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.The advance in the price of oil yesterday was said to be due to the Fed keeping Q3 options on the table.
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.
Saturday, September 1, 2012
Q3 Easing: Price of Oil (and Gasoline) Could Spike -- SeekingAlpha
Posted by Bruce Oksol at 8:28 AM