One of my main contentions with Paul Krugman is that I don't believe the man understands even the basics of Price Theory. Yes, I am sure he can dazzle anyone with mathematical models on the subject, but nonetheless he represents the Progressive Wing of modern academic economics, and I have yet to meet a Progressive that can give me a clear explanation of what happens when prices change.
A number of prominent Congressional Democrats are publicly claiming that "speculation" is responsible for rising gasoline prices. (I guess that their claims are even worse than those of Krugman, who has written in his blog that gasoline prices have gone up because of economic activity in China, and because commodity prices are "volatile.")
Of course, those same speculators were at work when gasoline prices went down, and especially nearly four years ago when prices dropped from more than $4 a gallon in the summer of 2008 to about $1.50 near Christmas that same year. One wonders, if speculation occurs, how it seems that speculators are involved ONLY when gas prices go up.
I will be watching to see if Krugman joins this bandwagon, or if he writes something to the contrary. If he says nothing at all, then he is proving that as a political hack, he will protect the Democrats, even when they wallow in utter economic ignorance.
And, yes, I believe that when we have a commodity that is priced world-wide in dollars, and when the chairman of the Federal Reserve System openly attempts to shower the world with dollars, we are going to see price increases in things like crude oil and gasoline. Oh, and Krugman already has discounted that possibility.