The Long and Short of Energy Prices

Published March 18, 2011 11:00pm ET



The disaster at Japan’s Fukushima Daiichi nuclear plant, and the upheavals in the Middle East are the sort of events that send economists back to their forecasters’ drawing boards. As usual, there is a tendency to confuse the long-run and the short-run, and to blame developments that were due to occur anyhow on the most recent events.

There is no doubt that the supply chains on which many industries rely — from electronics to auto making — have been interrupted. Everything from Apple’s new, hot iPad to Sony’s flat-screen television sets, to Nokia’s handsets to the cars produced by General Motors in its Louisiana plant, shut down awaiting supplies, will be in short supply. At least for a while. But these companies are resilient, will link together new supply chains sooner rather than later, and resume the growth that is propelling the American recovery. If they don’t, their competitors will.

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