Thursday, June 30, 2011

Oil is like sugar---More of it gives you a short term good feeling but eventually you go back to feeling Blah---Yes, there is a lesson here...

Before last weeks announcement that the US would release some of the oil from the Strategic Petroleum Reserve, the price of oil was already heading down. See graph below. After a week, the price is almost back up to where it was. Can this be considered a policy success?  The administration could make the case that the price would be even higher if the they had not taken the action. It is hard to say at this point.  Perhaps a good lesson in policy lag---the time difference between policy decision and implementation.  Wonder if gas prices are headed up again...  



Source: WSJ

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