Oil prices have reached record highs earlier in the week. Price hikes have caused much speculation regarding the fickle world economy. Estimations of world economic growth have been estimated to reach 5%. However, with oil prices surging, many economists fear that growth may be replaced by decline. Federal Reserve Bank President Robert McTeer feels that although oil prices are rising the economy is safe from the impact of high oil prices. McTeer compares the price hikes of today to the price hikes in the 70’s. One major difference between the seventies (which resulted in economic burden) crisis and the oil problems today is supply. The price hikes in the seventies was do to a shortage of oil. Today the prices today are caused by demand. Therefore, oil prices are not damaging the economy. Prices aren’t dictated by a shortage of supply, rather the life style of larger cars and other factors that contribute to high demand.
http://www.msnbc.msn.com/id/6185707/
2 comments:
I would disagree somewhat with this post. Todays oil prices include both a factor of the low supplies and high demands placed upon it. OPEC is already churning out as much as it can feasibly do, yet oil prices still seem to be rising. At $53/barrel why wouldn't OPEC not want to supply the world with as much oil as it can? It's not possible, oil supplies are rapidly dwindling and unless the American public realizes this soon, our economy is going to continue to lag slowly ahead and maybe even behind. There is no question that the U.S. is completely dependent on Middle Eastern countries to satisfy our high demand for oil. All of the blame cannot go to people in our society that have SUV's. It's simply more of a numbers game, there are millions of more drivers now than in the 70's. And 20 years from now, there will be even more, but the oil just won't be around forever. Companies are starting to sense this and are forging ahead with plans to develop and introduce hybrid vehicles into the marketplace.
John_West: I would think very seriously about disagreeing with Robert McTeer. He has been very successful at thinking outside the box.
Right now, the facts tend to suggest that this is a demand driven spike in oil prices. We've never had a big one of those, so it will be interesting to see what happens.
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