How Much Do Oil Prices Affect Inflation?
June 3, 2015 5:00am by
This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client. References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers Please see disclosures here: https://ritholtzwealth.com/blog-disclosures/
What's been said:
Discussions found on the web:Posted Under
Previous Post
MiB: Pizzarelli PlaylistNext Post
Futures: New Layout at Bloomberg
Interesting article, indeed. But there is a question in my mind : what is the ‘oil price’ ? I’m saying that one buys oil for doing something (the absolute greatest reason is to provide energy to engines for transportation, both by land and by air). So the price of the utility should be in link with the value obtained. If you have a terrible need for it, you’re going to pay as much as requested, and the requests can go up anyhow. Clear. But the matter is a bit confused when you take into account that , e.g., the Airbus A3XXneo will run on 20 % less oil than a A3XX built in … 2015. The same holds for automotive engines and such. I’m meaning that we are getting an always increasing ‘mileage’ from the same quantity of oil. So we are no longer in a ‘terrible need’ of oil, we are just in a ‘need’ : in short, inflation forecasts are set on a limited interval, and I think are still heavily biased by the ’70s petrol shock fear still looming in people heads, whereas GDP evaluation takes into account the aforesaid ‘-neo effect’, that is what really happenED in near past, and thus effects brought about by price increase are by far less evident. Mr. Ritholtz would certainly (and with sound reasoning, IMHO) discuss it from behavioral point of view. My own point of view is, in general, that in order to get correct answers, one has to put correct questions, and in detail, that technology is changing our world, and in a VERY fast way. Using historic data series is becoming more and more difficult, one could make huge mistakes using data that really picture a different universe.
the last phrase is truncated : please read as ‘really pictures an universe different from the one object of the analysis, and so a mere correlation is valued as a possible causation’
It’s rents that drive inflation. You pay rent multiple times a day; the home you live in, the toll road you drive on, the restaurant you eat at, the higher wages you have to pay employees, the car park. Rent, rent, rent. You pay it over and over and by the end of the day when you ask, “Sheez, where did all that money go?:” you have the answer; unproductive payments to idle owners. Do like Germany and make speculation in land more punitive. Notice how Germany has always had low inflation since the ’80’s despite being the economic forerunner of Europe since forever?