have several other subscriptions that I keep to stay informed.

Since rising prices are a given, I recommend stocking up on all household goods that you need, since many people's income are not likely to catch up with the raising prices.  So it makes since to stock up while items are "cheaper."  I also recommend keeping as much food on hand, but not longer than its expiration date.  There will probably be a wheat shortage in 2009 since we are not likely to get the harvests this year to supply the demand.  For those that do get wheat, it will be expensive.

I have driven my car only a few times this year because I work next door to where I live and groceries, stores, post office, bank, and many other things I need are within walking distance from where I live.  While only a few people can get this benefit, I do suggest looking at what changes you might have to make to deal with $6.00 gas or more.  And if we do get hyperinflation, gas will likely be unaffordable.  When Germany experienced hyperinflation, many people were able to avoid starvation because they had small gardens for fresh produce.  Many people had these gardens because the regular supply of produce was inferior.  Our current supply of food is managed to reduce inventory levels and has not been significantly tested for large supply disruptions.

Anyway, hyperinflation is a possibility, not a certainty.  Although after a long, hard look at the long and sad history of fiat currency in human history and our current economy along with historic accounts of hyperinflation, I am forced to take hyperinflation in the US seriously.

You know there's a limited amount of light sweet crude, right? So it's inevitable. Should I elaborate?

I don't think anyone was ruling that out of the equation despite all the graphs and explinations, it was just a matter of course in all of them.  However, greed is not the main source of it, just something certain people are taking advantage of as always.

Actually the price of gas has been too low for too long.

When enough people start dying from starvation and freezing, congress (and many other people) will finally pull their head out of their ass (mainly because the voters will demand it) and allow drilling where it is not permitted and start building nuclear power plants.

The push is on for windmills.

Okay, except nobody has any way to make the scarcity of a resource change. There can't be any more of it, so greed or not, the price will go up. It's not arbitrary at all. There's less, so you'll get charged more.

You can call it greed if you like, but you'd have to point the finger squarely at us. Our greed for cheap fuel, our greed for cheep far-away food, our greed for cheap Chinese consumer goods, and our greed for suburbia.

No thanks, I prefer living in denial  .

Like many people, I understand that the price of a barrel of oil and a gallon of gasoline is affected to some extent by supply and demand.

That said, I'm pretty sure that the decrease in supply and increase in demand are nowhere near high enough to justify the price of oil jumping over $100 per barrel in under 10 years. We're talking an entire order of magnitude increase in price because of speculation - futures traders buying oil at a high price for no other reason than to sell it at a HIGHER price three months down the line.

Gas is also up for this reason - if it costs more to buy the raw materials to make the finished product, the finished product will cost more to the end user. Gas used to cost $1.20 a gallon. Now you're lucky if you can find anybody still selling it for under $4/gal. It was about $3.50 only about a month ago, and at the pace it's going, it'll probably reach $5/gal by the end of June, definitely by the end of July.

The plummeting value of the U.S. Peso Dollar isn't helping, either.

Hehe. Awesome.

right now is a good time to start thinking 'alternatives', (hydrogen, maybe compressed air or even garbage). the gov't has the technology, i just know it.

I'm not sure why they'd be hiding it so well, then. The math on this one is a bit dismal: oil accounts for the majority of north american energy consumption. That's not including the products made of plastic (from oil) and the fertilizer for food (natural gas). We're kind of in a bind.

The closest thing we'd have would be more efficient vehicles (electric, lighter bodies, etc). But automotive manufacturers are being very slow on the draw since they'd have to re-fit factories and re-train employees. That's a huge undertaking that it seems they'd rather not start any time soon.

There are definitely ways to make it work (check out the papers by the Rocky Mountain Institute), but nobody seems to be working on it hard enough for it to be ready soon. But there are ways.

Everyone says this is scary. I don't understand why.

'National Debt' I've always just considered. basically, a sort of 'psuedo-debt'. It seems like a country can accrue as much as they want and just yawn about it, since there isn't anyone they really have to pay back or a deadline for the debt to be settled by. I'm ignorant of the topic here:

What does a country's debt actually mean? I presume it's money they borrowed from other countries? If so, what's the worry? Can someone just 'call' the loan? If so, I mean, what can they actually do to claim the money? It's not like America can go to 'jail' if they don't cough-up the dough.

To a certain extent, you're right - a country's debt has an artificial side to it. On the other hand, without getting into the mechanics, the current state of affairs is very much like the conditions before the great depression, with the added interesting dimension that the US dollar is no longer bound to physical gold. That could be a help or a hinderance, depending on what school of economic thought you espouse.

The thing with the bonds is that they're a great indicator of how confident people are in a country's future. Finances in general are purely psychological, as much as people like to make the numbers seem real. When people get less confident, they spend at a slower rate, slowing the economy. If things get really tight, the economy slows enough to be a serious problem (thus depression). That's obviously a huge simplification, but that's what I find scary about the bonds. Not that they mean anything in and of themselves, but the effect that they'll have upon people's behaviour.

