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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Get Ready for Higher Gas Prices

On most television dramas, there's the main plot line, called the "A Story," and the secondary plot line, which is the "B Story."

If the market performance is today's A Story, the B Story has become the price of oil.

As of about 2:30 this afternoon, oil set for October delivery had shot up more than $25 per barrel -- the biggest one-day spike in history -- and briefly touched $130 per barrel, before falling back to the high $120s.

Oil contracts go on a month-by-month basis, so price goes up or down based on a number of factors, including supply, expected demand, speculation and so on. Oil buyers buy futures as a hedge against price spikes. For instance, oil set for November delivery is selling for about $110 per barrel -- lower than October oil, but also rising.

Today marks the fourth straight day of the oil rally.

The reason? Analysts say that the federal bailout will further depress the value of the dollar, so investors are looking for safe-haven investments, such as oil. The more buyers, the higher the price per barrel goes.

Oil reached its record high of $147.27 per barrel in July, and gas prices at the pump rose accordingly.

Which means drivers may see gasoline prices climbing back toward the $4 per gallon figure.

-- Frank Ahrens

By Frank Ahrens  |  September 22, 2008; 2:51 PM ET
Categories:  The Ticker  
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Comments

I think you mean $110 per barrel--not per gallon.

Posted by: Jon Morgan | September 22, 1908 3:20 PM | Report abuse

It's time for the government regulate this commidity. Speculators should pay 70% tax on their gains.

Posted by: mzbond | September 22, 1908 3:26 PM | Report abuse

oil spiked over 25 a barrel today due to bush's half baked bailout of his legacy.

yup.

everything george touches turns to sh*t.

Posted by: BOB | September 22, 1908 3:39 PM | Report abuse

"It's time for the government regulate this commidity. Speculators should pay 70% tax on their gains."

Than you should be willing to give up on your retirement account, because if gains are taxed at 70%, no one would invest. Speculators earn their lumps when commodities drop. Ridiculous taxes on gains will just mean that less of your money will be invested in markets that show high returns, and will likely only gain 2-3% per year. You try to retire at age 65 with 40 years of contributions that only gained at 2-3%. I bet you couldn't last more than 5 years on that mzbond!

Posted by: George | September 22, 1908 3:41 PM | Report abuse

25 in one day (What happened did we run out oil??) These lawmakers are bunch of fools, Most of oil price rise is speculation and they don't have guts to regulate.

What goes up comes down. Oid price is going fall soon and then we'll find Bush cronies lost 500 Billion and taxpayers have to bail them out too or else economy will falter. I am sick of fat cat bailouts.

Posted by: Optimist | September 22, 1908 3:42 PM | Report abuse

morgan wrote, "I think you mean $110 per barrel--not per gallon."

------------------

a freudian slip?

Posted by: BOB | September 22, 1908 3:42 PM | Report abuse

Government intervention caused this whole mess when they printed up a bunch of money and lower the interest rates in 2001. Thats when banks started giving out these high risk loans because it was cheap for them to borrow money and more people bought houses becuase it was cheap to borrow money which artificially raised the price of houses. Maybe instead of bailing these lenders out they should let them fail and let investors lose a lot of money for taking to many riskey investments so people don't do this dumb stuff in the future.

Posted by: RJ | September 22, 1908 3:48 PM | Report abuse

Hi, Jon: Thanks for the catch -- fixed.

Posted by: Frank Ahrens | September 22, 1908 3:52 PM | Report abuse

The oil spike represents the clear intent of Henry Paulson's bailout: to drive up oil prices to $200 per barrel to reward Bush Pioneers in the petroleum industry and the lucrative multi-billion-dollar offshore holdings of Richard Milhous Cheney.

Posted by: Mark | September 22, 1908 3:59 PM | Report abuse

Kudos to Bob. A Freudian slip, indeed. Took the words right out of my mouth.

Posted by: Brian Hoyle | September 22, 1908 4:02 PM | Report abuse

Short sellers looking to prudently manage their risk are banned in the name or "Orderly" markets, yet the price of oil is allowed to spike 25 dollars and NOT A WORD from the Bush Crowd. Talk about taking care of your buddies. Congress: WHERE IS THE OUTRAGE!!!

