New York Times gets it right: High oil prices are bad for the economy.

Oil closed at $70 a barrel today. There is no good market reason for the run-up. In fact, the Department of Energy reports that demand for oil is down and that oil inventories are at a record-breaking 19-year high. The financial media (largely CNBC) has been gleefully abuzz of late about rising commodity prices - especially oil - as somehow signaling a rebound in the economy. They have suggested that high commodity prices are somehow a "green shoot" or "mustard seed" that shows the market still has potential. It's too bad they are absolutely wrong.

In today's New York Times reporter Clifford Kraus has documented two obvious facts.

The first is that high gas and oil prices are bad for the economy, and the second is that the current run-ups in oil prices are largely due to speculation.

In May of 2006, UCAN commented on this in its Watchdog newsletter when we noted that in 31 of the last 34 years the price of oil tracked almost precisely with the rate of inflation (you can view it on page 4 of the PDF).

Our point is that the cost of energy influences the price of everything. High oil prices are not a bellwether of future prosperity, rather, they are a bell that tolls for thee