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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Kirk © who wrote (14458)6/16/2000 5:58:00 PM
From: Archie Meeties  Read Replies (1) of 15132
 
I think you're confusing a high price of gasoline with inflation. A high price of gasoline does not cause inflation, but a rising cost of gasoline does. You need not look any further than the EU, which has a phenomenally high price of gasoline but a lower rate of inflation the we do see this.

The two things which are helpful to think about when you ask yourself, "Do changes in gasoline prices influence inflation" are these; 1) the dependency of the economy on gasoline, and 2) the rate at which gasoline is inflating.

The easiest way to address 1 is by comparing the per capita consumption of gasoline. Since we lead all other economies in this number by a significant margin, it takes no great step to realize that this economy, more than any other, will be affected by a rising price of crude and its products.

The rate at which gasoline inflates is also important because a slow pace of inflation will lead to efficiencies in its use, curtailing demand. But I doubt if they'll be a big decrease in commuted miles/citizen/day any time soon, even if gasoline breeches $2 everywhere. They'll just be a further slowing in consumer demand and higher manufacturing, transportation, food, and energy costs.

BTW, have you considered the consequence of the fed lowering rates on the price of oil?

A view from the inside.
simmonsco-intl.com
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