Friday, February 24, 2012

A Quicky on oil

We have the West Texas Oil price posted at the top of this blog for a reason. These days oil prices have a larger impact on economic growth than interest rates.  In an earlier post we estimated that the oil price ceiling lies around $125 per barrel; when prices exceed that level the economy is likely to tank.

With the Iran tensions running high, oil prices have recently sky rocketed. This being an election year, Barrack Obama is likely desperate to keep oil prices lower - that may be one of the reasons he has been stalling on his Keystone decision. But if the oil glut in Cushing is not enough to keep oil prices down in the U.S. he has one other card; the release of some of the U.S.'s oil strategic oil reserves.

Overall, in spite of the higher oil prices, this year's economic and stockmarket performance support Obama's re-election. This is my first prediction of the year - who wants to bet on the number of revisions I will have to make?

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