I heard the same estimate.  I was listening to the Financial Sense News Hour May 31st 3rd hour and they are predicting higher oil prices. In 2000, a 40 foot container shipped from China to the west coast was $3000; today it is $8000. 

Great program if you have the time to listen to it.

I say we have to endure the pain for there to be a change.  The silver lining is that once the price becomes unbearable there might a period of civil unrest and then people will find alternatives.

-RR

Yes, individually, I think we have to prepare for these issues to not be addressed soon enough.  The time line for addressing these items is short and will require aggressive action to provide any real effect.  From the way things are being handled in the political arena, I do not think our government has the intelligence to do the right thing soon enough.  Another silver lining is that if we get into a very deep depression, solar and renewable sources will make more sense than oil, and we will have more oil to sell to other countries if we ever get around to tapping it.

Gold is the most convenient money (example: less bulky than iron) that has kept its value for recorded human history.  Ralph T. Foster sells a book called "Fiat Paper Money, History & Evolution of our Currency."  In it, you see the long, sad history of fiat currency, and where we are today.  We are in a decade where the world is transitioning from cheap, plentiful commodities to expensive, scarce  commodities due to raising middle classes in developing countries around the world.  This will put more stress on fiat currencies.  With the way the US dollar is going, trust/complacency in currencies is going to be reconsidered (it already is being reconsidered by many people who are closely watching the value of the USD and the US economy).  In this situation, investing in commodities is a good alternative to currencies, but gold ownership worldwide is at a record lows in terms of percentage per person.  If gold ownership doubled per person, then the price of gold would probably quadruple or more.  Central banks also have record low inventories of gold.  I agree that the value of gold will be affected by how valuable people perceive it to be, but the same is true of fiat currency.  The difference is that fiat currency needs to be trusted to retain value.  Gold does not need trust as much because it is scarce, which is a good protection against its debasement.

Food does make more sense, and since gold is too scarce among the population, food may be more useful for trade if we experience a currency crisis.  A currency crisis in the US is not a certainty, but since it is a possibility, and I do greatly value my ability to feed myself, I am looking into how to garden.  If we do not get a currency crisis, then at least I know how to reduce my grocery bills.

I agree that investing in alternative energy companies does make a lot of sense and that not every alternative is going to work.  I think we are going to use several alternative sources, but I think solar is almost a given.  I know someone who is building a house soon and will be installing solar panels with ether roofing tiles or some kind of solar laminate.  I am not sure if it will be grid tie or battery based, but I am sure it could be converted from one to the other if the need is there.
 

I think its main value is based on its scarcity.  That is what you want in a currency.

True, but it has never gone to zero.  Also, be careful when comparing the value of gold to fiat currencies, because inflation may make the value of gold look like it is fluctuating, when it is the currency itself that is fluctuating.  A better way to track the value of gold is looking at its purchasing power.  Perhaps look at how many oz of gold it take to build a small home, buy a month's worth of food, or some product/service.   I can give you a very long list of fiat currencies that have ended with approximately zero value.  They tend to end in hyperinflation, and gold is a very good store of wealth during hyperinflation, assuming the government does not make it illegal to own or use as currency.

One sign of a currency's demise is the coin's melt value worth more than the face value and a national debt that is growing to an unmanageable size.  This means that the government is not being responsible with its monetary policy, and frequently, monetary policies tend to degrade more than improve.  Eventually, trust in the currency is lost and then it ends in hyperinflation.  Take a look at http://www.coinflation.com/  A "Metal % of Denomination" greater than 100% means that the melt value is worth more than the face value.

The value of everything is determined irrationally anyway. Of course, the economic astrologers will have you believe everything from chart patterns to "fundamentals" that drive prices, but it's just us.

That would be an incredibly risky endeavour. No current technology shows the promise of addressing even a third of the energy requirements that oil does, so existing companies are very unlikely to survive the coming crunch. If you were to bet the farm on 20 companies, and two made it out alive, you would have bet 5% on each, and so gained maybe 130% on the win, and lost around 95% on losses. 35% isn't bad, but for that level of risk, it's terrible. If only one of them makes it, you're down 30%.

(Sorry if I'm getting boring - trading is my job/obsession)

I own a little bit of CF, DBA, GLD, DGP, SKF, and BEARX.

They are interconnected, but what happens if investors, and eventually governments, choose to favor certain currencies?  A possible scenario that I see is people dumping currencies of debtor nations in favor of the currencies of creditor nations.  If things get too bad, a new currency with hard asset backing could develop.

EDIT: Part of the interconnected behavior is due to currencies being pegged to the USD.  Those pegs may be dropped if governments do not like their domestic inflation.  That would reduce the interconnected behavior.

 Jim knows his shit. The first clue is when asked, "how long do you think the bear market will last?" he says, "oh, I'm not that smart." While I'm not sure that zinger was directed at Jim Cramer, it makes me smile to think it was.

