Global Gas Price Surge Threatens to Dent the Economic Recovery
Oil and gas are highly correlated. If we see a sudden oil price surge then we have another GFC.
Check the two price indices:
The red line is consumer inflation minus energy, the bottom is oil price.
The inflation is hitting Texas and they produce the oil. Something has to give, either the petrobanks or the Fed. If the petrobanks give up the fight then oil rises, gets a lot closer to one hundred and we still get the sudden dollar plunge. FX insurers look at the same chart, and they freak at possible dollar plunge, thus raising rates. We have a trilemma once again.
Now this, from June:
Texas is catching up with previous disinflation. Adjusting for current inflation means oil up to near 80 and he dollar take a six point plunge. That is close to a minor recession..
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