Oil futures surge again
There appears to be no stopping the advance in crude oil prices. Fueled by expectations that an economic recovery will be more rapid than anticipated and that demand in developing nations like China will spike up sharply, the cost of crude has more than doubled this year.
Prices for oil futures rose above $78 in Globex trading Friday morning. Contracts hit $78.17, a 2009 record.
Concerns are emerging, however, that oil price increases could actually derail an expansion of GDP in nations like the U.S., where the recovery is still tentative. Oil prices affect a broad range of products from petrochemicals to heating oil to gasoline. If crude continues to trade higher, both businesses and consumers in America will start to feel the pinch as the holiday season approaches. That could impact corporate profits in the fourth quarter and retail sales. Many retailers make 40 percent of their total annual sales in the fourth quarter.
Oil prices have probably crossed the tipping point -- from being a benefit to the economy to being a drag on GDP expansion. When crude was below $40 early in the year, it helped contain the recession. But if oil prices continue to push up, the chances of a double-dip recession become a concern once again.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
10-16-2009 @ 9:54AM
acheapmom said...
Of course oil prices surge could derail the US's already fragile economy!
We have bizarre self-destructive excessive environmental policies which hinder the US from using more of our own oil/natural gas reserves!!!
So---we will be at the mercy of other countries who drill for energy...and who knows how many of them really care about "environmental" drilling?
Sarah Palin says (in a new October article in National Review Online and on her Facebook) that the US should use more of its own energy resources for the reasons above---and for many other good reasons.
But so many who live in Saturday Nite Land...or in Media Manipulation Land will dismiss Palin...and her experience living in a state loaded with energy resources...
But you financial types---Do your own research. Should the US drill...or keep buying from the many nations who---might well be happy if they can bring the US down?
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10-16-2009 @ 1:10PM
Iridium said...
Walk into Goldman Sachs, light it on fire, and then watch the price of crude fall to $25 the next day.
THERE IS NO DEMAND MODEL TO SUPPORT OIL AT $40. We've known it for three years now. Is gasoline hits $3 the US economy is done.
The new terrorists live in the office buildings in NYC. There have caused more destruction than a little guy in the middle east could ever dream of. Instead of fighting a war in Afganistan we should be raiding the offices of JP Morgan Chase and Goldman Sachs. The real war is there, the real enemy is there.
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