Publications: Notes at the Margin

Consumers, Wages, Income Inequality, and Gasoline Consumption (April 7, 2014)


Politicians, commentators, central bankers, macroeconomists, and most certainly my MIT classmate Paul Krugman have talked incessantly of economic inequality for years. President Obama, in case you missed it, has joined the chorus. The reactions to this in the energy world have been mostly yawns. For the energy sector, the issue of income distribution is a sideshow, a liberal infatuation, and irrelevant. 


This view is correct regarding the policy discussion. The energy sector can do very little to address income inequality, minimum wages, or any other economic or social hot button. However, the view is almost certainly incorrect regarding the business of selling petroleum products to consumers. In fact, prospects for increased product sales may be limited for the foreseeable future in many countries—but particularly in the United States—due to sluggish economic growth and rising income inequality.


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