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Bureau of Labor Statistics vs. Energy Information Agency.

In Commentary on April 16, 2011 by CQCA

On April 15th, the Bureau of Labor Statistics released CPI data for March, 2011. In it, they stated “Gasoline and food prices continued to rise and together accounted for almost three quarters of the seasonally adjusted all items increase in March. The gasoline index posted its ninth consecutive increase and has now risen 14.4 percent over the last three months. The household energy index rose as well, with advances in the fuel oil and electricity indexes more than offsetting a decline in the index for natural gas.”

Basic economics tells us that when demand goes up or supply goes down, prices will rise. These prices could be rising because of a shortage of production or an increase in consumption. However, according to the Energy Information Agency’s Petroleum Supply Monthly for January, 2011, the U.S. has a higher ending stock of crude oil and petroleum products now than one year ago. The total ending stock in January, 2010 was 1.78 million barrels, whereas in January, 2011 it was 1.80 million barrels. This would indicate that the rapid increase in the price of fuel products is a monetary issue, not a supply and demand issue.

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