Earlier we discussed some of the factors behind the recent surge in oil and gasoline prices.
One thing that’s worth emphasising: The Fed’s/cheap money is NOT a compelling culprit.
This is not a minor point, since the country’s largest business publication, WSJ, recently editorialised on the subject, saying that it was the Fed’s fault.
In a post up this morning, economists James Hamiltion takes issue with WSJ noting how little other commodities have moved at the same time as oil.
Below I’ve graphed the price of oil along with 9 other commodities that I could find quickly on Webstract. Oil increased 22% in the last 3 months of 2011; the next biggest gainer over this period was copper, which was up less than 4%, and most were actually down over those 3 months. Since the start of this year, the metals have climbed, though their gain is still typically less than half that of oil. Most agricultural commodities are still below their levels of the start of October.
He also points out this 1-year chart of other various metals:
Again, oil is a clear outlier — not what you’d expect to see in an environment of inflationary overheating or monetary debasement.
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