More Fodder for Inflation / Deflation Debate: Higher Gasoline Prices

Those thinking that we've seen the last of inflation for a while might want to have a look at what gasoline prices have been doing lately; that is, relative to a year ago. For the second straight week, the national average for the price at the pump was higher than a year ago.
It may not look like much now, but, next month the comparisons will be done against gasoline that sold for as little as $1.61 a gallon last December. Some quick math indicates that the most recent national average of $2.69 a gallon would represent an increase of 68 percent.

This will show up in the inflation data before long. However, at the moment it looks like the year-over-year increases in energy prices may be offset, at least in part, by falling rents.

Comments

[John Evans:]

The price of gas is rising only and solely due to collusion. The world is and has been producing more oil than we need for years. How can the price rise we seen be predicated on anything but collusion? Why collude you ask? To protect Socialist Europe, with its very stringent price and wage controls, from a very ruinous deflationary spiral.

Nov 05 06:37 PM

[Carlos Lam:]

On Nov 05 06:37 PM John Evans wrote:

> The price of gas is rising only and solely due to collusion. The
> world is and has been producing more oil than we need for years.
> How can the price rise we seen be predicated on anything but collusion?

It IS collusion but not the type you believe it to be: it's collusion among the members of the Federal Reserve Board to continue driving the dollar lower. As they print more dollars, it takes a greater quantity of those dollars to buy a given amount of oil.

Nov 05 08:19 PM

[aussiereader4:]

This is year over year price not absolute numbers. Please stop peddling garbage data.

Nov 06 02:27 AM

[a fat panda:]

TIm,

As long as the value of the dollar shrinks and the size of the barrel doesn't, we will have rising oil prices. The ability of companies to pass that along will vary by industry depending upon pricing power. So Inflation will affect the economy on an uneven basis, pump gasoline providers have more pricing power than say hockey ticket sellers.

The government has decided to fight deflation with inflation instead of innovation. So beyond money printing inflation (which you are seeing in gasoline), you will eventually see more inflation in the broader economy as we wash-out the excess capacity out of the system that is currency keeping pricing power in check.

Nov 06 06:50 AM

[indeolie:]

>Socialist Europe, with its very stringent price and wage controls

Have you ever actually been to Europe or did you just hear about the place from talk radio?

Nov 06 08:00 AM

[Zmartmoney:]

I've been to Europe many times. It doesn't seem all that Socialist on the surface. Then, in conversation with an associate in Holland, he mentioned that he'll be moving into his "new" apartment, and will be meeting his new roommate. I asked him if he advertised for them, and he said that no, he didn't, that the government picks his roommate.... Huh?
And, then look around and realize that pretty much everything you see has been owned by the wealthy, landed gentry for centuries, and that the people on the street are just ants, with very little opportunity to break out of what they're allowed to do by the wealthy and the statists. Then, it starts looking like Socialism - much like what the Emporer Obama has planned for us. Ask him if he plans to set it all up and then go to sacking groceries in Harlem when he's done...

Nov 06 12:01 PM