ajc

Options Trader Thursday Outlook

I too believe China's demand for oil has been keeping oil prices elevated as well as other commodities. Their double digit growth rate has had the assistance of the governments subsidy to keep gas prices low. Inflation has come to China as a result of the rising costs of other commodities and labor costs. In an unusual effort to curb its inflationary growth, the Chinese government has opted to pull back some of the subsidy it has provided resulting in an 18% rise in the price of gasoline in China.
There are alot of details to cover but generally, as the worlds largest consumer of oil and our low status as producer of oil, and a steady global increase in demand for oil, makes us subject to the whims of the world; like attacks on pipelines and oil rigs, etc. And though it sounds like an old song at this point, the sooner we reduce our dependance on foreign oil, the less subject we are to price spikes in oil and gasoline. I think in the short term more drilling at home is needed immediately, but over the longer term a transition to alternative methods is needed, such as hydrogen. But this sounds alot like the dual mandate of the fed. Which way should we go? Which way do we go?