Here is an easily read and very complete analysis of why gasoline prices are likely to be very high this year and into the future. (see here) The author says:
In just a matter of a few days, gasoline prices have become a major worry for people pondering what might drag down the US economy....
Bottom line: The gas price sure is the result of global supply and demand, plus some unique US circumstances. Politicians, The Fed, speculators, and greedy corporations are hereby absolved.
The author gets hammered in the comments because he ignores inflationary pressures brought about by Fed expansionary policies and so forth. But what I find interesting is how we blame politicians when markets move in what perceive as negative ways and applaud markets when the movements are positive. Also, the world economy is complex and no one explanation is ever really enough.
This is a really helpful article, and I especially like the title "We like markets but like to blame politicians more."
ReplyDeleteI can distinctly remember last summer when gas prices spiked hearing multiple people complain about Obama's inability to drop gas prices. In reality, political agendas have proven to be somewhat irrelevant in the gas market.
There used to be a time when the global market meant America and the other countries. Today, this is no longer the situation. We need to become more aware of the existence of international influence on our economy.