The Bad News About Falling Oil Prices

If commodity prices are dropping, how come inflation might be getting worse?

By Daniel Gross | Newsweek Web Exclusive
Sep 4, 2008 | Updated: 11:10  a.m. ET Sep 4, 2008

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  • Posted By: pnoty96 @ 09/04/2008 2:20:09 PM

    Observer01..you are anything but. Just another dumb ass Republican. Not that all of you are dumb asses. It just incenses me when someone is a Republican w/o reason. A reason would be: you make more than $150K a year, which judging from your comment, you probably don't. I guess you would rather have an old fart (72), who is out of touch with his wealth, (how many houses?) and the plight of the middle class ( under $5.0 million a year is his middle class). Not sure if you have kids, but if this troop withdrawal scheduled for 2011 does not happen for whatever reason, I hope your kids go to the meat grinder. You are more concerned with a democratic blow job than you are with the real world. Come out from under your silver spoon. And I am not gonna even talk about Palin (although she is a hottie). You probably hadn't noticed. Most of you are gay, judging from most of you being stuck on the blow job (and the other 4 guys who were "shoved" out of their proverbial closet). ***.

    • Posted By: observer101 @ 09/04/2008 4:30:37 PM

      You bet I would vote McCain...As opposed to a young dumb ass(how many states 57?)...Who cares how much money McCain makes...It doesnt matter if he is President and wealthy..It wasnt a problem when Kennedy won the Pres...How many houses do you suppose he owned?...Its not like McCain is going to spend his and his wifes money to put food in your mouth or change the country fiscally...Anyway if Hillary was the nom for Pres her money wouldnt matter would it? Dems/libs are just grasping for what ever they can.. And if thats all they can focus on is his properties, then McCain has this one in the bag...Honestly what does him owning houses or remembering how many have to do with anything? ...YOU are certainly snowed if you think Obama the great is going to stop any conflicts if he is President...First off where do you think the troops are going to go if they are pulled out of Iraq in 2011?...I'll tell you what the almighty Obama hasnt told you...Afghanistan, Russia, or if worst comes to worst Iran..So dont put your little hopes on anything Obama says regarding troops. His supreme ignorance regarding foriegn affairs is atrocious. Sadly he is using the troops withdrawl story to WIN votes from an unpopular war, and you are stupid enough to buy into it. Sure I do have kids... My kids (16+)would proudly serve this great nation if called to do so by any President...So if YOU have kids go ahead and send them to Canada, France or some other foriegn school to get them out of protecting this country...God knows he/she can run for Pres 30 years from now and claim he/she smoked pot but never inhaled(and sadly you dem clowns bought that excuse)...Try pulling your head away from the Obama commercials and Youtube long enough to stop worshipping Obama for no REAL reason other than "everyone else is doing it." You pair of clown shoes!

      • Posted By: observer101 @ 09/11/2008 2:40:33 PM

        As I pointed out in my earlier post...Where are the troops going that are leaving Iraq?...Afghanistan...Exactly what Obama was going to do if President....So much for "Obama will bring our troops home"....Poor weak minded, easily fooled Obamites.

  • Posted By: careerdaytrader @ 09/05/2008 3:01:35 PM

    Have you ever even CONSIDERED you may be an idiot?

    Jeff Foxworthy had those great lines about why you might be a redneck but it applies to all the idiots out there too.

    If in our INFORMATIONAL economy you are still seeking a manufacturing job, you MIGHT BE AN IDIOT!

    If in the beginning of a recession which could be SERVERE you believe the ANSWER is raising taxes, you MIGHT BE AN IDIOT!

    If you think Obama or ANY politician can CREAT jobs (businesses do that and they will do LESS of it with Obama's huge taxes) you MIGHT BE AN IDIOT!

    If you think Obama will create alternative energy sources, you MIGHT BE AN IDIOT!

    If you think Obama's TAX increases ONLY ON THE RICH won't affect you, you MIGHT BE AN IDIOT! (After all if you buy products and services from businesses and they have to pay higher taxes they will RAISE the prices so YOU ultimately pay those taxes).

    If you think Obama is smart, you MIGHT BE AN IDIOT!

    If you think Obama will give you CHANGE you would be RIGHT, but you also MIGHT BE AN IDIOT!

    Because nobody in their RIGHT MIND would want the kind of changes Obama is recommending!
    High taxes, BIG government, jobs flowing overseas because of all the higher taxes and healt incurance costs skyrocketing under his plans, interest rates and INFLATION skyrocketing WORSE than Carter!

