Posted by Daniel Hall on July 29, 2008
At a time when we’re facing $4 gasoline, I think that you need people who’ve been in the energy industry to tell us what to do.
—Steve Pearce, a House member from New Mexico who is running for the Senate
With retail gasoline prices in the US persistently above $4 per gallon, the determinants of gasoline prices is no longer an esoteric topic best left to industry insiders.
—Lutz Kilian, Associate Professor at the Department of Economics, University of Michigan and a Research Fellow at CEPR
I think I am going to throw my lot in with the economics professor. Kilian’s post over at VoxEU discusses why U.S. gasoline prices have risen in recent years. (Hint: it’s not the speculators.) Kilian also postulates that high prices are here to stay and says that the best predictor of future prices is today’s price.
H/T: Kevin Drum, with a very trenchant response to Pearce’s quote.