C’mon, people, doesn’t anyone know how to use a GDP deflator? Certainly the journalists writing articles like this at the Washington Post and the various and sundry wire services that have been feeding hyperbole to their readers have demonstrated their complete and utter inability to process the difference between real and nominal prices. Why don’t they get into such a tizzy and print articles on how our incomes have reached record levels?
Meanwhile, here’s an interesting New York Times article on investment in drilling for oil and natural gas in the Gulf of Mexico, considered to be pretty dry. In this case the author makes the correct observation that as prices rise, investment in exploration goes up. He also highlights the role that technological change has played in enabling oil explorers to get product out of places that were impossible before.
I’m glad to see that not all journalists writing about this industry are economic thickies.
I had two students last quarter who are econ/journalism double majors, and I think they were mystified by why I kept encouraging them so vigorously, saying things like “we really need people with your combination of skills!”. This current gas price situation provides yet another data point supporting that argument.
UPDATE: Clearly Steve Verdon and I are both bugged about this, as indicated by his almost contemporaneous post on the same topic.