The impacts of paying $100 a barrel for oil
For the Appeal
With the price of a barrel of light sweet crude oil on its way to $100 on the New York Mercantile Exchange, it may be time to consider a few things. The prices have been moving up fast.
Just this July, oil was trading at over $78 per barrel. In September the price was over $80 and late last month oil briefly spiked to over $98 per barrel.
So what influences the price of oil? Numerous geopolitical and supply and demand factors are the main culprits. This leads to higher food and gas prices raising concerns about inflation.
There is a huge insatiable demand for oil these days. You have to consider China, India and other emerging markets now competing with established economies for this unrenewable resource.
It seems that the price of oil keeps moving two steps forward and one step back, which means each time the price falls, we begin with an increasingly higher base price. The days of cheap oil may be in the past.
I had the notion that oil would continue to rise a few years ago. How could it not with supply being flat and demand increasing. Refining capacity has not changed much for the last 30 years either.
The potential for $100 per barrel oil is just confirmation of the fact that oil is an increasingly valuable global commodity. With the triple-digit mark just around the corner, is the average American concerned?
Here in the U.S., the topic of conversation tends to be about other issues. The economy, the war, what to do about Social Security and Medicare. What that tends to tell me is that while the price of oil is important, it is not causing too much pain in the economy yet.
I still see a lot of Hummers out there. Although there is a lot of talk about alternative energy right now, the reality of practical usage is probably many years away.
Being that 2008 is an election year, we could be hearing a lot more about the cost of oil , but for now the prices seem to be absorbable.
I cannot imagine such high oil prices having little impact if gas gets to $4 per gallon or more. At $4 per gallon, it would take over $100 per tank to fill up that Hummer and that sounds painful.
So will we see a recession in the coming year with the current price of oil ? No one really knows for sure, but oil will definitely be a factor.
If nothing else, maybe it will inspire us to be grateful for the resources that we all currently take for granted.
• Carol Perry, of Carol Perry and Associates, has been a resident of Northern Nevada since 1983.