Posted by: Shark89 | September 22, 1908 4:03 PM | Report abuse

To "Mark 'the whimp' no last name", why even bother posting such innane and partisan comments about $200 oil, don't waste our time.

Posted by: Vasily Kandinskiwiczs | September 22, 1908 4:30 PM | Report abuse

What goes up will not necessarily go down. The underlying problem with oil is that the supply is finite. Every oil field has a supply curve, and most of them are in decline right now. So even if oil prices stabilize, the era of cheap oil is still over. Not realizing this and starting to plan for it (ie developing alternatives, improving efficiency, etc) is our own short sightedness and will be our ultimate downfall as a society.

Posted by: MP | September 22, 1908 4:42 PM | Report abuse

Since there was no global catastrophe that caused a change in supply, you can chalk this up to speculators. Thus, the largest increase in Oil cost was due to some one "speculating". Drill here, drill now? Yah, right. Drill the heads of the speculators, and watch Oil prices plummet.
Another Phil Gramm masterpiece... the Enron loophole, which allows speculators to inflate Oil prices.

Posted by: JakeD's shadow | September 22, 1908 4:49 PM | Report abuse

But but but what about the drilling! If we just Drill, Baby, Drill then the price of oil will fall! Right? Right?

Posted by: Elrod | September 22, 1908 4:49 PM | Report abuse

The $700 billion bailout plan is a terrible idea. The U.S. doesn't have that amount of money, so it has to be borrowed from somebody.

Who has that much money? China, Japan, Korea, Saudi Arabia, Russia, United Arab Emirates, Kuwait, Venezuela.But none of those countries would be willing to lend to the U.S. unless they get some good collateral.

When the Mexicans faced a similar crisis in 1995, they had to put their country's OIL RESERVES as collateral in order to get an IMF rescue loan.

What collateral can the U.S. offer?

Posted by: berrymonster | September 22, 1908 4:54 PM | Report abuse

Vasily Kandinskiwiczs

Otherwise known as Vlad Putin's lapdog in the Russian Mafia,

Yes, we all know your boss has seen into George W.'s brain and started laughing.

Now, with Vlad Gone Mad having $60 billion in the bank and nukes under his thumb, we can expect $200 per barrel oil and seeing Cowboy Vlad make more trips to see his pals in Texas like Richard Milhous Cheney.

Posted by: Mark | September 22, 1908 5:03 PM | Report abuse

Capital at work for cheap easy profit rules.

Posted by: stan | September 22, 1908 5:04 PM | Report abuse

If this government, "of the people, by the people, for the people", wants to do what is right for the people; they will bail out the citizens by controlling the price of oil. Other socialists governments have nationalized energy; the US only has nationalized wall streets. The He doubletoothpicks with the citizens.

Posted by: linda521 | September 22, 1908 5:12 PM | Report abuse

For everyone who wants a cap on oil, how about if we put a cap on your paycheck?
You think it is ok for the other guy.
How do you suggeset we regulate speculators on the overseas markets? We can't. Or do you wnat to tax it until we have a shortage at the pump like Jimmy Carter did?

Posted by: Sternberg | September 22, 1908 5:19 PM | Report abuse

WOW the shoes keep dropping...

Just cannot figure why anyone would consider McCaine..

If he won he would be co-opted by the NEOCONS to govern the country.

ISA

Posted by: ISA Gallego | September 22, 1908 5:25 PM | Report abuse

I think the spike in oil prices is as much about betting against the US dollar (which oil is priced in) as it is about supply and demand of oil.

Those parts of the investment community that are not in the financial sector are worrying that borrowing another $600 billion dollars from other countries is likely to lead to a big depreciation of the US$.

Note gold and silver are also up dramatically today.

Posted by: Anonymous | September 22, 1908 5:31 PM | Report abuse

Under Comrade Bush and Comrade McCain and the Socialist Republicans, you can be sure that the Party Elites will dine at the trough of higher oil prices.

It's what the America-hating Socialist Red Bushies do.

Sad how much they hate America, after all we did for them.

