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  • Economic Optimism Abounds As Crude Oil Plunges

    Each year at this time, we see a plethora of fresh forecasts for the New Year, and this year is certainly no exception, especially with the recent implosion in oil prices. There is widespread agreement that sharply lower energy prices will provide a boost to the global economy this year, especially for oil-importing nations including the US.

    As a result, almost all of the New Year forecasts that I have seen in recent days have been upbeat and revised higher with regard to the US economy. With that in mind, I thought it would be a good idea today to revisit the recent developments in the oil and energy markets over the last six months. What we have witnessed since last summer has been nothing short of breath-taking, to say the least!

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  • Average Gas Price Could Hit $4 by Labor Day... Or Not

    With the recent jump in gasoline prices, several energy analysts are forecasting that prices at the pump will top $4 a gallon (national average) later this summer. On the other hand, some analysts feel that gas prices will only go up another 5-10 cents a gallon just ahead, and then move lower in the fall. Of course, no one knows for sure. Today, we’ll take a look at what’s driving gas prices higher.

    But before we get to that discussion, let’s take a quick look at the latest economic reports, most of which were disappointing. The only good news here – if you can call it that – is the economic data of late is not encouraging enough for the Fed to begin tapering its bond purchases anytime soon, as I discussed at length in last week’s E-Letter.

    The Fed reported recently that Americans’ cumulative net worth has finally hit a new record high of $70.3 trillion in the 1Q, up $3 trillion from the 4Q of 2012. While this is good news on the surface, much of the increase came as a result of Americans spending less and paying off their debts. Slower growth in consumer spending is not good for the economy.

    Last but certainly not least, I will reveal the results from our recent Financial Literacy Test. This quiz was wildly popular with my readers. And today, I’ll tell you how you did – which was really good. You may be surprised at the results, including the two questions that stumped about half of those taking the test. My thanks to all who participated!

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  • Carbon Emissions: Environmental Or Political Issue?

    I don't know if you've noticed, but the global warming issue is now increasingly referred to as "climate change." Believers say that the new name conveys the idea that there are more changes in store than rising temperatures. Critics, however, say that the name change was necessary because the warming has ceased in recent years. Whatever your opinion on climate change, it's likely that you've noticed that it is a polarizing issue, with most people being either adamantly for or against taking steps to reduce man-made greenhouse gasses.

    I will not even attempt to enter the fray of whether or not climate change is the result of human activity. What I do know, however, is that the economic consequences of trying to reduce greenhouse gasses is going to cost a lot, and most of the money will come from the pockets of American taxpayers either as taxes or increased costs of goods and services. With that in mind, this week I'm reprinting an excellent article from Peter Huber. He addresses the likelihood of meaningful reductions in greenhouse gasses when only developed countries are required to participate. No matter where you stand on the climate change issue, I think you'll find his analysis to be thought provoking....
  • Are "Speculators" Controlling Oil Prices?

    With the recent spike in oil prices above $140 a barrel, and gasoline at $4.00 or above, Americans are crying foul. Someone must be to blame. In recent weeks, blame has increasingly been focused on so-called "speculators" in the oil and energy futures markets. This week, I take an in-depth look at the role of speculators in the futures markets and how much, or how little, they may be affecting the prices of oil and gasoline. I also review a recent Merrill Lynch study on the role of speculators in the energy markets. This should be one of my more interesting E-Letters....
  • The Corn Ethanol Myth & My Retirement

    This week, we explore the ethanol myth, and why not, since corn prices have recently exploded to over $6 per bushel, an all-time record high. As a result, farmers are planting corn everywhere they can and selling much of it to ethanol producers. But upon closer examination, we find that corn ethanol is not a very efficient fuel to produce or consume, especially if we strip away the massive government subsidy of $1.90 per gallon....