Professor Mark J. Perry's Blog for Economics and Finance
It's not just oil and gasoline prices that have been plunging since last summer. The December natural gas price ($5.81 per million BTUs) was less than half of the June price of $12.69 (see chart above). The 54% drop from the June 2008 peak brings natural gas prices to the lowest levels since 2006.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
15 Comments:
Where is my hyper-inflation Austrians??
Inflation won't arrive until demand picks up.
But don't worry, it's coming...
If the bear market in energy persists, we will soon see energy companies asking for a bailout.
JCarr
Why to my utility rates keep going up?
Why to my utility rates keep going up?
coal prices?
Yeah, this doesn't mean anything to consumers until it is actually reflected in their monthly bills from their power company - which it is not doing. I read that that is because the gas we are now "using" was purchased when the prices were high. So, of course, power companies want to sustain their margin of profit on everything they buy and resell. Theoretically, consumers are supposed to see the reduced cost reflected in power bills months from now. . . . It will be interesting to see if that ever actually happens.
I am dumbfounded about nat gas in the nation's energy dependence issue.
We've have unlimited reserves, a decent infrastructure, etc. It is clean, it results in to money being sent to MidEast terrorist supporters, would help the balance of trade (by not importing oil), puts us in a much stronger geopolitical position--AND now it is cheap. why is the US not moving at Manhattan Project speed to convert the entire nation to NG???
I realize some powerful majors may not be positioned well in NG but this is absurd.
We are about to spend a fortune on wind, sun, tide, biofuels, hydrogen, etc. when a real solution seems to be staring in the face.
I MUST be wrong--someone pls take me out of my misery and explain this.
I MUST be wrong--someone pls take me out of my misery and explain this
Duh. Natgas is a finite resource. Perhaps Carpe Diem, could give his readers a Hotelling Lesson.
Start here and educate yourself.
The political question is why isn't the strategic oil reserve being filled with $40/bbl oil?
We've have unlimited reserves
Sure we do. ROTFLMAO.
>Inflation won't arrive until demand picks up.<
The value of the dollar is strictly dependent on its scarcity. We are in deflation! We are in cash contraction! That is why all these prices are coming down, starting with the property values. With low interest rates that the Fed has, in their "wisdom", deemed helpful to this situation, the local bank can't take any chances with their loans, and so money will not circulate like before.
>The political question is why isn't the strategic oil reserve being filled with $40/bbl oil?<
The problem is that private reserves that have been held are being forced into liquidation by the contraction of money. That is why the price has plummeted. You seem to be calling for a bailout package for the oil companies.
Mike Darda (via Jimmy P.):
"Looking ahead, we expect the recent thawing in credit markets to reduce the pace of decline in economic activity in the months ahead."
When this happens, hello inflation. You watch.
A.D. (After Deflation)
Where is my hyper-inflation Austrians??
Until and unless you learn the actual content of Austrian economics, you will continue to misunderstand -- and consequently misrepresent -- Austrian economic theory, even as everything it predicts unfolds exactly as predicted right in front of you.
If George W. Bush caused the price of oil to go up, did he also cause the price of oil to go down?
"The political question is why isn't the strategic oil reserve being filled with $40/bbl oil?"
Because it's already full?
Theoretically, consumers are supposed to see the reduced cost reflected in power bills months from now....
Of course...in June - When I don't need to run my furnace 24/7 to stave off the effects of global warming. Until then, Consumers Power is bleeding me like a stuck pig
Anonymous--
Thanks for the offer of education. the first link I will study carefully.
The second one is either wrong link or irrelevant to my question. It shows US crude production.
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