Oil and Gas Prices Have Peaked, But Inflation Will Continue

With producer prices increasing by 10%, huge government spending deficits and a continued expansionary monetary policy, inflation will increase.

The good news is that oil and gas prices have peaked. The bad news is that inflation will continue to be at record highs. That means President Biden blaming today’s inflation on Putin is simply not correct.

Biden recently said, “Today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike. A large contributor to inflation this month was an increase in gas and energy prices as markets reacted to Putin’s aggressive actions.”

Truths, Untruths … and Biden

His statement is simply not true. The Consumer Price Index (CPI) increased by 0.8% in February, which raised the yearly inflation rate to 7.9%. The data for that number is mostly gathered in the first 20 days of the month. Putin did not invade Ukraine until February 24.

On February 20, the price of oil was $91 per barrel. That price was about 40% higher than the price on December 1 and had nothing to do with Putin. Rather, the Putin-related price hikes occurred after the February 24th invasion of Ukraine, so the higher oil prices reflected in the…