Oil prices surged higher on Thursday as markets absorbed the latest news about the fighting in Ukraine and better than expected numbers in the U.S. labor market, home construction, and industrial ouput.
The price of the global benchmark oil contract, Brent North Sea crude, rose nearly eight percent on Thursday to $105.75 a barrel. The U.S. benchmark, West Texas Intermediate crude, rose 7.3 percent to $101.92.
Gasoline prices in the U.S. have fallen this week following a decline in the price of oil. Typically, gas prices decline with a variable lag after oil prices fall. They tend to rise more rapidly when prices are rising, giving rise to the industry saying “up like a rocket, down like a feather.”
This is not unique to gas and oil prices. A study by University of Chicago economist Sam Petzman published in the prestigious Journal of Political Economy in 2000 found that the tendency of output prices to respond more rapidly to rising input prices than falling input prices could be found across the economy. This pattern could be seen in two out of three markets examined.
— Catherine Rampell (@crampell) March 17, 2022
The American left has campaigned for years to reduce the supply of oil, gas, and coal, especially by reducing domestic production through tightening financial conditions, raising the price of leases or curtailing leasing on federal lands, tax increases on fossil fuel companies, and thwarting the Keystone Pipeline. These are referred to as “restrictive supply side” policies.
Now that high energy prices have become a significant political liability for Democrats and the Biden administration, the left has attempted to backpedal on the issue. Sen. Elizabeth Warren and the Biden White House have claimed, without evidence, that corporate greed and monopolization are to blame for rising prices.