By Michael Schaus
Wednesday, June 18, 2014
It must be nice being an economist for a living. Much
like meteorologists, university professors, and the Clintons, getting almost
everything wrong doesn’t seem to impact job security. Remember when economists
were forecasting 3 percent GDP growth for 2014? Well, that is pretty much
already debunked, after the first quarter contracted by more than a full
percent; but the rest of the year might have its own distinct setbacks. The
biggest “headwind” we can expect in the second half of 2014 can be summed up in
two words: Oil prices.
David Williams, with Williams Edge, expects the price of
crude to increase by “biblical” proportions in the near term. And while his
technical analysis is sound, it is further buoyed by the events unfolding
throughout the Middle East. Some experts have even predicted oil climbing above
$125 a barrel. Let’s face it, $125 oil isn’t exactly going to help an economy
that is clawing and scratching for the most modest of gains.
Hooray! Higher gas prices! And this hike in prices, of
course, will conveniently coincide with increased inflation, stagnating wages,
record joblessness, and anemic economic growth. (Haven’t we seen this movie
before?)
As prices start to climb, those evil speculators and oil
companies will quickly earn the wrath of liberal pundits and clueless CNBC
analysts. And, really, the message is bound to stick. I mean, it’s pretty easy
for people to hold a little grudge against big businesses when they’re watching
those numbers roll over at their local gas station. But, the truth is much simpler
than some convoluted conspiracy between “speculators” and oil giants… After
all, contrary to the rants of anti-business liberals, oil companies actually
prefer slightly lower prices. Unreasonably high prices tend to curb
consumption; and let’s face it: You can charge anything you want for a gallon
of gasoline, but if people aren’t buying it you won’t make much of a profit.
The bigger news (yes… there are more important things
than the profit statement for Exxon Mobile) is what such prices will do to our
already fragile economy. And the blame can be put squarely on the shoulders of
our almighty central planners in DC.
Our Campaigner in Chief has done his best to avoid
creating an environment that encourages job creation and economic growth. And,
while the hike in oil prices might not have been completely avoidable, a more
robust economy would certainly temper the impact of climbing crude prices.
Instead of allowing businesses the opportunity to expand, hire, and increase
wages, our all-knowing DC politicos have drowned the economy in regulation and
crony-capitalist pet projects.
The Chevy Volt, new CAFE Standards, and treadmill powered
public transit (that might not actually be a thing) aren’t the answer. For
starters, some semblance of coherent foreign policy would be a more effective
hedge against outrageous oil prices. More domestic production would also go a
long way. But, most importantly, increases in pump-prices could be weathered a
whole lot easier if Americans had seen their wealth growing over the last few
years. Ya know, if incomes were climbing, jobs were being created, and
consumers weren’t quite so strapped for cash, we might be able to shell out a
few more bucks to fill our gas tanks without it taking a sizeable bite out of
an already anemic “recovery”.
It wasn’t too long ago that CNBC pundits, NYT editors,
and CNN anchors were willing to blame the White House for any (and every)
increase in oil prices… But I guess things changed once “W” returned to his
ranch in Texas. Apparently Obamanomics’ profoundly negative impact on household
income, and our Nobel Laureate’s childish foreign policy, have no impact on the
coming spike in oil prices… Right?
So, let’s recap: Millions of Americans out of work,
potentially outrageous oil prices, mass chaos in the Middle East, increased
inflation (assuming the Fed has their way), and stagnating wages… Hope and
Change apparently looks an awful lot like 1979.
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