The US Energy Landscape Has Changed. What That Means for Inflation

RFF President and CEO shares his insights on energy inflation in a column he wrote for Barron's.

View on Barron's website

Date

Oct. 20, 2021

News Type

Media Highlight

Source

Barron's

In only six months’ time, the script on energy prices has flipped. Headlines about record-low energy prices have been replaced by fears of multiyear highs. While Covid-shocked economies have recovered, energy prices have soared and the consumer price index—a helpful tool to measure price change over time—has risen much faster than normal...

To be sure, increasing energy prices and related inflationary concerns are historically associated with shocks to the price of fuels, particularly oil and the products derived from it such as gasoline and fuel oil. While the relationship between fuel prices and inflation has weakened over the past few decades, it’s understandable that many consumers feel anxious about inflation. Many of us remember the energy crises of the 1970s, when both oil prices and inflation skyrocketed as crude-oil exports from the Middle East plummeted. That crisis was compounded by an economic recession, so it is no wonder that people today are left fearful of a broader economic reaction to increasing oil prices. But it is important to remember how much the economy has changed since then."

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