Higher oil prices would hamper global economy

[onehandle]

Source: AP

A darker possibility — one that few analysts expect — is that oil prices will keep rising until they reach $150 or more and then stay there for months. Under that scenario, another recession is possible, economists say.

Gasoline prices would near $5 a gallon. Consumers would spend much less. So would businesses, which would slash jobs. "It would nail the economy," said Mark Zandi, chief economist at Moody's Analytics. "All the benefits of the tax breaks we got in last year's tax-cut deal would be completely wiped out and then some."

One reason the United States and other developed countries can still grow with oil at $100 a barrel is they've become more energy-efficient since the oil-price shocks of the 1970s. U.S. retailers and manufacturers that use oil-produced plastics, for example, have been shrinking packaging and packing more items onto their trucks. A new wave of redesigned products, like ultra-thin plastic bottles of water, has also emerged.

"Companies have been very clever in what they can do to reduce the production costs without affecting performance," said Jonathan Asher of Perception Research Services, which works with consumer product companies. The latest surge in oil "will turn up the heat even more."

Read more: http://news.yahoo.com/s/ap/20110224/ap_on_bi_ge/us_oil_prices_economy

[RKP5637]

1. Interesting post! n/t

[AKDavy]

2. American industry could recover with higher energy prices

When the cost of transportation (oil) makes it less expensive to manufacture locally which higher labor costs than to transport raw materials to and finished products from nations with lower labor costs, local economies could recover.

Suggested Reading: "Why Your World Is About to Get a Whole Lot Smaller" by Jeff Rubin

But no, there will never again be a healthy global economy AND cheap petroleum.

[DJ13]

3. Well, high prices triggered the economic crisis we still face

So adding a new round of pain only adds to the risk of truly following into a depression.

[Imagevision]

4. Last September HuffPo stated more foreclosures in 2011 then in 2010...

[bhikkhu]

5. On the other hand...

back in 2008 high energy prices were driven by a growing global economy where demand for fuel exceeded the supply, for a short while as prices spiked. The whole sub-prime fiasco, credit freeze, and banking mess more or less masked the energy supply problem, to the point that few people are aware that it was even an issue. The following recession alleviated the problem.

...until recently, where a growing global economy and demand for oil exceeding supply has again been a problem, for a short while. Its off the radar while the news is full of interesting developments, but the price of oil was already on the way up before unrest tightened things up further. I imagine this time around there will be plenty of theories about causes and effects which again ignore the underlying geological constraint to economic growth.

[jtuck004]

6. Oil Shocks and Economic Recessions

Published http://wallstreetpit.com/57346-oil-shocks-and-economic-recessions">here

___

Read something the other day, said the average American meal travels about 1500 miles to feed us.

We no longer have enough arable land left to grow what our diet has become.

So what happens when you are in an unrecognized recession (well, by everyone except for 98% of the population that has to live it), where 27 million people are underemployed, gas goes higher than it ever has, and a national election is less than 2 years away...


So what will people look to for, uh, salvation?

[tech9413]

7. forget the global oil based economy

Start working toward a local economy and oil prices will have little effect on you life.

[Wednesdays]

8. Maybe we should start using other sources of energy other than oil?

:think:

[GliderGuider]

9. It's a bit too late for that.

It may help in some places, but overall it's far too late to build out an alternative to our fuel supply. We've been at Peak Oil for 6 years already, and I think we're about to roll off the plateau: