Can gas savings make up for a hybrid's higher sticker price? L.A. Times

Yep. The speculators are speculating that the economy is recovering and thus, once again, economic growth demand will out strip supply. Basic economics, 101. No conspiracy.

SGH-I717R ? 2

 

There is both conspiracy and a failure of public policy. The conspiracy is quite public in the form of OPEC, but like most criminal cartels the members fight, and it does not act like a "text book" monopolist. The arab spring threatens to whack off some of the conspirators, which can cause supply disruptions. Iran's nuclear program and the EU and US response may cut of one of the cartel members, but that risk has gone down in the speculators minds. OPEC by its nature causes shortages and surplus oil.

There are also legalized speculation in the form of the oil and gasoline futures and derivatives market. This used to be restricted mainly to those that actually used and produced oil, but laws changed to allow speculators, mainly banks to gamble on the price of oil. This causes exaggerations of price swings. In a well maintained futures market the price would reflect the risks in sudan and iran, but in this casino type market the price premiums and deficits get exaggerated. The US set up the casino, and can close it down, but other countries can set it back up. It seems obvious that the US should shut down the casino, and stop US banks from playing in foreign casinos for oil and gasoline. Wall Street does give a great deal of money to both parties to stop any of this worthwhile regulation.

This comes down to the failure of public policy. Knowing that oil is controlled by a rogue cartel, the government should be acting to reduce the countries risk to moves to that cartel, but instead seems to act to increase its influence. With the Iranian risk going down, the price of oil has gone down, and I expect both opec and the futures market to push it down further until the next spike.

 

The Exxon Valdez
The First Gulf War
The Second Gulf War
The BP oil spill
Tea Partiers demanding we drill the oceans
Oil Billionaires spending hundreds of millions on political campaigns
Newt Gingrich promising he'd build a pipeline as his first act as President
Air pollution
Groundwater contamination
Fracking


...for some people, there are very good reasons to buy cars that consume far less oil, and no oil at all, if possible. We use a completely different Total Cost of Ownership estimation.

What's your favorite reason for driving a Prius?