$120 Oil & Beyond: An Update
Keybridge Research releases an update on world energy prices, considering what America can expect in terms of the economic impact of high oil prices
In the spring of 2006, when oil was trading around $60 a barrel, Securing America's Future Energy (SAFE) released an analysis entitled "What Would $120 Oil Mean for the Global Economy?" Today, with oil having reached and crossed the $120 threshold, SAFE has revisited that analysis to examine its predictions and consider what America can expect in the future.
Many of the economic effects anticipated in the 2006 analysis have come to pass. $120-and $140-oil appears to have pushed the U.S. economy to the brink of recession, with tumbling consumer confidence, weakened household real incomes, supply disruptions, and a policymaking apparatus with reduced options to come to the rescue.
What would happen if oil prices continue to rise to $160 or $180 or even $200 a barrel? Such a development certainly cannot be ruled out, and with the U.S. economy already likely to experience a recession under current circumstances, higher oil prices would make a recession deeper, longer, and more painful for families.
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