Friday, March 16, 2012

Crude Oil Up $2.00 per Barrel

Light, sweet crude for April delivery settled $1.95 higher at $107.06 a barrel on the New York Mercantile Exchange. May Brent crude on the ICE futures exchange traded $3.22 higher at $125.82 a barrel. Not a good way for the week to end.

Front-month April reformulated gasoline blendstock, or RBOB, settled 6.84 cents, or 2.1%, to $3.3569 a gallon, a fresh 10-month high

That sound you hear is serious price inflation. It always starts with oil because there is demand for oil in the capital goods sector and the consumer goods sector. As Bernanke pumps money into the capital goods sector, capital goods operators are able to bid oil away from the consumer sector. Gasoline going up in price as consumers cut back their use of oil is this bidding process in action. As the Bernanke money works it way back to consumers, they up their bids for gasoline, but Bernanke just pumps more money to the capital goods sector. The vicious price spiral goes on.

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