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Price Trends: Gasoline and CPI Are Twins
Ron Cook, The Cultural Economist
Just for the fun of it, I calculated the month to month change in the price of American gasoline (all grades) versus the month to month change in the Consumer Price Index (CPI-U), from January 2004 through October, 2008. Although the correlation is not perfect, it does show how the rate of inflation tracks the price of gasoline (and the oil from which gasoline is made). The left scale of the following chart shows the month to month change in CPI-U as reported by the Department of Labor, Bureau of Labor Statistics (BLS). The right scale shows the month to month change in the price of gasoline as reported by The Department of Energy (DOE).
This is important stuff. Despite a temporary decline, the long term trend for the price of oil (and hence gasoline) is UP. Unless we humans find an alternative source of low cost fuel to replace the portability and high energy content of oil, the long term outlook for inflation is also UP. As shown by this chart, the price of oil has been (and will continue to be) volatile. We can assume the rate of inflation will be equally volatile. Since the price of oil will become an increasingly important component of what happens next to the world economy, the development of alternative (lower cost) energy options assumes increasing importance.
(11 December 2008)
Recent articles by long-time EB contributor Ron Cooke:
Unemployment: How Do We Measure A Shortage Of Work?
The Perfect (Economic) Storm
Davos confronted by peak of distrust
Andrew Edgecliffe-Johnson, Financial Times
The 2,000-odd business luminaries, political leaders, campaigners and members of the media descending on the Swiss mountain resort of Davos this week are, according to the World Economic Forum’s motto, dedicated to improving the state of the world.
This year, by common consent, they have a fuller and more urgent agenda than ever. Yet they have never been less trusted to provide the answer to the financial and social troubles they are supposed to be addressing.
That is the stark conclusion of the 10th edition of the Edelman Trust Barometer, a survey of almost 4,500 “opinion leaders” across 20 countries that aims to measure the credibility of groups ranging from non-governmental organisations to stock market analysts.
(26 January 2009)
Putin and Wen, ‘Cocky’ No More, Pay Davos Price for Recession
Lee Spears and Lyubov Pronina, Bloomberg
When Wen Jiabao and Vladimir Putin were invited to speak to the World Economic Forum, China and Russia were supposed to be saviors of the global economy as the U.S. fell into recession.
No more.
Today, as the Chinese premier and Russian prime minister address the opening of the annual meeting in Davos, Switzerland, they’re disappointing those who bet their economies would help power the world through the slump and weakening their case for a greater say among global leaders.
(28 January 2009)
