Somehow the data is getting a little out of whack. Gasoline consumption in the US has decreased markedly. See the chart below. The last two dots tell it all.
This would lead one to believe that oil producers have cut production to keep prices from falling. Less gas is being sold, that implies less oil is being pumped out of the ground. There is one problem, the oil producers have grown accustomed to a lifestyle that did not anticipate cuts in production. Pumping less may keep the price high, but it won’t pay all of the bills.
The last time this happened, the OPEC cartel set quotas for each county, to keep the price of oil from dropping. It didn’t work, the price per barrel of oil fell off of a cliff. Officially, everyone was producing what they were allotted (and a little more on the side that no one knew about).
Prices are rising at the gas pump (4 dollars a gallon today), consumption has dropped and there is very little indication that the oil producers have cut production. It’s a given that refiners are only going to buy as much oil as they can expect to process and sell, while oil producers will tend to pump as long as they can sell their forward production into the futures market. There could be a meltdown in the oil commodities futures pit sometime in the near future.
There is one other possibility; Obama and Bernanke are printing dollars 24/7 and turning our currency into funny money. Below is how it turned out, once upon a time, long long ago . . .
We could be here. Early 2012 is just like early 1922.
You'll wish you had Obamacare if we get to here!
The only drawback to the opiate of printing money, is trying to stop. Either path is possible, my crystal ball is a little to foggy to see clearly. One sure thing, a fifty dollar bill won't fill my gas tank anymore.