Recent statistics released by the OECD confirm what we have long known: Euro Area unemployment runs about twice that of the United States. Projections released by the OECD on 07-Feb-2006 show that this trend is expected to continue through 2007:

US Unemployment Compared to Europe
US Unemployment Compared to Europe

The Wall Street Journal, in an editorial on 08-Feb-2006 (”The European Disease”), citing the same OECD report, said that the rate of GDP growth per capita for Germany, France, and Italy is falling, relative to the U.S., and that Jean-Phillippe Cotis, chief economist at the OECD said that at this rate, in twenty years, the average U.S. citizen would be twice as rich as a Frenchman or German.

So, what does this have to do with the price of U.S. bonds?

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Although you might not get this impression from the press or politicians excoriating oil company executives, the United States benefits from energy costs that are relatively low compared to other countries.

Key Energy Statistics
Key Energy Statistics

I recommend to readers the free, 82-page PDF file, published by the International Energy Agency on this subject. This attractive document is packed with graphs and tables that compare production, consumption, and costs for all types of energy, throughout the world.

(See: “Key World Energy Statistics 2005“, International Energy Agency)

This booklet shows that the cost of U.S. household electricity compared as follows with countries in Europe in 2005 (US$ per kWh):

Household Electricity Costs: US$ per kWh
United States

These numbers suggest that an increase in the cost of oil, rather than plunging the U.S. into recession, is more likely to remove political constraints that impede development of resources.

If Europeans, often burdened with costly energy manage to get by, Americans should survive higher gas prices, especially if this leads to better use of the existing coal and nuclear potential.


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