Sit Still, You Won’t Feel A Thing
I sure am glad the U.S. Department of Labor is around. Otherwise I’d really be feeling the pinch of higher food and energy prices. See if you can follow this logic: the Labor Department reported today consumer prices (read: inflation) rose 0.2% in April, which economists would call “essentially flat.” This despite the fact that food prices jumped 18% in April, the biggest rise in nearly two decades. And clearly energy prices have risen, as well, although get this: Labor says gasoline prices actually fell in April, offsetting a 4.8% increase in natural gas prices. How, you may ask, could Labor think gasoline prices fell last month? Well, as the Associated Press explains,

The reported drop in gasoline prices reflected the government’s accounting process, which discounts expected seasonal price changes. Since gasoline prices normally rise significantly in April, the 5.6% rise in prices for the month turned into a 2% drop after the government adjusted for normal seasonal changes.

This makes sense. The government has been applying the same kind of logic to the budget for years.

Predictable Irrationality
Naturally, stocks rallied on the good news.

Taking Charge
From the people who brought you the gas tax holiday comes this latest gem.

The administration reiterated skepticism about the impact of the bill on Tuesday, with one spokesman, Scott M. Stanzel, saying “there is no evidence that it will affect the price of oil or gasoline in a meaningful way.”

But drilling for oil in the Arctic National Wildlife Refuge would.

I’m a Congresswoman, Not a Mathematician
On what planet are Rep. Nancy Pelosi’s (D-Calif.) advisors living?
Estimates of the impact of suspending the deposits varied. Some economists predicted the impact would be negligible, while Speaker Nancy Pelosi, citing others who have studied the issue, said prices could drop 5 to 24 cents a gallon.

How is increasing the daily supply of oil on the market by 70,000 barrels per day—when the United States uses 20 million barrels per day, 68% of which goes to gasoline production—going to affect prices that much? Seventy thousand barrels represents half a percent of the crude oil shipped to U.S. refineries, so far as I can tell. Which is all just a long-winded way of saying what Joe Barton of Texas said: “If all the members of the House would go out onto the steps and clap our hands three times and say, ‘Down prices, down prices,’ that would have as much impact as passing this bill.”

It’s all the Hedge Funds’ Fault
Still more proof that government, in this case legislators, don’t get it can be found in Christopher Faille’s piece on the “blame-the-speculators” mentality in Washington.

My Prices Are Falling, And I Can’t Get Them Up
Meanwhile, over at the refineries. . . .

“They are not sitting in a boardroom and colluding, but they can see easily enough where their benefit lies, and it doesn’t lie in a price war,” said Judy Dugan, the research director at Consumer Watch. “In a truly competitive market, you might see some of these providers try to improve their market share by reducing prices. But this is not happening. They are all better off by restricting production to keep prices up.”

Food Fight
I have to admit that when I heard U.S. Secretary of State Condoleezza Rice say a couple of weeks ago that rising standards of living in developing nations was part of the reason for the rise in global food prices, I thought it made sense as part of a series of events and policy decisions that include droughts, flooding and the shift of farmland to production of biofuels. Apparently the folks in those developing nations, including India, didn’t see it quite so innocuously.

This entry was posted on Wednesday, May 14th, 2008 at 6:38 pm and is filed under Wednesday's Random Shots. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.