Saturday, September 1, 2012

Q3 Easing: Price of Oil (and Gasoline) Could Spike -- SeekingAlpha

Link  here.
Focusing on the price of gasoline at the pump, a look at past stimulus programs highlights this point. During QE1 from March 2009 to March 2010, gasoline prices spiked +86% higher. And from the announcement of QE2 in August 2010 to its end in June 2011, gas prices posted a double at +101% before cooling off and ending +75% higher.

Moreover, it is not just balance sheet expanding monetary stimulus from the Fed that causes gasoline prices to spike, as policy actions from the European Central Bank have shown to have a comparable impact. During the ECB's long-term refinancing operation from December 2011 to February 2012, gasoline prices jumped +25% in just over two months.
The advance in the price of oil yesterday was said to be due to the Fed keeping Q3 options on the table. 


  1. Hate to say I told you so. But...

    Long term, oil has been a better inflation hedge than gold.

    1. When I first started investing, back in the 1980s, I concentrated on two sectors, one of them was oil. I never thought about "inflation." I just figured oil was a pretty good investment. Funny how things work out.