Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 8/25)

Editor’s Note: Liz Peek is a financial columnist.

Here’s big news: you can go away for a week — maybe more — and almost nothing will have changed when you get back! This is certainly true in the financial markets. While I’ve been in China witnessing one of the greatest Olympics and public-relations coups of all time, oil prices and financial stocks have see-sawed back and forth, dragging the market along for the ride. This week we’ve seen more of the same. The market’s gyrations have been exaggerated a little since most Wall Streeters are on vacation and trading is thin, but the same issues rule the day.

Oil prices are up a little today because of concerns about approaching tropical storm Gustav. The storm, which is expected to attain hurricane status, is targeting the Gulf of Mexico oil fields, which produce about a quarter of our nation’s oil and a lesser percentage of natural gas. Though output in the region could be disrupted, it is unlikely to be a long-term factor.

Of more interest to me was a story in The New York Times this morning about how $10-per-gallon gasoline is failing to rein in European driving. Actually, all of the facts in the story prove just the opposite. Eurostar train traffic was reported to be up 21% in the first quarter, suggesting that some Europeans are resorting to mass transit, while traffic on Italy’s autostrata dropped 2.5% between March and June. New car registrations in Italy are off 18%, and the story cited studies linking higher prices to declining usage.

What I glean from this report is that Europeans have fewer options to reduce gasoline consumption than Americans do, because they have been living with high gas prices for a long time. The governments of Europe have long encouraged conservation, despite in some cases having substantial local energy production. So the drivers in France already have cars that get 40 miles to the gallon. The buildings in Europe already regulate lighting and heat to minimize expenses.

In a sense, this is a great opportunity for the U.S. The next administration should take advantage of any further weakening in oil prices to establish an import fee (apologies to regular readers for repeating myself but this is such an important issue) which would maintain current energy prices, and consequently continue efforts to conserve, to develop alternatives and to push for increased oil and natural gas production. In his NYT column this morning, Floyd Norris reminds us that Gerald Ford had the courage (and you can bet it took courage for a fellow from Michigan to espouse higher gas prices) to suggest an import fee 35 years ago. The idea was as good a one then – though unpopular – as it is today.

Because oil prices have backed off a little, Americans are feeling a little less gloomy. The Conference Board reported that consumer confidence improved in August for the second month in a row. Though the readings are still quite negative, according to a Conference Board spokesperson, the trend indicates that Americans are more optimistic about the outlook ahead.