Posted by: Will in Seattle | September 22, 1908 5:31 PM | Report abuse

Mccain the deregulater

Lets extend deregulation! The age of consent....12!!!!
No stop signs.

The only limit on speed on the beltway.... The speed of light!

No regulation re amount of alcahol in your bloodstream!


what kind of world would ensue... check whats happened with the economy!

Posted by: choctaws | September 22, 1908 5:49 PM | Report abuse

In U.S., OIL is Wasted AT Incredible Rate. Having Lived in Steam Heated Building for 4 years was quite experience.

It started at Boiler running 40 minutes per hour, FULL BLAST, on, starting in mid september 24/7 GOD, What Heat, 107F.Finally it was at 8 minutes per hour On Time in last year & Temp down to more reasonable 94F. 3,000 Gallons of Fuel Wasted Every Month. Yet, if noone had complained, that specfic boiler wpuld be Burning heat straight up Flue right now, near Constantly. Attitude is Problem, Price is Very Low.

Signed:PHYSICIAN THOMAS STEWART VON DRASHEK M.D.

Posted by: thomasxstewart | September 22, 1908 6:17 PM | Report abuse

Naturally they rose. Pelosi just prevented Drill, Drill, Drill so the future for OPEC et al looks great again.

Posted by: adpack | September 22, 1908 6:52 PM | Report abuse

If they can put a halt to short selling of financial stocks, they should put an end to futures trading on oil. Speculators should have no place in determining the price of oil. Talk about messing with supply and demand (not that I am a free trader, or even believe there is such a thing).

Short of nationalizing the oil industry, or treating it like a public utility, take the volatility out of the market by ending the kind of speculation that is behind all of these huge collapses. These bailouts don't benefit me any...

Posted by: WDR | September 22, 1908 7:28 PM | Report abuse

Someone should take a drill bit and stick it up Phil Gramm's fat flabby butt cheeks.

Posted by: Phil Gram is a butthole | September 22, 1908 7:51 PM | Report abuse

I've got a drill you can use, Sailor!!

Posted by: Sen. Larry Craig, (R-ID) | September 22, 1908 7:53 PM | Report abuse

Tax windfall profits on speculators? Hm. Suppose you win Powerball. You're guaranteed a lot of money, right? Wait a sec ... you're a speculator too, you don't deserve the money anymore than those evil Wall Street types do, you should pay it all to society. Yeah, that's the ticket! The way to prosperity is to make certain that nobody who takes a chance has a chance. Riiiight. *That* will encourage people to invent a cure for cancer.

Posted by: JeffRandom | September 22, 1908 8:08 PM | Report abuse

This thing is out of whack. It is time to take bizarre measures, such hiring Eliot Spitze, the disgraced governor of New York to investigate it. He could redeem some measure of respect for himself but only because the oilmen and their investors are so much worse.

Posted by: Jobes | September 22, 1908 8:28 PM | Report abuse

I have been saying it: The imbecil Decider is an anti american stupid idiot, every time he has a plan or every time he opens his mouth, it is a disgrace...

Posted by: whatfor | September 22, 1908 8:28 PM | Report abuse

US Govt spends 1 trillion dollars they don't have.

The use dollar is now worth much less than it was on friday.

Oil is traded in dollars.

Price of of oil is now more expensive.

Seems simple econ to me.

Posted by: Anonymous | September 22, 1908 8:32 PM | Report abuse

Does anyone REALLY think the price of gas will go down as a result of drilling off America's coast?

Posted by: Nite Owl | September 22, 1908 8:50 PM | Report abuse

I am moving my family to Canada. The U.S. has become one of the most disgraceful places on Earth. Greed, Ignorance, Racism, and Just Plain Dumb seems to be what the country is made of!

Wake up America, they have us by the balls and they keep squeezing!

Posted by: Tanya | September 22, 1908 8:58 PM | Report abuse

buy and hold all oil and natural gas etf's every sept you decide when to take profit buy oil now its cheap well i think so hope this makes u a ton of money that is worthless so make 2 tons

--------

Posted by: teezy baby | September 26, 1908 9:57 PM | Report abuse

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