Is Fed’s stimulus a cause of high gas prices?

Are the high oil prices that have caused so much pain at the pump in recent months the result of the Federal Reserve's efforts to stimulate the economy? That's what one former Fed official claims.

Vincent Reinhart, who ran the central bank's monetary affairs department until 2007, will note to a House committee this afternoon that oil prices have risen from $76 to around $100 per barrel since the Fed made clear in August that it planned to make large-scale asset purchases, known as "Quantitative Easing," as a way to foster growth, according to a copy of Reinhart's prepared remarks. That, he said, has "fueled an upsurge in inflation."

In addition, Reinhart argued, those higher prices have undercut the effectiveness of the quantitative easing by hurting Americans' pocketbooks--perhaps even offsetting any growth the policy delivered.

"The Fed gambled that the benefits of the stimulus of [the asset-purchase program] to financial markets would offset the adverse effects of oil price developments. Whether that gamble pays off is yet to be proven," Reinhart will tell the Committee on Oversight and Government Reform.

Reinhart is now a scholar at the conservative American Enterprise Institute. His argument echoes that of small-government conservatives, including some GOP lawmakers, who have charged that the $600 billion asset purchase plan has caused price spikes.

Fed chair Ben Bernanke has countered that oil prices are outside of his control, and are the result of turmoil in the Middle East, as well as growing demand from rising economies. That view will receive backing today from Dean Baker, an economist at the liberal Center for Economic and Policy Research, according to a copy of Baker's prepared remarks.

And core inflation--which excludes food and oil prices, whose volatility are thought by the Fed to be poor predictors of future price trends--has remained low by historical standards.

(AP Photo/J. Scott Applewhite)