Why gas prices are skyrocketing......

If you use gasoline, and who doesn't, you've no doubt noticed that prices at the pump have gone up a little!  Okay, they've gone up a lot.  Conventional wisdom would say that oil prices must be going up as well.  In fact, oil prices have gone up some but are nowhere near as high as they were four years ago.

If that's not the cause then the next bit of conventional thought would point to increased demand for gasoline.  Remember your high school economics class, when demand goes up, prices rise in response.  When demand goes down, prices usually drop as suppliers compete for fewer consumers by lowering prices.  We saw this with oil in 2008 when the price of oil dropped precipitously when the world economy tanked and oil consumption went south....

Oil Price Crash in 2008
(Source InflationData.com)

The same graph shows oil prices have rebounded but are still below 2008 levels.  So what gives?  Oh and one more thing, gasoline consumption is below 2002, yes, 2002 levels.  Here's the chart.....

So, gasoline demand is really low. oil prices are a little high but gas prices are increasing rapidly.  What's going on here?

The answer can be found at this link from Forbes magazine, Gasoline Prices Are Not Rising, the Dollar Is Falling.

In a nutshell, our friends in Washington are printing money to finance our national debt.  This oversupply of dollars is devaluing the dollar which is causing the price of gas to rise.  The author does a great job explaining how the dollar is being devalued.  He does this by showing the price of oil in terms of the amount of gold required to buy a barrel of oil.  It turns out that the amount of gold required to buy a barrel of oil right now is actually below the historical average proving that oil prices aren't rising in real terms but that the dollar is getting weaker.

Inflation is an ugly thing and it's being brought on by our friends in Washington due to extreme government spending and borrowing.  Inflation is very damaging to an economy and our leaders seem hellbent on spending our nation into oblivion.  But paraphrasing Glenn Reynolds over at the Instapundit blog, things that can't go on forever will eventually end!

The last time we saw this sort of thing going on was when Jimmy Carter was president.  I was in high school  when he was elected but remember how big a disaster he was.  I never thought I'd see a worse president in my lifetime.  Surely people would be too smart to elect someone worse than Carter.  I was wrong.  I've now seen the worst president of my lifetime!  I hope no one worse comes along.

I will make a bold prediction, however.  If gas prices continue to rise or even if they stay at current levels I think it will be the undoing of Obama.  This hurts people in many ways.  It hurts when they fill their gas tank and increases the cost of everything we buy.  People notice that and Obama owns the policy that's causing this.  Too much government borrowing and spending!