You've heard all the excuses: There's no inflation. America is producing more oil and natural gas than ever. If we could just get access to all that oil in Alaska. Drill baby drill.
Right. Ok, now pay attention. See the chart below. Oil prices are really high relative to the recent past.
The following chart comes from Gail Tverberg's post on "Our Infinite World" where you can learn a lot about how oil prices impact the economy.
Figure
1. World Oil Supply Growth vs Growth in World GDP, based on exponential
trend lines fitted to values for selected groups of years. World GDP
based on USDA Economic Research Data.
The video below does a great job of explaining how the price of oil fits in with all other major economic factors.