– by New Deal democrat
I plan on putting up a Coronavirus update later today, because there have been a few significant developments (No, the pandemic is *NOT* over) particularly as they relate to the next few months. Tomorrow and Wednesday, we get our first batch of monthly housing data. In the meantime, today let’s update the situation with energy prices.
And here, the news is unequivocally good. Oil prices, as of this morning, are under $83/barrel. They have remained under $90/barrel for this entire month. Even more importantly, if you follow the dotted line on the below graph all the way to the left, you can see that oil prices now are *lower* than they were before Russia invaded Ukraine:
They are still higher than they were a year ago, when oil was priced at about $70/barrel, but this has been creating, and will continue to create, a second wind for American consumers.
Gas prices, which follow oil prices with a 2 or 3 week delay, are back down to an average of $3.64/gallon, only about 5% higher than they were before the Ukraine invasion:
It is very likely that gas prices will decline to $3.45 or less within the next few weeks, again completely undoing their Ukraine war spike.
Keep in mind, I make no forecast about the future course of oil prices. This is a nowcast only. But the immediate forecast for gas prices is very good.
There’s been a spate of positive coincident economic data in the last month or two, and we can expect this to continue so long as gas prices continue to decline. We only have 12 days left in the 3rd Quarter, and DOOOMers hoping for a third consecutive decline in GDP are probably out of luck.