Seems that the continuing instability in Iran, and threats of closing or disrupting ocean freight traffic in the Strait of Hormuz, are to blame for the creeping rise in gasoline prices. 

The Strait of Hormuz is considered one of the most, if not the most strategic strait of water on the planet.  Through its waters, in giant ocean-going tankers, passes much of the oil from Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates. Bordered by Iran, Oman's Musandam Peninsula and the United Arab Emirates, this stretch of water is of obvious military significance, and any disruption, or fear of disruption, could send prices at the pump soaring to new highs.  Or so we are lead to believe is the cause?

This type of geopolitical uneasiness is music to the ears of speculators.  What speculators do is bet on what price oil will reach by a future date.  Speculators make no investment in oils itself, derivatives are the instrument of choice.  A derivatives value is based on the value of oil and if the price will increase or decrease in the future.  Speculators never touch the oil, they never even buy or sell it; they just bet on the future.

Speculators with large capital, and you have to have large capital to play at this game, can purchase a substantial number of futures derivatives at a price that can actually direct the market.

A speculator is much like Entertainment Tonight, their business is rumor and gossip, not fact.  Buy creating this gossip whirlwind, and buying large amounts of futures at higher prices, producers are encouraged to horde the valuable commodity in hopes that they will get a higher price in the future.  Future prices go up based on the higher anticipated rate and current prices go up due to decreased amount of oil on the market.  A double whammy.

Investment firms that can influence the oil futures market stand to make a lot; oil companies that both produce the commodity and drive prices up of their product up through oil futures derivatives stand to make even more.

Investigations into the unregulated oil futures exchanges turned up major financial institutions like Goldman Sachs and Citigroup. But it also revealed energy producers like Vitol, a Swiss company that owned 11 percent of the oil futures contracts on the New York Mercantile Exchange alone [source: Washington Post].

As a result of speculation among these and other major players, an estimated 60 percent of the price of oil per barrel was added; a $100 barrel of oil, in reality, should cost $40 [source: Engdahl].

Not sure we can blame President Mahmoud Ahmadinejad for our next expensive trip to the pump.  I only wish those responsible would sport white windbreakers too.  They would be easier to spot.  What are we going to do?  Sua Sponte.

Bradford C. Bruner for Sua Sponte Wealth Management

As we read every day, and have for the past four years, these are the toughest economic times we will see in our generation.  What are we passing onto our children?  With more and more adults unemployed, under-employed or newly employed but with savings depleted as a result of weathering the storm, we are passing on a huge debt burden to our next generation.

There was a time when planning for college by saving and investing for the future was the norm.  It took a few crashes, or in my case Bernie Ebbers and Joe Nachio to wipe out hard earned investments.  Then it was the hope of home equity.  As housing prices soared, it seemed like a little comfort was had knowing that the value could help fund a better future for our children.  That was short lived.  Is the "debt to fund education" the next tsunami lurking on the horizon?  We think so.

Credit card debt in the US is roughly 3/4 of a trillion dollars. Debt from student loans is $1 trillion. The high cost of college tuition and high interest rates from private lenders (even 8% from the US Government) all lead to the building bubble. Prices keep going up, wages for college grads, if you can get a job, keep going down. 

For the 2009–10 academic year, annual prices for undergraduate tuition, room, and board were estimated to be $12,804 at public institutions and $32,184 at private institutions. Between 1999–2000 and 2009–10, prices for undergraduate tuition, room, and board at public institutions rose 37 percent, and prices at private institutions rose 25 percent, after adjustment for inflation. (SOURCE:U.S. Department of Education, National Center for Education Statistics. (2011). Digest of Education Statistics, 2010 (NCES 2011-015).

Estimate is that this bomb will explode at the beginning of 2013.  Unemployment will remain above 8% and those who entered college at the beginning of this crisis will find themselves unemployed, or under-employed, and strapped with a mountain of debt that no student will be able to pay off. No discipline will be immune. 

This phenomenon, compounded by guilt ridden parents using retirement savings to shoulder the burden, is a formula for disaster. Who are they going to get help from?  Sua Sponte. 

Bradford C. Bruner for Sua Sponte Wealth Management