Posted on 03/12/2011 11:44:10 AM PST by neverdem
Ten of the last 11 recessions were preceded by oil price hikes.
Oil prices surged to near $107 per barrel yesterday and regular gasoline is going for $3.51 per gallon. Last March oil sold for around $80 per barrel and gas cost about $2.79 per gallon. The uprisings throughout the Middle East are in part responsible for the recent uptick in prices. For example, the fighting in Libya has reduced global oil production by about one million barrels per day. On the other hand, members of the Organization of Petroleum Exporting Countries (OPEC) are boosting their output by a similar amount to make up for the shortfall. Democrats in Congress are calling upon President Barack Obama to damp down prices by selling off oil from the Strategic Petroleum Reserve.
Of course, the global oil market is pricing in worries that production could be disrupted if protesters in other major OPEC producers such as Saudi Arabia, Kuwait, and Iran began to demand greater freedom. What would happen to the U.S. economy if petroleum prices continue their rapid rise? University of California, San Diego, economist James Hamilton noted in a recent study that 10 out of 11 post-World War II recessions [PDF] in the United States were preceded by a sharp increase in the price of crude petroleum. The only exception was the mild recession of 1960-61 for which there was no preceding rise in oil prices.
Hamilton has also written a fascinating short history [PDF] of U.S. and global oil price shocks. Until 1974 the United States was both the world’s biggest consumer and producer of crude oil. Although domestic oil production has recently upticked, the U.S. today produces about half the oil it did in 1971. It still is the biggest consumer.
It turns out that boom/bust price shocks have...
(Excerpt) Read more at reason.com ...
We aren’t out of the last recession yet. Our “growth” is equal to fed borrowing
People must not be paying attention to the news. Yes oil has gone up and yes we need to explore our own energy resources, but last week was a bad week for the oil market.
NYMEX oil fell yesterday to below $100 pbbl and London oil is back around $113 pbbl. People need to do their research.
Yes, but when do you remember that we self-induced an oil price increase during the middle of a major economic downturn? (recession or depression) That is what is happening. Greenies supported by the White Hut hammering the coal producers, the occupant of the White Hut hammering the off-shore oil developers in stealth (say they are moving away from the moratorium but finding bureaucratic methods to continue the freezing of new wells) and reducing fuel production capacity by the Global Warming Scam to deny new refineries in Texas (political punishment). FUBO!
No,the uprisings have nothing whatsoever to do with our gas prices. NOTHING.
The uprisings are, though, a convenient cover.
If all along we were drilling in ANWR, Bakkan, offshore LA, offshore FL, offshore CA, offshore elsewhere, adding refineries, building nuke plants... any price rise would be a minor ripple, at most.
Yep, and your height is equal to weight.
Do you bother to think about even the meaning of the words before you put them into a sentence?
You are absolutely correct, of course.
But since we did not do those things, it is still true that
The uprisings throughout the Middle East are in part responsible...
GDP treats spending as equal to income (product). It also treats government spending as equal to private. In a world of constant value dollars this is a good enough measure of actual economic productivity, just as measuring my spending can give an accurate representation of my income. However, if I start running up my credit cards, then it's a totally fictitious measurement. So too with the GDP.
The Treasury has been spending money in vast amounts beyond it's actual revenue. The Federal Reserve has been buying T-bills with a printing press. If you subtract this funny money from the GDP you get zero growth. The U.S. hasn't grown the GDP, it has devalued it.
OK, now you can tell me what those big words that I don't understand mean. Can't wait.
No, you are absolutely correct, as far I can tell. I apologize if my post was unjustifiably strongly worded. But, with all due respect, I cannot be solely blamed for the misunderstanding when you stated that our recession is not over. I am now confident that you know that recessions are not delineated in terms of real growth but in terms of the nominal growth. So what am I to think when someone claims we are not out of the recession? And, I read this on the background of numerous statements such as, "We are not out of recession --- just look at unemployment." The brevity of your statement did not allow me to understand that you meant real rather than nominal growth.
I apologize once again for my contribution to this misunderstanding. I am glad to meet someone who understand the underlying issues.
Ping to #5
Thanks, TOL!
bttt
You’re welcome. :-)
I'm glad it is all cleared up.
It is my gut feeling that growth in constant dollars has actually been stagnant or even negative for the last two years. Real unemployment is getting larger every month, as the number of new people ready to enter the workforce outnumbers the growth in jobs.
Inflation in fuel, food, clothing, and metals has been huge. With that in mind, steady rates for services reflects a devaluation of wages, which is generally the true goal of Keynesian politicians.
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