Asleep at the Wheel - Part I

Since 1999, when crude was $12 per barrel, the cost of crude oil went to $70 per barrel, a price increase of 483%.

For our purposes we will be generous and use 1996 as the baseline at $20, yielding a price increase of 250% which equals a 28% annual increase.


During the period, the PPI for energy costs rose over 200%, yielding an inflation rate of over 22% per year. This would seem to equate with the 28% increase in crude oil.


During the period, the CPI for energy costs rose 100%, yielding a consumer energy cost inflation rate of 11% per year. I guess the producers, being so generous, decided to absorb a large chunk of the costs in the supply chain for us. Sounds realistic huh?


Despite average annual increases of: 28% in crude oil; 22% in energy related producer price inputs; and the dubiously low 11% passed on to the consumer in energy costs;

Since 1996 the CPI for ALL items has risen a paltry 30%, yielding a miraculous and seemingly benign inflation rate of only 3.3% per year. Notice, I have not singled out healthcare, insurance or housing costs. To do so, would make the econometrics used seem even more absurd than they already are.

To say there is not a major disconnect in logic reflected in these statistics would be like saying the public is not gullible. In Part II we will examine just how much the Treasury has cranked up the printing presses.