What a Gas
Did gas prices cause the bad news on jobs?
10:19 AM, Jun 8, 2011 • By STEPHEN F. HAYES
After struggling to come up with an explanation that doesn't admit a policy failure, the White House seems to have settled on an answer to questions about what led to the grim unemployment numbers last week: Gas prices. The president said the other day that the latest jobs numbers are a "blip" caused by "headwinds" facing the U.S. economy—the "most prominent" of those headwinds comes from "gas prices." It's an argument that certainly fits with the administration's political case against oil companies. Is it true?
One problem: After four consecutive months of increases, gas prices went down in May. (See here.) In January, the average self-serve price rose from a little over $3.00 per gallon to $3.15. In February, it rose from $3.15 to $3.55. In March, it spiked from $3.55 to almost $3.80. In April prices went from $3.80 to nearly $3.95. In May, however, gas prices declined—from about $3.95 to $3.77. So if rising gas prices were truly the cause of additional unemployment, we would have seen these problems show up earlier this year. We didn't. In each of the four preceding months, the economy added near or above 200,000 jobs—despite gas prices rising quickly. And then in May, when gas prices fell, the economy added just 54,000 jobs. So the best month of the year on gas prices (at least in terms of trends) was the worst month of the year for jobs.
So the president's explanation doesn't work.