Want to bring inflation down? There is no single, simple fix or we would have done it already. It would be a good idea to stop using gasoline and diesel.
Prices for fossil fuels are high. Diesel has increased by more than 50% since last year, while gas prices have increased by 75%. There are many reasons why Putin's war in Ukraine, an unexpected surge in demand, and an East Coast refinery exploded a few years ago.
The recent surge shows the folly of tying the transportation sector to highly volatile consumables that are bought on a spot-price basis.
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According to Mark Zandi, chief economist at Moody's Analytics, diesel prices alone are driving about 17% of the inflation we're seeing today. According to the Bureau of Labor Statistics, inflation in the energy sector was more than triple anything else in April. Dropping fossil fuel would bring inflation down.
How do you replace diesel, which is used in so much of our economy? It won't be easy, but it is straightforward.
Oil and gas can cause sudden price shocks, but an electric economy powered by renewables is less likely to be affected. Here's why.