[Barrera]

> This has nothing to do with monetary policy.

How can you be so certain? Gasoline prices started rising well before the war:

https://fred.stlouisfed.org/series/GASREGW

I would agree that the war has made a bad situation worse. But to say this has "nothing to do with monetary policy" seems like a stretch.

[frgtpsswrdlame]

There's more than just monetary policy and war. Monetary policy would imply demand for gas is up, driving prices up. But demand for gas is still lower now than it was pre-covid.

Oil is on its way out the door. Oil companies all have projections that show demand for oil increasing in the short term and decreasing in the long term. The list of their options to (1) increase their profits by (2) increasing the supply of oil are all investments that only pay off in the long term. Hence, even as prices rise in the short term, they are making calculations off the long term and finding it not very profitable to increase supply. Simple economic theories of corporate response to supply and demand don't work nearly as well with this long-term, short-term incentive difference.

[epistasis]

Refinery capacity has shrunk in the US, so even with more crude, we would likely still have price increases.

[bfuller]

Correct me if I'm wrong but that chart shows gas prices on feb 21 being as high as in 2014, that upward trend just looks like a recovery from the $1 gas we had at the begging of the US "stay at home order"

[gizmo686]

Most of the pre-war rise was recovering from the covid crash of gas prices. The price overshot its pre covid level a bit, but that can be explained through supply issues (you can't increase production on a dime; demand was difficult to predict; and suppliers prefer to under produce than over produce)

[worker_person]

We have a president who is hostile to oil. Let's ignore if that is a good / bad idea for moment.

It's been long enough that price of gas reflects those decisions. Except we've been drawing down our strategic oil reserves to keep prices cheap for the moment. So really it should be a lot higher.

Real pain will begin when the reserve runs out of good oil.

https://www.washingtonpost.com/business/energy/the-us-is-dep...

[jbay808]

Gas is pulling up the CPI right now, but it's always volatile. Shelter is slow, strongly linked to monetary policy, and the highest-weighted component in the CPI basket, and it's up 5.6% YoY, with a lot of inertia to keep growing. That suggests to me, in a back-of-a-napkin way, that about half of the current inflation is due to monetary policy.

[gizmo686]

Shelter tracks CPI less energy pretty closely, especially during the recent surge: https://fred.stlouisfed.org/graph/?g=RJqZ