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Does AG really want oil prices high? Looks like it...
JW
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http://www.businessweek.com/@@YGnANWYQQG8RvgAA/premium/00_14/b3675086.ht
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Oil: Greenspan's 'Safety Valve'?
Price hikes should moderate growth
With surging energy costs raising the hackles of households and
businesses, Republicans and Democrats are busy promising relief to
consumers. What they aren't talking about, however, is how the rise in
oil prices may in part be a positive development.
The fact is that higher energy costs may prove critical in fostering the
economic soft landing the Federal Reserve is intent on engineering.
Calling the oil price surge ''Alan Greenspan's hidden safety valve,''
economist M. Cary Leahey of Deutsche Bank points out that it has added
about $50 billion to household energy bills over the past year, cutting
sharply into funds available for other outlays. This raises the
interesting question of how much stronger the supercharged U.S. economy
would now be if energy prices had stayed low.
To be sure, the runup in energy costs has added a percentage point to
the consumer price index over the past year--a trend the Fed can't
ignore. But it has hardly affected core consumer prices, and most
economists doubt that it will unless such costs stay high a lot longer.
They also think that rising gasoline prices will inevitably slow
consumer spending on motor vehicles and other items in the months ahead.
Thus, there's a fair chance that high energy prices will actually help
the Fed to secure the moderation in economic growth that it and the
financial markets have been hoping for.
By GENE KORETZ
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