Gasoline 20 Cents a Gallon?

Many of us aren’t old enough to remember Gasoline at 20 cents a gallon. I can remember gas during the 1960′s at 29.9 cents a gallon. The last time that gasoline averaged 20 cents a gallon was in 1942. That was during WWII ! But if you know us here at you probably know that we usually talk in inflation adjusted prices. So adjusting for inflation, the price of gas in 1942 would have been $2.78 if you are paying in January 2012 dollars. But that is still a long way away from the average price of Gas in 2011 of $3.48.

We track the inflation adjusted price of gasoline based on the annual average price using the Consumer Price Index (CPI) generated by the U.S. Bureau of Labor Statistics and a chart is always available from the menu bar above under Inflation Charts and Data / Inflation Adjusted Prices.

But this article isn’t about inflation adjusted prices using some artificially created index, and it isn’t about prices of gasoline during WWII.  How would you like to buy a gallon of gasoline for 20 cents today?  Yes, two thin dimes!  Well, I recently I read an interesting article called Why Gas Prices Are actually Falling and in it was this picture:

Gas 20 cents


So there you have it a store that is currently selling Gasoline for 20 cents a gallon. And if you look at it closely you will find that he is actually making “excessive” profits as the monetarists might say. You see, today as I write this, Silver is trading for about $35.51 per ounce. A silver dime contains 0.0724 ounces of silver. So at current prices a Silver Dime is worth $35.51 x 0.0724 or about $2.57 so the guy who is selling gas for two silver dimes is actually getting $5.14 per gallon of gas!

So that leads to one of two conclusions [Read more...]

Falling Oil Prices: Worrying Trend or Saving Grace?

By Marin Katusa, Casey Energy Team

When oil prices start to decline, investors and economists get worried. Oil prices in large part reflect global sentiment towards our economic future – prosperous, growing economies need more oil while slumping, shrinking economies need less, and so the price of crude indicates whether the majority believes we are headed for good times or bad. That explains the worry – those worried investors and economists are using oil prices as an indicator, and falling prices indicate bad times ahead.

But oil prices have to correct when economies slow down, or else high energy costs drag things down even further. And the current relationship between oil prices and global economic output is not pretty. In fact, every time the cost of oil relative to global production has hit current levels – and that’s after the sharp corrections earlier this month – an economic slump, if not a recession, has followed, according to a Reuters article.

The “warning signal” that is currently flashing red is the Oil Expense Indicator, which is the share of oil expenses as a proportion of worldwide gross domestic product (specifically, it is oil price times oil consumption divided by world GDP). Since 1965, this indicator has averaged roughly 3% of GDP and has only exceeded 4.5% during three periods: in 1974; between 1979 and 1985; and in 2008. Each period saw severe global recessions. [Read more...]

Casey Research Identifies Next Generation of Resource Leaders with Casey’s NexTen

Stowe, VT, October 12, 2010 – Casey Research, a leader in providing in-depth, independent analysis of high-growth investment opportunities, announced today Casey’s NextTen, the next generation of leaders in the natural resource industry.

Successful investors, like Casey Research founder Doug Casey, have long recognized that there are no more important considerations when investing than the people. For years, Casey Research has helped its subscribers succeed by closely following the careers of the most successful explorers in the industry, those top few percent who consistently generate the majority of returns for shareholders.

And now, it is proud to present the next generation of industry leaders to keep a close eye on — the top 10 up-and-coming resource stars 40 years and under who are already demonstrating a strong track record in innovation, exploration, and financing – Casey’s NexTen. [Read more...]

Is Natural Gas Cheap?

By David Galland, Casey Research

At the height of its late 2005 rally, natural gas in the U.S. was selling for just over $16/MMBtu, 350% higher than today’s price of $3.56. The oil/gas ratio, now over 18, is an all-time high… suggesting that natural gas is dirt cheap. So, it’s a buy, right?

In a phrase, not exactly.

According to a recent report by Natural Gas Intelligence, U.S. natural gas available for production “has jumped 58% in the past four years, driven by improved drilling techniques and the discovery of huge shale fields in Texas, Louisiana, Arkansas and Pennsylvania, according to a report issued Thursday by the nonprofit Potential Gas Committee (PGC).”

According to the report, the increase in gas discoveries and production improvements means that North America shouldn’t have to be concerned about gas supplies for up to 100 years! [Read more...]

Oil and Price Inflation

I recently received the following question from a student in Malaysia.  I thought it was a good question so I am including it here.

Dear Sir,

Greetings, I am a student of  International Islamic School Malaysia, Kuala Lumpur. I hope you are well. I am in grade 10 and I take business studies as one of my subjects. Recently I  had a class on inflation in my school. The teacher said when fuel prices alone rises we cannot term that as inflation. I disagree with that because I think that rising fuel price is the only exception where we can say that it is inflation. When fuel prices increase the price of all other commodities increase … please tell me if  it is right or wrong to say that ‘high fuel prices is inflation’. I would really appreciate your help.

Thank you..  Samin

Dear Samin,

That is a very thoughtful question.  Often professors, analysts and the news media remove Energy and Food prices from the “inflation equation” because they are so volatile (these prices change a lot in the short term) without them it is called “core inflation”. [Read more...]

Inflation, Oil and the Environment

I recently received a great question from a 6th Grader on Inflation, Gas Prices and the environment all rolled into one. It isn’t often that 6th graders think about these issues so I would like to share my response with you…

To whom it may concern,

My name is Sam and I am a 6th grade student at (deleted) Middle School. I love traveling. Whenever I go places I see lots and lots of poverty. I think to myself why? Than I look ahead of me and see the outrage sky high prices for food, gas and many other things.

You may be wondering why I’m telling you this .I’m doing a project on one of the things that you know a ton about. My subject is inflation of consumer and gas prices. As I think about the fact that gas is so expensive. I also think about why.

Than I remember that they are destroying habitats for animals. As the thoughts run through my head I wonder how can I stop this. This is my whole point of my project. I also realize that the demand for gas is very high. But the bigger demand the more wildlife is cut down and the higher the prices go. If this cycle keeps going on than the some people wont be able to offered to heat there homes or drive too work or even feed there family. Please send me as much information as you can so I can complete my project.

Thank you,


Dear Sam,

Thank you for the well thought out letter. It is good that you are thinking about inflation, Oil prices and the environment. Unfortunately it is a very complex subject so I will start with inflation. [Read more...]