This week, I was well into composing the next installment when an issue of “Letters from an American” by Heather Cox Richardson (Professor of History, Boston College) came across my (virtual) desk. Not only am I a huge fan of her work (and a paid subscriber), but I think she nicely summarized the current nexus between history, politics, the economy, and oil prices. So I recommend that you read it instead. [You can skip the parts about our remarkable economic recovery, the supply chain, the Fed raising interest rates, and the pre-emptive missile strike on Mexico that Mark Esper thwarted :-)]
There’s only one data-centric point that I want to quibble with: Prof. Richardson writes:
The skyrocketing price of oil, which has translated into soaring gasoline prices, has also driven up prices: the American Automobile Association says the average price of a gallon of gas nationally today is $4.279 a gallon (prices are significantly cheaper in the South than in the West, where in some places they are more than $5.75 a gallon). Higher gas prices drive up the price of everything by increasing the costs of shipping even further.
The price of oil isn’t “skyrocketing”. It has almost completely recovered to its trajectory before the Russian invasion. The corresponding price of gasoline ought to be somewhere between $3.00 and $3.50 per gallon. Speculators, hoarding, and anxiety drive gasoline prices up, not commodity economics! And supply anxiety is causing consumers to willingly pay more for everything, lining the pockets of the distributors.
Read my earlier installment for context:
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