    So basically if you think Obama is the ANSWER to all your life's issues, you ARE AN IDIOT!

    • Posted By: jarcher1 @ 09/06/2008 1:58:21 PM

      Who, exactly, do you think the informational economy services, punk'nhead? Answer: People that produce real 3D objects that can be used to cloth, shelter, and feed us. If you're dying of exposure and malnutrition, websites and word processing software aren't really of much use now are they. I could take the time to refute you question by question, but that *would be* idiotic. Just don't break your arm patting yourself on the back cause you're so smart.

      • Posted By: observer101 @ 09/11/2008 2:37:13 PM

        Sorry that makes you mad...tee hee...McCain/Palin08'

  • Posted By: phiomalibumalibu @ 09/05/2008 5:32:27 PM

    The policy has to change: Basically America has off-shored 10 million jobs to East India and China during the last 8 years. Last month 85,000 more jobs were lost.

    Unemployment figures are incorrect. Currently 25% of Americans are unemployed. Unemployment figures only reflect W-2's, they ignore the unemployed 1099 workers (1/3 of america) and Self Employed Workers who don't have a job now.

    • Posted By: observer101 @ 09/06/2008 7:54:06 PM

      What awesome bill do you think was signed to allow those jobs to go overseas and across borders..NAFTA...Thank Clinton...Dems think that if a dem sponsored bill is signed that it has long term effects that day...Your right approx. 8 years ago that was signed ..Hooray for Clintons ultimate plan of sharing/out sourcing jobs...

  • Posted By: mrlink @ 09/04/2008 5:59:29 PM

    When is the American public going to see through the lies that the Fed has fed us over the past decades? Inflation is the increase in the money supply which directly affects the costs of all goods, PPI & CPI due to more dollars of less value chasing the same goods. The Fed has added trillions of worth(less) dollars to the money supply in the past few years and the pace is accelerating, diluting our nation???s currency. If blame the oil companies & Arabs for the increase in oil, you have only a small piece of the picture. Our money is worth less due to devaluatio0n, requiring more of it for the same goods. History is full of examples where governments have created money out of thin air, destroying the value their country???s currency. This is a hidden tax on the population of the U.S., devaluing our money through the monetization of U.S. debt. Wake up to the lies and Fed manipulation before it is too late.

    • Posted By: Bowles2323 @ 09/05/2008 10:44:46 AM

      Hit the nail on the head with the FED. They have been ignoring inflation due to the finacial crisis and will not take any action to combat it, but they will print more money to bail out Freddie, Fannie, Indy, etc. which will only hurt in the long run. And where does the burden fall for the financial industries wreckless behavior?? Us, the tax payers....they get rich and we deal with the consequences. Like I said before, people better start saving their money as it's going to get much worse before it gets better.

  • Posted By: prince007q @ 09/04/2008 6:28:04 PM

    i don't know why somebody think US is buying beef and pork. we export ton of beef and pork to east asia. and you might see the controversial issue about mad cow in south korea. so silly.

    • Posted By: smokey_joe @ 09/04/2008 6:35:09 PM

      Of course America does not import beef and pork. But the price of these meats is out of proportion to their actual value when you consider the health risks. People should think before they eat and think before they buy. We all have choices in life. Let's all start making smarter choices.

  • Posted By: expatincebu @ 09/04/2008 6:23:53 PM

    There is one reason for price inflation and that is monetary inflation. The Federal Reserve has been increasing the amount of money in circulation by double digits for years. This devalues all of the currency. It is a secret and hidden tax on all of you.

    The owners of the Fed created and profited from the Great Depression. They have engineered and are profiting from the current crisis. They are the worlds true terrorist.

  • Posted By: smokey_joe @ 09/04/2008 6:14:07 PM

    The answer to commodity price inflation is the same as the answer oil price inflation: DON'T BUY (unless your life literally depends on it). America is known for buying tons of useless junk. Also, instead of buying beef and pork and other high-priced meats at the supermarket, buy turkey breast at $ 1.98 per pound. Its much better for your health and your wallet will feel better too.

  • Posted By: mlbuie @ 09/04/2008 1:43:48 PM

    Wasn't oil $20 to $40 per barrel before Bush took office?

    • Posted By: blackcourt @ 09/04/2008 2:21:02 PM

      From what I understand that there has been no real change in the price of a barrel of oil. The reason that we are seeing such huge prices in the oil markets is because of speculators buying up reserves in an effort to raise the prices and make money. There was even a report on one company having as much as a 17% share of the oil reserves. I may be wrong about this and would appreciate correcting if I am but that has been my understanding of it thus far. Bush doesn't control oil prices and no matter how much you would like to blame him for all the problems in the world he is responsible for very little of what Americans are complaining about.

