How in the world does oil spike up so quickly?

The beauty of the market, whether it’s commodities, mutual funds, or just plain ‘ol stocks, is that they never fail to surprise me. Only a month ago, I wrote an article about oil and why (based on analyst’s opinions) the price has increased so much, going up to $147 per barrel back in July. Well, just four short weeks later, oil has come down to under $108 per barrel. How in the world does oil spike up so quickly? More importantly, how does it plummet so drastically? Oil prices have decreased over 25% in the last four weeks, which makes me laugh when I think about all of those big shots from Goldman Sachs and such who predicted that oil will hit $200 by the end of summer.

Of course, there are a number of reasons (based on analyst’s opinions) as to why the price of oil has decreased so much. The economy of “powerful” countries, such as China, is weak and in jeopardy of a recession. Demand for products has decreased due to these countries having weak economies. Furthermore, specifically with China, the currency there has increased in value, which obviously makes exports less desirable, hence, causing a decrease in the output of goods. Yet, the average person would conclude that if a county’s currency appreciates in value, why would it be having economical problems? For that, stay tuned for another article…we’re talking about oil here.

The demand for gasoline is weak, which makes oil less appealing to investors. This further drives prices down, considering consumers of gasoline are finding other means of transportation, a phenomenon that is not all that phenomenal. It was only a matter of time for people to start getting sick of paying over $4.50 at the pump for a gallon of gas. Another reason why the price of oil has decreased is because of a stronger dollar in the last few weeks. Our currency is on the rise (yippie!), and this is causing investors to pull out of commodities (such as oil). Investors usually purchase commodities in order to hedge against inflation, and if the dollar is increasing in value, well, there isn’t as much hedging necessary.

There are many other factors involved, including hurricane Gustav not having the impact investors had anticipated for it to have. Also, refineries are starting to slowly come back online after being shut down for various reasons. So then, is it safe to say that the oil bubble has finally burst? Or is it just leaking for now but getting ready to grow larger again? Some analysts believe that prices can spike again due to unforeseen geopolitical events (could they be any more vague?) or OPEC deciding to cut back production (basically them saying,” We need to drive demand up, so we should decrease supply and drive prices up because this year I want to make $2 Billion instead of only $1 Billion”).

Whatever the reason is for oil prices decreasing, I really don’t care. As long as gas prices are decreasing, which they have gone down in the past month from a national average of $4.11 to $3.67 according to AAA, and then I’m a happy camper. Might I add that just because prices have gone down about $0.45 doesn’t mean I’m satisfied? It wasn’t too long ago that I could fill up the gas tank of a gas guzzling Camaro for no more than $35.00. I’d like to see those times again, very soon, so I can drive more like Jeff Gordon rather than Ms. Daisy.

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Get Higher Gas Mileage!

Taking care of your vehicle will make the car last the longest and it will give you the most mileages out of it. Some of the benefits are that you will have fewer repairs, your car will run smooth and won’t leave you stranded some where, will help on your gas mileage and more. Now you don’t need to be a car mechanic to know about your car. In this article I will provide you with steps on how to take care of your vehicle, and help you learn a little more.
The first thing I recommend to people is to have a repair manual for your vehicle. This will help you learn and understand a little more info about your car and what it will need. Remember getting to know your vehicle will help you out in the future plus when you take in to a mechanic shop you will know a little more about what the guy is talking about and this way you will know that you are not getting screwed. You can basically buy the manual at any dealer or even an auto parts store.
Here are some procedures for maintaining your car.
You can also find really good articles and info on 104Inc or you can also go to 104Automotive.com or 104Mechanic.com and more at 104Inc.com you can find anything you need in your daily life.
Weekly: Check all of your fluids and make sure you service your car all the time. This includes your radiator fluid only when it is cold so you don’t’ burn your self, transmission fluid, brake fluid, engine oil, power steering fluid and windshield washer fluid. Now most of these fluids are very important for the car to run properly except the windshield washer fluid is more of safety because it can clean your windshield if it is dirty or something covers it. Now in any of your fluids you notice that it smells or it is dirty then it is time for you to change it.
Bi Weekly: Check your tire pressure. You will need a tire pressure gauge, which you can find at almost all auto part stores or gas stations and they are not that expensive. Each tire valve will have a cap on it to protect it from rocks and dirt. You will have to unscrew the cap counter clock wise till it is off. Then stick the gage on the valve which will then tell you what Pressure your tires are. Now you have to check your manual, or the driver front door would have a sticker or actually another easier way would be to check your tire and it will have the info on it on what the pressure should be set to. Now remember when your tire is cold you will have an accurate reading, because once it gets warm the air in the tire will expand and won’t give you an accurate readings. Now if the tire pressure is low then you can basically go to any gas station or repair shop.
Tire Pressure Tip – When you have the pressure set properly on your tires then you will save some money on gas and by that you will be getting more mileage out of a full tank, also your tire won’t pull to one side if one of them has less or even more air in it.