Yarn: 2 Balls Lingarn -- or 140 meters of any worsted to heavy worsted cotton/linen blend. It would also be nice in hemp, or 100% linen, all cotton, or any tough, not-very-stretchy fiber.
Needles: size 13 double pointed needles; size 13 circular needles, 16"
*Note: the bag is started on double pointed needles; switch to the circular needles when it is feasible.
Base of Bag:
Cast on 9 stitches, divided on 3 double pointed needles. Join.
Round 1: (K1, yarn over) around (18 sts).
Rounds 2, 3, & 4: Knit (on Round 2 knit into the backs of the yarn overs to close them up a bit).
Round 5: (K1, yarn over) around (36 sts.)
Rounds 6, 7, 8, 9, 10, & 11: Knit (on Round 6 knit into the backs of the yarn overs to close them up a bit).
Round 12: (K1, yarn over) around (72 sts).
Round 13: Knit.
Round 14: Purl.
Round 15: Knit.
Round 16: Purl.
Body of Bag:
Round 17: (yarn over, K2tog) around.
Round 18: (K2tog, yarn over) around.
Repeat rows 17 & 18 until bag measures 12" from last purl row. You can make it longer or shorter at this point. Just remember to buy more yarn if you want to make the bag longer!
Bag Top & Handles
Knit two rounds, knitting into the backs of the previous row's yarn overs to close them.
Next round: Knit 9, bind off 18, knit 18, bind off 18, knit 9.
Next round: Knit 9, cast on 40 (over the space where you bound off 18 in the last row), knit 18, cast on 40 (over the space where you bound off 18 in the last row), knit 9. (116 sts) *You could cast on more here if you want longer handles. If you have extra yarn!!
Knit one round. Bind off all stitches.
Actually, you could make this bag big enough to carry laundry or beach stuff in, if you wanted. Just make the base larger (you would knit 12 more rounds plain after Round 12, increase by yarn-overing every other stitch, knit another 24 rounds, then do the increase round again -- that would make it plenty big; you could stop anywhere in between, of course); then knit a much higher body, maybe 24 inches?
Have fun knitting the bag! Go shopping!