Oil and Inflation

[MDZ]

Okay, I am hoping to get a few opinions here, and see if I am in the right understanding of the situation.

The way that it appears to me, since the Fed is raising rates to keep inflation down, there is going to be a smaller supply of money in our economy. (for this is the reason for the rate hikes) Since there is going to be less money moving around, it will become more valuable, and inflation will get under control.

Now my question is this, did the oil companies just make a brilliant move? The way it seems is that they quickly were able to raise prices, and reap the rewards from doing so. This would eventually lead to other prices having to increase as well. With the rate hikes, it makes sense to me that the price of gas will start to fall, and this will help keep other prices from jumping. By raising prices quickly, the oil companies were able to make a lot of money before other items started to rise and hurt our economy. Then they drop the price back down once the Fed, and other agencies are on the watch for inflation and price gouging. So really, the oil companies jumped prices, made money, and dropped them (maybe?) before anyone tried to control it.

Am I stating the obvious, missing something, or making a valid point? You tell me. I was just thinking about this the other day, and wanted to here what you all had to say.

[Stocktrading101]

That's a good question Mark.

Imma bump this so you can get some more views on the thread.

As for an answer your guess is as good as mine dude!

[bubbabubba]

Originally Posted by MDZ

The way that it appears to me, since the Fed is raising rates to keep inflation down, there is going to be a smaller supply of money in our economy. (for this is the reason for the rate hikes) Since there is going to be less money moving around, it will become more valuable, and inflation will get under control.

I know very little about the forex market, but that sounds like the US dollar will be a good play after the announcement, unless it has already been factored in to the equation since it's pretty much considered a sure thing that the Fed will do at least 1 more rate hike.

[WizTrader]

Yeah, for some reason I don't ever see 1.50 gasoline ever again...


Maybe mother nature, the god of everyone, is trying to tell us something...

[WallStGolfer31]

Originally Posted by WizTrader

Yeah, for some reason I don't ever see 1.50 gasoline ever again...


Maybe mother nature, the god of everyone, is trying to tell us something...

LOL and people in 1999 didn't ever see DOW at 7500 either (which happened late in 02').

People mispredicted oil just like this in the 70's screaming for no end to the rising prices, people thought YAHOO and AMZN were never going to have a less than a 3 digit multiple again, but alas, bubbles burst. History. Study it.

[WizTrader]

Originally Posted by WallStGolfer31

LOL and people in 1999 didn't ever see DOW at 7500 either (which happened late in 02').

People mispredicted oil just like this in the 70's screaming for no end to the rising prices, people thought YAHOO and AMZN were never going to have a less than a 3 digit multiple again, but alas, bubbles burst. History. Study it.

Ok, in my defense I wasn't feeling good yesterday.


I just thought I'd throw it out there you know.....

[MDZ]

Mark, when you say raise the prices of oil, do you mean NYMEX Crude oil, or oil products?

Hmm, I guess I was really refering to the price that I pay at the pump. Now I know that not ALL that money goes back to the oil companies, but my understanding is that a majority does. I just seems that they could quickly jump the price up, make profits before other businesses start to raise their prices, and then drop them back down when everyone starts watching inflation.

[WallStGolfer31]

Originally Posted by WizTrader

Ok, in my defense I wasn't feeling good yesterday.


I just thought I'd throw it out there you know.....

I was just saying that people get excited. This has happened 1000x in history, nobody seems to look back upon it.