About a month ago we discussed the risks of higher oil (and gasoline) prices on the economic recovery. The ensuing few weeks have only seen prices go higher with retail prices for gasoline now in excess of $3 a gallon. Although we focus on the role that the financial crisis played in the great recession we should not forget that the big oil spike also wreaked havoc on consumer spending and helped hasten the downfall of the American auto manufacturing sector. Although the US economy is in a very different state than it was at the time of the prior spike in prices, we should continue to keep an eye on what is going on with oil prices. If we do see another spike in oil prices it will be interesting to see how consumers react. Having been through this scenario in the near past, consumers might more quickly adjust and adapt to higher prices. In today’s screencast we revisit the oil markets and its risk to the ongoing economic recovery.
Items mentioned in the above screencast:
The risk of higher oil prices to the US economy. (Pragmatic Capitalism)
Retail gasoline prices now exceed $3 a gallon. (WSJ)
The dent higher gasoline prices could put on consumers. (Atlantic Business)
How might consumers react to another oil price spike? (CNBC)
A daily price chart of gasoline futures. (StockCharts)