Monday, October 29, 2007

Here & Now Interview

Oil prices are going through the roof, yet stocks are rising, too. Contrary to popular opinion, one has little to do with the other. Nonetheless, it is common to hear reporters blame a sell-off in stocks on rising energy prices. They often say things like "Stocks fell today because oil went up $2 a barrel." The truth, however, is that the two are not negatively correlated over the long term.

Yet rising commodity prices are a cause for worry. The two commodities that get much of the attention are oil and gold. Both are near all-time highs. Both may be telling us to expect higher inflation.

So far, gasoline prices have not budged much. Given the recent surge in oil prices, this is a bit surprising. It probably won't last. Either gasoline prices will rise, or oil prices will fall.

To hear more about the recent rise in oil, listen to my recent interview on Here & Now, a radio program broadcast out of Boston.