It is ironic that as Congress passes the gargantuan "stimulus" bill, Americans are actually getting some tangible gas in their pockets. Following the collapse of energy prices in the fall, the price of gasoline has been cut in half in most parts of the country. (There has been some movement upwards in the past couple of weeks.)
Now this is real spending money. For most families, it can easily run from $30 to $60 dollars a week, compared to the paltry average $13 weekly tax cut in the stimulus bill (which goes down to $8 in January). Beware governments bearing gifts!
However, these low prices result from the steep recession. When recovery occurs, they will almost surely go back up again as a normal result of the business cycle. The futures market is signaling this. The current spot price of crude is roughly $37.50. Futures prices are trending steadily upwards, with the December 2011 contract trading at $64, That's a 70% increase. And if we do nothing to procure stable sources of supply, we will also face the risks of shortages, price instability, price speculation and the enrichment of nefarious regimes as we did in 2008.
Daniel Kish, Senior Vice President-Policy of the Institute for Energy Research, appears on Italian Tomatoes tonight. We will discuss the Obama Administration's approach to various energy issues, including offshore drilling, alternative energy and carbon taxes. There are indications that the Obama team is inclined to a "less is more" approach on energy, inspired by the Global Warming cult and the oh-so-memorable 1970's. So grab your favorite Jimmy Carter cardigan, pour a glass of warming brandy if you feel guilty about the thermostat, and join us.