What Energy Crisis?
A new commentary from Deloitte chief economist Carl Steidtmann provides a useful antidote to the political hyperventilating over gas prices. In Economist’s Corner: The oil price debate Steidtmann comments that political interventions to deal with rising energy prices can hurt more than help.
One useful chart illustrates the fact that, adjusted for inflation and productivity, the price of oil, though trending upwards, is still well below historic highs. Another shows that the share of consumer spending on gas has stayed in the 3-4% range in the last few years, compared with between 4 and 5% in most of the 1960s and 1970s.
The price of gasoline by volume is less today than the price of bottled designer water and just about as important.
Steidtmann warns against overzealous government intervention. His prescription: “It really isn’t rocket science. As a nation we should pursue policies that increase supply and reduce demand through conservation.”
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