Key insights
- The author questions the assertion that the US is more immune to oil-driven inflation than Europe and emerging markets. They argue that the US's reliance on transportation, slow adoption of renewable energy, and lack of access to cheap Chinese EVs make it vulnerable to rising oil prices. While the US is a net oil exporter, it's still subject to global oil price fluctuations, potentially leading to inflationary pressures on the US economy.
So in one of the last Unhedged episodes: https://www.ft.com/content/826b8f82-5c47-4b0f-8558-02f4475c7fda?syn-25a6b1a6=1
... a host suggested that the United States is much more immune to oil-driven inflation than Europe and emerging markets.
My first reaction was, "eeeeh?"
A couple of things.
- The United States is a massive country - we truck and fly everything. We are heavily transportation-dependent, it still runs on diesel, and the government is pro-actively anti-energy innovation. Transportation costs eat into everything. Most other countries are much more "compact". 2. Other countries are more aggressive in their push to renewable energy sources. Spain just hit 100%. Many others are very close to that. The United States is not even in the same universe. 3. Other countries have access to cheap Chinese EVs. We don't. 4. Oil prices are global. Just because we are net exporter (and only of a certain kind of oil), we are still subject to The Price.
What am I missing here?