      • Posted By: tutink777 @ 09/04/2008 2:50:57 PM

        Actually there are several factors that conribute to the oil prices. Speculators do, but certainly not $80/barrel. The cost to produce the barrel of oil is also a factor. Right now, drilling and production companies are in great demand, so the cost for a rig is greater, costs more to produce a barrel. And to give a little blame to Bush, the strength of the dollar and our foreign policy comntribute as well. However, Demand is the single largest factor in the price of a barrel of oil. Demand goes up, price goes up. When the markets believe that demand is going to go up(IE China and India emerging markets, cold winter coming) or supply is going to go down (IE Hurricane Gustav hitting the Gulf drilling operations, or OPEC decreasing production), the price rises. It is basic economics at the base level. It is just that the things that affect the demand get into greyer areas.

        • Posted By: mcdeere72 @ 09/04/2008 5:16:52 PM

          I want to compliment you because you're the first person I've seen on these boards that seems to apply some logic instead of just placing blame. I would agree that Bush does have some affect on strength of the dollar and foriegn policy can affect that. I must applaud you not placing all the blame on Bush, because that's simply not the cut and dry of it.

  • Posted By: prairiefox @ 09/04/2008 4:59:29 PM

    I PRAY THAT I GO TO HEAVEN WHEN I PASS ON SO I WILL NOT HAVE TO SPEND AN ETERNITY WITH THESE GREEDY PIGS! AND I HOPE THAT ALL OF YOU WILL JOIN ME IN PARIDISE!

  • Posted By: prairiefox @ 09/04/2008 4:47:34 PM

    WHY WITH A 41 DOLLAR DROP PER BARREL DROP ONLY MEANS A 40 CENT DROP AT THE PUMP?
    PLEASE TELL ME?
    AND THE RIPOFF CONTINUES!

  • Posted By: prairiefox @ 09/04/2008 4:45:07 PM

    SINCE THE PRICE PER BARREL HAS DROPPED THEN SOMEONE PLEASE TELL ME WHY GAS IN OKLAHOMA HAS ONLY DROPPED 40 CENTS? WE GET A ONE CENT DROP TO THEIR DOLLAR DROP?
    AND THE RIP OFF CONTINUES!

  • Posted By: Thalecress @ 09/04/2008 3:16:34 PM

    In the last few months, oil prices were over inflated by the big Oil companies who were playing with the "shock factor" on Americans. The falling oil and gas prices are not only due to reduced consumer spending, but also because they are dropping back to the realistic prices that they should have been.

  • Posted By: Thalecress @ 09/04/2008 3:15:42 PM

    In the last few months, oil prices were over inflated by the big Oil companies who were playing with the "shock factor" on Americans. The falling oil and gas prices are not only due to reduced consumer spending, but also because they are dropping back to the realistic prices that they should have been.

  • Posted By: Bowles2323 @ 09/04/2008 3:04:16 PM

    Gross should have said that stagflation has begun, which it has. Inflation along with a stagnant economy. The downturn in oil prices will not be passed onto the consumer for sometime, even if it falls below $100 per barrel. Prices always come down much slower then when they rise. People better start saving their money if they can, it's going to be a long 2009.

  • Posted By: pinkpanther87413 @ 09/04/2008 1:37:37 PM

    oil goes up so does the price! Oil goes down gas prices stays the same or go higher! till it's concidered low cost or after 6 months which ever is quicker. if stable gas drops a penny or two, if it goes up, so does the price, on that day! See the problem?? GREED GREED GREED, TAXABLE GREED!!! Under GOP rule TAX FREE GREED, KICKBACKS, IT'S FOR THERE WAR CHESTS, OR THERE POCKETS, IF NOT RUNNING!!!

    • Posted By: observer101 @ 09/04/2008 1:58:13 PM

      So you are implying is that if Obama is in office, the supply will go up and demand of oil will moderate or go down?...China will no longer need oil for their thriving economy?...And Americans will get the hint and rely on public transportation and drive less to work all because of Obama?...You are stupid, stupid, stupid to believe that...Hell if that were true Id dump McCain in a heart beat and vote Obama..But Im not stupid..:)..McCain/Palin 08'

  • Posted By: newage_lightbulb @ 09/04/2008 1:32:35 PM

    Here's a question: if oil is trading at $109, why the hell is gas still almost $4 a gallon in the LA area? They have no problem jacking up the price when oil goes up, but drag their feet lowering the price when oil goes down.

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