You can forgive the man the comb-over and the bowtie. He knows what he's talking about, and he can pull the trigger.

Straight talk from Ron Paul:

Rising Energy Prices and the Falling Dollar

Oil prices are on the minds of many Americans as gas hits $4 a gallon, and continues to surge.  How high can prices go?  How can we solve these problems?  What, or who, is to blame?

Part of the answer lies in understanding bubbles and monetary inflation, but especially the Federal Reserve System.  The Federal Reserve is charged with controlling inflation through interest rate manipulation, however, many fail to realize that creating money, and therefore inflation, is really its only tool.  When the Federal Reserve inflates the dollar as drastically as it has in the past few decades, the first users of the newly created money go in search of investments for their dollars.  They must invest this money quickly and aggressively before it loses value.  This causes certain sectors to expand beyond what would naturally occur in the free market.  Eventually the sector overheats and the bubble bursts.  Overinvestment in dotcoms eventually led to a collapse of the NASDAQ.  Next we had the housing bubble, and now we are seeing the price of oil being bid up in the creation of another new bubble.  Investors are now looking to commodities like oil, for stability and growth as they pull capital out of real estate.  This increased demand for investment vehicles related to oil contributes to driving up the price of the actual product.

If the Fed continues with its bubble blowing policies of the past, the new commodities bubble will continue to grow, gas prices will continue to go up, as the value of your dollars go down.  We will see an overinvestment in these commodities as solutions are desperately sought for a supply shortage, which is only part of the problem.  Make no mistake, though, this is not the free market at work.  Government manipulations have added levels of complication and unintended consequences to the marketplace.

This is not the time for members of Congress to take political potshots at each other, or to imagine that the free market is somehow to blame.  This is the time to understand and fix problems.  That begins with making sure the decision makers have a firm grasp on the causes of the problems and possible effects of their decisions.  This is absolutely crucial if we want to get it right this time.  That is why I am in the process of calling for hearings on Capitol Hill on how the falling value of the dollar affects energy prices.

Governments need to get out of the way and let the people get back to work so that we can get our economy back on stable footing.  Our destructive regulatory environment, confiscatory tax policies, and managed, rather than free trade have chased many businesses overseas.  The bottom line is average Americans are being seriously hurt by these flawed policies, and they are not getting good information about the true dynamics at work.  The important thing now is to get the diagnosis absolutely correct so we can administer the appropriate treatment and move on to a healthier economic future. To do this it is absolutely necessary to address the subjects of central banking and fiat money.

***

Sad to see that even though he has identified the problem and has the solutions for change for the better the majority of Americans can't see that he's the best man for our country.  But wait...he's a creationist (sigh).

I rather have a creationist that knows his shit about a sound economy than a evolutionist that fucks up the economy with more regulation, taxation, and inflation.  We're going to get that with Obama/Clinton/McCain.

-RR

Start stocking up on food and stuff now because it will be more expensive a few months from now.  Stay close to friends and family...this shit is gonna hit the fan or Ben Bernanke will crank start the printing presses and drop money outta a helicopter.

Marc Faber knows his shit too.  He squarely blames the effects of oil and inflation on Alan Greenspan/Ben Bernanke.  Ron Paul's been saying the same thing all along.  When will the masses wake up?

Ron Paul schools Ben Bernanke:  Inflation is the increase in the money supply which debases the currency.  Inflation is NOT rising prices (although it is the result of inflation)

-RR

My prediction was that the Fed would keep interest rates at 2% or lower until the election.

Here's the latest B.S from the Fed:

Release Date: June 25, 2008

For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending.  However, labor markets have softened further and financial markets remain under considerable stress.  Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

The Committee expects inflation to moderate later this year and next year.  However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time.  Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased.  The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.

The Fed are professional liars.  They use words like "inflation to moderate"...what does that mean?  They along with the majority of mainstream media will blame rising prices on anything else except the creation of new dollars and credit.  For more of their lies see a history at: The Mess that Greenspan Made

If you follow the business news, the MSM is reporting on speculators driving the price of oil on the futures market.  Jim Rogers debunked that notion soundly in the previous post here.

Ron Paul on Federal Reserve and Inflation 6/25/2008

Ron Paul is the only politician that is talking straight about the Fed actions.  Meanwhile the masses get fed a bunch of lies.

The Fed stopped publishing the M3 report (best report on the money supply).  By inference of M2, the true inflation rate is around 16%.

Lies, lies, lies...

-RR

Oh, thank you! Telling people I'm in "futures ... that's commodities ... like gold ... yes, oil, too" has become worse than telling people I'm an atheist. Of course, recently I've had bad losses, so people can feel good about my failure - that's always nice. 

Exactly. Speculators also provide liquidity, which allows "legitimate" traders (like corn farmers trading corn futures - that's always a quaint example) the ability to buy and sell much more conveniently than they could in a smaller market.

In short, greed is good.