|I’ve got two bits of good news and one bit of bad news.
Good1: The good news is that as high as energy prices have recently become in the United States, relief is on the way. Oil and natural gas prices have now been high enough for long enough that America’s shale operators have steadily expanded operations and fresh production is already feeding into the system. We might not feel that relief in the form of lower prices until March, but relief is still on the way.
Good2: As bad as prices seem, it is way worse everywhere else. Natural gas prices in Europe are now ten times what they are in the United States, and the Europeans have zero reasons to expect their situation to improve one whit this year. Or next year. Or the year after. Europe has next to no local oil or natural gas production, and no shale sector to speak of. Instead, the Europeans have chosen to rely on solar and wind power (on the world’s cloudiest and calmest continent, no less), with a bit of bridge assistance from…the Kremlin.
Bad1: Good1 might make you exclaim a sigh of relief. Whew! This too shall pass. Weeeeell, not really. Just because I don’t see energy inflation holding up in the United States does not mean that I don’t see us entering one of the weirdest periods of economic transition in American history. You name the sector — finance, manufacturing, housing, agriculture, transport, commodities — we are in for at least the strongest inflation we’ve seen in this country since the 1970s.
Breaking down that is going to require a great deal more than a newsletter.
Join us for the final installment of our series on the future of the global and American economies in an age of deglobalization.