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2 weeks ago
thank you SO much for your thoughtful answers. You were all a great help ;) 67% 2 Votes 1.6% of our electricity comes from Fuel Oil; everything else is non-oil related).Oil and gas futures are traded on international markets, and the oil market itself is worldwide. Events in foreign nations can cause prices to rise or fall: the threat of military conflict with Iran would make prices rise as traders and oil producers started to think that oil supply would fall; news that the Chinese economy has slowed would cause prices to rise as traders and oil producers expected demand for oil to fall.
Even seemingly unrelated issues can have huge impacts on oil and gas prices. For example, when the Dollar weakens, goods that we import become more expensive (in Dollar terms). We import 70% of our oil, so a weak Dollar will cause oil prices (and gas prices) to rise. This can actually turn into a self-perpetuating cycle: as a weak Dollar causes oil prices to rise, our current account deficit (sometimes called the %26quot;Trade Gap%26quot;) will grow, which typically results in an even weaker Dollar, which will cause oil prices to rise - so on and so on.
Part of the reason for the Dollar%26#039;s current weakness is that interest rates in the U.S. are very low. If the Federal Reserve started to raise the target interest rate, and other interest rates throughout the economy started to rise as a result, more overseas investors would want to buy Dollars so that they could invest their money here at a higher interest rate, which would cause the Dollar to strengthen. This strengthening would play a role in reducing oil and gas prices.
At the blog www.oneofusiswrong.com, oil and gas prices are discussed a lot, partly because one of the writers is actually a trader in the energy market (he trades the %26quot;spread%26quot; between oil and gas prices, which is basically the difference between how much a barrel of oil and how much a barrel of gas costs). Some of what I have said here, and many other issues (both related to gas and other topics), are addressed there.
Basically, it%26#039;s important to remember that a ton of factors come into play in determining gas prices. By trying to %26quot;go green%26quot; and reduce our gas usage we may be able to make an impact on prices, over the long term, but a lot more needs to be done to have a lasting impact. In 1981 gas prices reached a peak not seen again until recently, but by the 90s people had forgotten about the higher prices and had started buying huge trucks and SUVs (this issue is addressed here: http://www.oneofusiswrong.com/index.php?... For changes to matter, they need to last. http://www.getenergyactive.org/fuel/inde...
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