(WSJ) High Oil Prices Complicate Housing Recovery

Posted by Kendall Harmon

Bigger fuel bills are making this winter harsher for many households. The Energy Information Administration estimates the average household in the Northeast will spend $2,431 on heating oil this winter, up 23.8% from last winter’s total. Businesses from airlines to chemical makers are also facing higher costs.

Most economists think the rise in fuel costs will deter output growth rather than boost inflation. That is because higher energy costs leave less money available to spend on other goods. Given the slack in labor markets and capacity, higher fuel costs won’t translate much into higher wages or prices that would push up core inflation.

The oil-related drag on output, however, means fewer jobs. And faster job growth was a key support for housing in 2011....

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Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifePersonal FinanceEnergy, Natural Resources* International News & CommentaryAfricaLibyaMiddle East

3 Comments
Posted March 2, 2011 at 6:26 am

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1. Militaris Artifex wrote:

There is probably very little reason for concern that

the rise in fuel costs will deter output growth rather than boost inflation.

Given the sheer magnitude of (a) the size of the existing federal debt, and (b) the magnitude of the current year’s budget deficit with suggestions that future years will see more of the same, we should have no fear that there will not be inflation.

Quite the contrary, we should be worried that inflation will be given further impetus beyond what has already been programmed. The more so if Bernanke, Krugman, et alii continue on the path they have already staked out.

Pax et bonum,
Keith Töpfer

———————-
“The common belief that whisky improves with age is true. The older I get, the more I like it.”[Ronnie Corbett]
“Si vis pacem, para bellum.”[classical adage, believed based on a quotation from Publius Flavius Vegetius Renatus]
—[i[]If you can keep your head while all those around you are losing theirs, you obviously don’t understand the gravity of the situation!”—[author unknown]

March 2, 12:54 pm | [comment link]
2. Larry Morse wrote:

Roight now,
Gas is #3.39 a gal and rising. And this in spite of the fact there is NO gas shortage in America. Why am I so tired of being screwed and being helpless to do anything about it?  Larry

March 2, 1:30 pm | [comment link]
3. Militaris Artifex wrote:

2. Larry Morse,

You wrote:

Gas is ($)3.39 a gal and rising. And this in spite of the fact there is NO gas shortage in America.

I regret that I must be the one to break the news to you, but your assumption that gasoline is NOT in shorter supply is incorrect. Details from July of 2010 are described in this article.  Furthermore, we experienced an earlier decrease in 2003 as a direct result of refineries damaged by hurricane Katrina. To the best of my knowledge, we have yet to regain all of the gasoline production capacity from Katrina, and I know within the first several years after that storm, there were no new refineries constructed.

Pax et bonum,
Keith Töpfer

———————-
“The common belief that whisky improves with age is true. The older I get, the more I like it.”[Ronnie Corbett]
“Si vis pacem, para bellum.”[classical adage, believed based on a quotation from Publius Flavius Vegetius Renatus]
—[i[]If you can keep your head while all those around you are losing theirs, you obviously don’t understand the gravity of the situation!”—[author unknown]

March 2, 4:13 pm | [comment link]


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