In a speech yesterday, Federal Reserve Bank of St. Louis President William Poole said, “The importance of recent energy developments is less than their high visibility leads many to believe.” The WSJ Real Time Economics blog further reports:
“There are certainly strains from the high price of energy,” but “there is no energy crisis and households and firms are adjusting in a sensible way to price increases,” [Poole] said….
“Market adjustments have been the hero in preventing energy price increases over the past four years from disrupting economic growth, as happened in the 1970s,” Poole said. He added “markets will continue to handle energy problems well and the future for the U.S. economy is bright.”
If “market adjustments have been the hero,” than interfering with market adjustment must be an act of villainy? Well, I think the writerly impulse to cast the story as one of heroes and villains is an effort to inject drama where there is none. “Market adjustments” are just a bunch of people reacting to the big and small changes in their economic environment.
The story here is that, so far, we have managed to avoid repeating the policy failures (gasoline rationing, oil import quotas, price controls) of the past.