 Hello, and welcome to another episode of the Minor Issues Podcast. I'm Mark Thornton at the Mises Institute. As a leftover from last week's commentary, I want to focus today on energy and energy prices. The price of gas has fallen, and energy prices have fallen generally, and this has been a big help in cooling price inflation in the economy. Clean delivery surcharges have come down or been eliminated in recent time. Now, of course, we're all interested as both consumers and producers in terms of energy prices almost on a day-to-day basis. How much is it going to cost me to fill up my tank of gasoline? But oil prices and energy prices are also a good indicator of where we are on the business cycle. The biggest example is oil prices spiking right before or in the early stages of a recession. And then that is quickly followed by oil prices bottoming during or slightly after the recession is over. So the price of oil goes up and down with the overall economy and the business cycle. It's not surprising if we reflect on the fact that energy is a master ingredient in economic activity both on the production and the consumption side and certainly in terms of the distribution of economic goods. It's an input of goods, for example, plastics. It's energy to make the goods. For example, the price of electricity that goes into the production of everything. And then, of course, finally, energy powers the movement and just distribution, the transportation of goods throughout the economy. So it's not surprising that energy prices go up and down with the overall economy. And what brings that to the forefront is the fact that the supply of energy is relatively inelastic in that the quantity supplied doesn't adjust rapidly to changes in the price of energy products. So that if the price is to rise, you're going to get a very slow reaction on the supply side as a result of changes in the overall economy. And of course, oil prices are indirectly linked to the prices of coal, nuclear power, uranium, natural gas, solar and wind power in all forms of energy tend to rise and fall on a daily basis. You can see it in the futures market every day. So if we take a look at a little history, back in the spring of 2020, we saw a big change in the movement of oil prices. Oil prices had previously peaked at $60 a barrel. And in the spring of 2020, they fell to $20 a barrel. And then more recently in the COVID Fed inspired bubble, we saw those prices rise from the trough of $20 in March of 2020 on up to $115 a barrel on a monthly close. And then we've seen prices most recently fall down into the $60 range. And I think this week it's going up close to about $70 a barrel. But more generally, we've seen almost a 50% drop in oil prices from the peak. And that really has what has fed into helping us with price inflation. Heating oil prices are down by about a half during the same time period. And natural gas prices, which is increasingly important, is selling for about $2 a unit, which is almost a theoretical zero price because any price lower than that suppliers will simply shut off the supply from their property. So when we look at the energy market, of course, we can't see past today. And so the question is, should we view these recent developments as an impact from recessionary forces? In other words, are we turning down towards a recession in the economy because energy prices have gone down by so much? And I would say yes. I'd say the weakening economy is a big part in lower energy prices. But we also have to wonder about, is this just a prelude to more price inflation? And in this case, I would say probably yes. The fed's inflation, after all, does take time, and then it sloshes around in the economy before re-establishing any type of equilibrium, and that really can take years. For example, during the housing bubble of 2008, oil prices were peaking in the $130 a barrel range in May of 2008. And by the end of that year, the trough in oil prices on a monthly close was $44 a barrel. And then after hitting that trough, we then experienced five years of higher and higher oil prices. So we can look at today's recent peak, we can look at the trough and its plausible ramifications, but we don't really know what's happening next.