Now Seeking Candidates for Unpaid Superhero Position
The world loves the idea of a superhero. The thought of a superhuman force that comes in and saves the day is a concept that has been around as far back as ancient Greece. The tales of superheroes have come a long way since Hercules, with today’s most notable ones being green, wearing iron suits, or having a thing for spider webs and Kirsten Dunst. However, in the real world, the world is still waiting for something incredible to happen about rising energy costs… and the wait continues.
The G-8 had an excellent opportunity to push the US dollar higher (and perhaps crude oil prices lower) last week, and what did they do? Not a thing. Instead of addressing what my colleague John labeled “the 800 lb. gorilla,” they focused on inflation. The problem that I see here is that the world has witnessed and dealt with rising inflation before. A $150 barrel of oil is a new concept, and the G8 sidestepped the issue that is the driving force behind global inflation.
So, if they G8 won’t swoop in and save the world, who is next up at the plate? The central banks would likely be the next candidates to become superheroes, but they cannot solve this problem on their own. While they can influence exchange rates, most are restricted in that they can only change monetary policy. Chairman Bernanke, for example, has been previously unwilling to even comment about Bush’s tax cuts. It seems unreasonable to expect that he would come out and advocate his opinions about what others must do to deflate energy costs.
Other possible players are the oil-producing nations, who to their credit, have stepped up to the plate in the past few days. Saudi Arabia announced that it will be increasing daily output, and the OPEC nations will be meeting this weekend about their admittedly overpriced oil. Still, it is unreasonable to expect these countries to solve the problem on their own. In the long run, their focus is on their own interests, not the chance for each American man, woman, and child to have an SUV fueled by cheap gas.
One more option is the oil companies… no just kidding.
So, the wait for that superhero continues. The demand is there; the everyday person in the industrialized parts of the world has demonstrated that they are going to keep refueling. The question is who will be the first to say, “I’ll sacrifice some of my wellbeing to help the entire world”?
We’re still waiting.
JPY Leading Economic Index (Apr)
GBP Bank of England Minutes (Jun 18)
CHF ZEW Survey (Expectations) (Jun)
CAD Leading Indicators (May)