Hi all,
I would appreciate if the economists amongst you could answer what probability you think there is that a fragile global recovery could be derailed again if we see oil climb to around $100 a barrel by the end of the year or soon there after?
Whilst I am a layman and accept there are many complex issues involved in why the global economy ended up in a recession; oil at $100-$147 a barrel had to be a significant factor.
Your thoughts would be appreciated.
High oil price was just one of many symptoms of the bubble. There’s no way that oil will get up to $100 in the near future.
Even if oil rises to the price points you mention, it will not be able to be sustained, especially if American consumers reduce consumption. The last time oil was over $100 very little changed by way of consumption. People may have made adjustments to conserve, but they still consumed oil quite heavily.
The price of oil is not the culprit. The expansion of credit and the money supply is. Study the Austrian Theory of the Business Cycle!!!
Get started here: http://mises.org/daily/3251