Your feedback is important to us!
We invite all our readers to share with us their views and comments about this article.
Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.
Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (http://bit.ly/vDisqus)
The price at the pump for premium gasoline topped $3 per gallon in much of the United States over the past few weeks, which is surprising to consumers but not to analysts of the world's oil markets. From its local low two years ago, the price of oil has more than doubled. At the same time, a doubling of energy costs takes a significant bite out of U.S. households' budgets, with energy costs directly accounting for about 6.5 percent of consumer spending.This tax effect partly underlies the robust association between spikes in world oil prices and U.S. economic downturns documented by James Hamilton of the University of California San Diego. Hamilton's sobering results show that, over the long sweep of history, every recession but one was preceded by an increase in oil prices, and every oil market disruption but one was followed by a recession.The scissors close with more demand and less supply, implying a higher dollar price of oil.For a healthy market consistent with longer-run capital investment, too high an oil price can be as challenging as one that is too low.Production technology advances, and higher prices beckon.
FOLLOW THIS ARTICLE