Wed, 30 Aug 2006

Gas may be headed back near $2

The one thing markets hate worse than inflation or manipulation is instability. Markets constantly strive for equilibrium, and wildly fluctuating prices make it increasingly difficult to get there.

The upshot is that these kinds of price swings are almost always due to politics, and not the economic forces of the market. And in this case, it's the political pressure for lower petrochemical prices that's keeping the market from developing the alternative fuel sources we need to get rid of our oil addiction. And as long as we're addicted to oil, those pressures aren't going away!

Can anybody say "Catch-22"?

The recent drop in prices at the pump could pick up steam, driving gasoline sharply lower in coming months, USA Today reported Wednesday.

(link) [CNN.com]

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