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Given the discretion afforded the Secretary in utilizing the ESF, and the strong correlation between commodity price volatility and exchange rate volatility, the Secretary has the authority to establish a Supply Insurance and Acceleration Program for key commodities.
The White House and Congress should consider an “all-of-the-above” approach oriented around three objectives: (1) investments where productive capacity; (2) targeted policies for reducing sectoral demand; and (3) policies that facilitate greater competition and technological diffusion.
Creative production contracts involving the sale of put options (as we previously advocated for), could help set a soft “floor” on oil prices, preventing a large-scale return to consumer purchases of gas-guzzling cars.
Repeated price crashes in a variety of industries led to a situation of underinvestment in productive capacity that created the conditions for the inflation we see today.